Reopening Proceedings In Defiance Of Mandatory Procedure U/s 151A To Be Quashed: Bombay High Court
Pankaj Bajpai
29 Aug 2024 10:45 AM IST
The Bombay High Court clarified that the Assessing Officer is required to adhere to the provisions of Section 151A read with CBDT Notification dated Mar 29, 2022 for resorting to a procedure u/s 148A and the consequent notice u/s 148. Section 151A of the Income Tax Act empowers the Central Government to make a scheme for the purpose of assessment, reassessment, or recompilation...
The Bombay High Court clarified that the Assessing Officer is required to adhere to the provisions of Section 151A read with CBDT Notification dated Mar 29, 2022 for resorting to a procedure u/s 148A and the consequent notice u/s 148.
Section 151A of the Income Tax Act empowers the Central Government to make a scheme for the purpose of assessment, reassessment, or recompilation u/s 147 (Income-escaping assessment); Issuance of notice u/s 148 for conducting income-escaping assessment; or conducting of inquiries or issuance of show-cause notice or passing of order u/s 148A; or sanction u/s 151 for the issue of notice u/s 148 for conducting the income-escaping assessment.
The Division Bench comprising Justice G.S Kulkarni and Justice Somasekhar Sundaresan observed that “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, vitiates the proceedings”. (Para 5)
Facts of the case:
Notice issued u/s 148A(b) and the order passed thereon u/s 148A(d) along with consequential notice were issued u/s 148 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. Hence, the Assessee approached the High Court challenging validity of such notices as well as the reassessment order.
Observations of the High Court:
The Bench noted that the Central Government issued a notification on Mar 29, 2022 whereby a faceless mechanism was introduced wherein FAO and the Revenue was mandated to comply with Section 151A while issuing reassessment notices u/s 148/148A.
Relying on coordinate bench decisions in Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax, as well as Nainraj Enterprises Pvt Ltd. Vs. The Deputy Commissioner of Income Tax, the Bench observed that it is apparent that Revenue failed to comply with the Scheme notified by the Central Government which was also tabled in the Parliament as a subordinate legislation pursuant to Section 151A(2) since the reassessment notice was issued by JAO instead of FAO.
The Bench also found that the show cause notice was issued within a day post issuance of notification on Mar 29, 2022 mandating faceless mechanism under Section 151A.
Thus, the Bench opined that the notification issued by the Central Government cannot in any manner control the substantive provision u/s 151A.
The High Court therefore quashes the reassessment notice issued u/s 148, notice u/s 148A(b) and order u/s 148A(d) passed by Jurisdictional AO instead of Faceless AO as mandated u/s 151A.
Hence, the High Court concluded that the Jurisdictional AO has no jurisdiction to issue reassessment notice and allowed Assessee's petition.
Counsel for Petitioner/ Assessee: Advocates Arun Jain and Madhur Agrawal
Counsel for Respondent/ Revenue: Advocate Suresh Kumar
Case Title: Tilak Ventures Ltd vs. The Union of India
Case Number: W.P No. 2500 of 2022
