Bombay High Court
Satish Ramesh Baikar vs Income Tax Officer Ward 2(2) Kalyan And ... on 2 September, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-AS:35412-DB
Digitally
signed by
909-WP 11670-24.DOC
PRAJAKTA
PRAJAKTA SAGAR
SAGAR VARTAK
VARTAK Date:
2024.09.04
10:29:01
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 11670 OF 2024
Satish Ramesh Baikar ...Petitioner
Vs.
Income Tax Officer, Ward 2(2), Kalyan & Ors. ...Respondents
__________
Mr. Tanzil Padvekar with Tejal Kharkar for Petitioner.
Mr. Akhileshwar Sharma for Respondents.
__________
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
DATED: 02 September 2024.
P.C.
1. Rule. Rule made returnable forthwith. Learned Counsel for the
Respondents waives service. By consent of the parties, heard finally.
2. Reply filed by the Revenue is taken on record.
3. This Writ Petition under Article 226 of the Constitution of India has
been filed to challenge a notice dated 04 April, 2022 (" impugned notice")
issued to the Petitioner under Section 148 of the Income Tax Act, 1961 (" the
Act"), and also the underlying prior notice and order under Section 148A(b)
and Section 148A(d) of the Act, respectively. The reassessment under Section
148 of the Act has been initiated in respect of returns filed by the Petitioner-
Assessee for the Assessment Year 2015-16.
______________
2 September 2024
909-WP 11670-24.DOC
4. On perusal of the record, it is apparent that the impugned notice dated
21 March 2022 issued under Section 148A(b), the order passed thereon under
Section 148A(d) dated 04 April 2022 and the consequent notice dated 04
April 2022 issued under Section 148 of the Act are all issued by the
Jurisdictional Assessing Officer ("JAO") and not by a Faceless Assessing Officer
("FAO"), as is required by the provisions of Section 151A of the Act. The
petitioner is also challenging the impugned assessment order dated 17
February 2024 issued under Section 147 read with Section 144 and Section
144B as also the notice of demand dated 17 February 2024 issued under
Section 156 of the Act as being barred by limitation.
5. To give effect to the provisions of Section 151A, the Central
Government has issued a Notification dated 29 March 2022 whereby a faceless
mechanism has been introduced. Thus, necessarily in resorting to a procedure
under Section 148A and the consequent notice to be issued under Section 148
of the Act, the Assessing Officer is required to adhere to the provisions of
Section 151A read with the Notification. Thus, for a notice to be validly issued
for reassessment under Section 148 of the Act, the Respondent-Revenue would
need to be compliant with Section 151A, which has been interpreted and
analysed in detail by a Division Bench of this Court in the case of Hexaware
Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. 1
("Hexaware"). The Division Bench has clearly declared the law as follows :
1 (2024) 464 ITR 430
______________
2 September 2024
909-WP 11670-24.DOC
"35. Further, in our view, there is no question of concurrent
jurisdiction of the JAO and the FAO for issuance of notice under
Section 148 of the Act or even for passing assessment or
reassessment order. When specific jurisdiction has been assigned
to either the JAO or the FAO in the Scheme dated 29 th March,
2022, then it is to the exclusion of the other. To take any other
view in the matter, would not only result in chaos but also render
the whole faceless proceedings redundant. If the argument of
Revenue is to be accepted, then even when notices are issued by
the FAO, it would be open to an assessee to make submission
before the JAO and vice versa, which is clearly not contemplated
in the Act. Therefore, there is no question of concurrent
jurisdiction of both FAO or the JAO with respect to the issuance of
notice under Section 148 of the Act. The Scheme dated 29th
March 2022 in paragraph 3 clearly provides that the issuance of
notice "shall be through automated allocation " which means that
the same is mandatory and is required to be followed by the
Department and does not give any discretion to the Department to
choose whether to follow it or not. That automated allocation is
defined in paragraph 2(b) of the Scheme to mean an algorithm for
randomised allocation of cases by using suitable technological
tools including artificial intelligence and machine learning with a
view to optimise the use of resources. Therefore, it means that the
case can be allocated randomly to any officer who would then have
jurisdiction to issue the notice under Section 148 of the Act. It is
not the case of respondent no.1 that respondent no.1 was the
random officer who had been allocated jurisdiction.
36. With respect to the arguments of the Revenue, i.e., the
notification dated 29th March 2022 provides that the Scheme so
framed is applicable only 'to the extent' provided in Section 144B
of the Act and Section 144B of the Act does not refer to issuance
of notice under Section 148 of the Act and hence, the notice
cannot be issued by the FAO as per the said Scheme, we express
our view as follows:-
Section 151A of the Act itself contemplates formulation of
Scheme for both assessment, reassessment or
recomputation under Section 147 as well as for issuance of
notice under Section 148 of the Act. Therefore, the Scheme
framed by the CBDT, which covers both the aforesaid
aspect of the provisions of Section 151A of the Act cannot
be said to be applicable only for one aspect, i.e.,
proceedings post the issue of notice under Section 148 of
the Act being assessment, reassessment or recomputation
under Section 147 of the Act and inapplicable to the
issuance of notice under Section 148 of the Act. The
Scheme is clearly applicable for issuance of notice under
Section 148 of the Act and accordingly, it is only the FAO
which can issue the notice under Section 148 of the Act
and not the JAO. The argument advanced by respondent
______________
2 September 2024
909-WP 11670-24.DOC
would render clause 3(b) of the Scheme otiose and to be
ignored or contravened, as according to respondent, even
though the Scheme specifically provides for issuance of
notice under Section 148 of the Act in a faceless manner,
no notice is required to be issued under Section 148 of the
Act in a faceless manner. In such a situation, not only clause
3(b) but also the first two lines below clause 3(b) would be
otiose, as it deals with the aspect of issuance of notice under
Section 148 of the Act. Respondents, being an authority
subordinate to the CBDT, cannot argue that the Scheme
framed by the CBDT, and which has been laid before both
House of Parliament is partly otiose and inapplicable.
........"
37 When an authority acts contrary to law, the said act of the
Authority is required to be quashed and set aside as invalid and
bad in law and the person seeking to quash such an action is not
required to establish prejudice from the said Act. An act which is
done by an authority contrary to the provisions of the statue, itself
causes prejudice to assessee. All assessees are entitled to be assessed
as per law and by following the procedure prescribed by law.
Therefore, when the Income Tax Authority proposes to take action
against an assessee without following the due process of law, the
said action itself results in a prejudice to assessee. Therefore, there
is no question of petitioner having to prove further prejudice
before arguing the invalidity of the notice.
[Emphasis Supplied]
6. In the present case, it is apparent that the Respondent-Revenue has not
complied with the Scheme notified by the Central Government pursuant to
Section 151A(2) of the Act. The Scheme has also been tabled in Parliament
and is in the character of subordinate legislation, which governs the conduct of
proceedings under Section 148A as well as Section 148 of the Act. In view of
the explicit declaration of the law in Hexaware, the grievance of the Petitioner-
Assessee insofar as it relates to an invalid issuance of a notice is sustainable and
consequently, the very manner in which the proceedings have been initiated,
______________
2 September 2024
909-WP 11670-24.DOC
vitiates the proceedings.
7. Learned Counsel for both the parties agree that the proceedings initiated
under Section 148 of the Act would not be sustainable in view of the judgment
rendered in Hexaware. Learned Counsel for the Petitioner-Assessee has also
drawn our attention to a recent decision of this Court in Nainraj Enterprises
Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax, Circle-4(3)(1),
Mumbai & Ors.2, whereby in similar circumstances, this Court has allowed the
petition considering the provisions of Section 151A of the Act.
8. Learned counsel for the petitioner has also drawn our attention to the
decision of this Court in Kairos Properties Pvt. Ltd. vs. Assistant Commissioner
of Income-tax and Ors.3 where the Court considered the effect of scheme as
notified by the Central Government under the notification dated 29 March,
2022. The Court, considering the relevant provisions, has held that this
scheme as notified in paragraph 3 of the notification would take within its
ambit steps taken by the Revenue in issuing notice under section 148A(b) as
also an order passed under Section 148A(d), so as to be included within the
ambit of Section 151A of the Act. In this view of the matter, on both
applicability of the law as laid down by this Court in Hexaware (supra) as also
considering the observations of this Court in Kairos Properties Pvt. Ltd.
2 Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
3 Writ Petition (L) No. 22686 of 2024 dated 05.08.2024
______________
2 September 2024
909-WP 11670-24.DOC
(supra), the petition would be required to be allowed.
9. In the light of the above discussion, and as there is no dispute that the
JAO had no jurisdiction to issue the impugned notice, the Writ Petition is
accordingly allowed in terms of prayer clause (a) which reads thus :
"a. That this Hon'ble Court may be pleased to issue a Writ
of Certiorari or a Wr i t in the nature of Certiorari or any other
appropriate Writ, O r d e r or direction, calling for the records of
the Petitioner's case a n d after g o i n g into the legality a n d
propriety thereof, to quash a n d set aside the said Notice under
Section 148 of the Act dated 4th April 2024 (Exhibit-"C"),
Order under Section 148A(d) of the Act dated 4 th April, 2024
(Exhibit-"B") and S h o w Cause Notice under Section 148A(b)
of the Act dated 21 st March, 2022 (Exhibit-"A") and
impugned Assessment Order passed under Section 147 r.w. s.
1 4 4 B r.w. s. 14 4 of the A c t dated 17 th February, 2024
(Exhibit-"F") and Notice of D e m a n d under Section 156 of
the Act dated 17th February, 2 0 2 4 (Exhibit-"F-1")."
10. It is clarified that having disposed of this petition on the ground of non-
compliance with Section 151A of the Act, we have not expressed any opinion
on the other issues raised in the Writ Petition. The other questions raised in
this petition are not being answered since it is not necessary to do so.
11. Rule is made absolute in the aforesaid terms. No costs.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
______________
2 September 2024
