Faceless Assessment Is Not A Fundamental Right: Delhi High Court Dismisses Gandhis, Aam Aadmi Party's Pleas

The Delhi High Court, while dismissing the plea of Rahul Gandhi, Priyanka Gandhi, and the Aam Aadmi Party, has held that neither the e-assessment nor the faceless assessment scheme in any manner modifies the power to transfer cases from one Assessing Officer under a Principal Commissioner of Income Tax to another Assessing Officer under another Principal Commissioner of Income Tax who are holding non-concurrent charges.

The Bench of Justice Manmohan and Justice Dinesh Kumar Sharma has observed that E-assessment and the Faceless Assessment Scheme only authorize the transfer back of the case to the Jurisdictional Assessing Officer holding original jurisdiction, which he never loses as only the function of assessment is carried out by the Faceless Assessing Officer holding concurrent jurisdiction.

The petitioner, Sanjay Gandhi Trust, was established with the intent of providing health services, education, and employment to the people of rural Uttar Pradesh. The trust manages a rural medical center, the Sanjay Gandhi Hospital, and educational institutes such as the Indira Gandhi School and College of Nursing, the Indira Gandhi Institute of Paramedical Sciences, the Indira Gandhi Technical Institute, and the Rajiv Gandhi Computer Shiksha Kendra.

The petitioner is registered as a charitable institution under Section 12A, and assessments have been completed under Sections 143(3) and 143(1) until the Assessment Year 2017-18. The charitable purpose of the petitioner has never been doubted by the revenue until the assessment year.

The petitioners have challenged the transfer orders passed under Section 127. The jurisdiction of the petitioners has been transferred from Exemption Circle (in cases of trusts) and ACIT Circle 52(1) (in cases of individuals) to DCIT Central Circle-27, and in the case of the Aam Aadmi Party, from Exemption Circle to DCIT Central Circle-03. All the income tax officers, i.e., both transferors and transferees, are located within Delhi.

By way of the Finance Act, 2018, the concept of e-assessment was introduced by the insertion of sub-Sections (3A), (3B), and (3C) to Section 143 of the Act, and the Central Government was delegated the power to make and notify a scheme for conducting e-assessments.

The counsel for Gandhis contended that the intention of the Central Government was to eliminate personal interaction in faceless assessments and appeals, which is now the new method of assessing income tax cases and deciding appeals. The assessments have to be processed only on the basis of written submissions and in electronic mode. Thus, the existing assessment of a person in Jaipur will no longer be carried out by the Jurisdictional Assessing Officer, ITO, in Jaipur. But, the assessment will be completed by the National e-Assessment Center, the Regional Assessment Centers, and units of assessment. The location where the assessment is done and the assessing officer will remain unknown.

The counsel further contended that even assuming that there is a power of transfer, the transfer to Central Circle can only be made on the basis of the circulars. Even if the cases are transferred to the jurisdictional assessing officer, they cannot be further transferred to the central circle.

The counsel for the Aam Adami Party contended that the cogent rights have been embedded in the statutory framework under which the Faceless Assessment Mechanism has been incorporated into the scheme of the Act itself. It undeniably leads to the conclusion that any deviation from giving the benefit of this mechanism to an assessee must be construed strictly.

The department contended that Section 127 falls under Chapter XIII, which relates to the jurisdiction of income tax authorities, and in contrast, Chapter XIV is only a procedural chapter limited to only the assessment function. He submitted that Section 144B under Chapter XIV provides for a faceless scheme of assessment, and the jurisdiction continues to be governed under Chapter XIII.

The court observed that Central Circle jurisdiction is not confined to search cases alone. Central Charge is also conferred with jurisdiction over non-search cases where a coordinated investigation is required. The Circular dated April 25, 2014, makes it clear that there is no restriction on the transfer of non-search cases to Central Circle.

The court found that the transfer of a case under Section 127 is an altogether different power that continues to exist even after the introduction of the e-assessment/faceless regime. The scheme does not in any manner trammel upon or negate the existing powers contained in Section 127 to transfer the cases as provided for thereunder. Consequently, the power of transfer under Section 127 is not in any manner denuded by the Faceless Assessment Scheme when the transfer is sought to be made from a jurisdictional Assessing Officer under one Principal Commissioner of Income Tax to another Assessing Officer under a different Principal Commissioner of Income Tax who is not exercising concurrent jurisdiction over the case.

"The assessments of the petitioners have been transferred to the Central Circle in accordance with law by way of the impugned orders passed under Section 127 of the Act. Accordingly, the present writ petitions along with pending applications are dismissed without any order as to costs, and the interim orders passed by this Court stand vacated," the court said.

Case Title: Sanjay Gandhi Memorial Trust Versus Commissioner Of Income Tax (Exemption) & Ors.

Citation: 2023 LiveLaw (Del) 446

Date: 26/05/2023

Counsel For Appellant: Arvind Datar

Counsel For Respondent: Tushar Mehta

Click Here To Read The Order