Case Note & Summary
The petitioner, Kairos Properties Private Limited, filed a writ petition under Article 226 of the Constitution of India challenging a notice dated 25 April 2024 issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-18, along with the underlying notice under Section 148A(b) dated 30 March 2024 and order under Section 148A(d) dated 25 April 2024. The core grievance was that these notices were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO), as mandated by Section 151A of the Act and the E-Assessment of Income Escaping Assessment Scheme, 2022 notified on 29 March 2022. The petitioner relied on the Division Bench decision in Hexaware Technologies Ltd. v. ACIT, which held that the Scheme is mandatory and that there is no concurrent jurisdiction of the JAO and FAO for issuance of notice under Section 148. The court noted that the Scheme, being subordinate legislation, requires all proceedings under Sections 148A and 148 to be conducted through automated allocation in a faceless manner. The Revenue argued that only the Section 148 notice should be quashed, not the Section 148A proceedings. However, the court rejected this contention, holding that the Scheme's scope covers both Section 148A and Section 148, and thus the entire proceedings initiated by the JAO were invalid. The court also held that when an authority acts contrary to law, the assessee need not prove prejudice. Consequently, the court quashed the impugned notice under Section 148, the notice under Section 148A(b), and the order under Section 148A(d), allowing the petition.
Headnote
A) Income Tax - Reassessment Notice - Section 148, 148A, 151A Income Tax Act, 1961 - Faceless Assessment Scheme - The petitioner challenged a notice under Section 148 issued by the Jurisdictional Assessing Officer (JAO) for AY 2017-18, contending that under Section 151A and the Scheme dated 29 March 2022, only a Faceless Assessing Officer (FAO) could issue such notice. The court held that the Scheme is mandatory and the JAO lacked jurisdiction, following Hexaware Technologies Ltd. v. ACIT. The impugned notice and underlying proceedings were quashed. (Paras 3-12) B) Income Tax - Prejudice - Invalid Notice - Section 148, 148A Income Tax Act, 1961 - When an authority acts contrary to law, the act is invalid and the assessee need not establish prejudice. The court held that non-compliance with the faceless scheme itself causes prejudice, as every assessee is entitled to be assessed following due procedure. (Para 4, quoting Hexaware) C) Income Tax - Scope of Scheme - Section 148A, 151A Income Tax Act, 1961 - The court held that the Faceless Scheme covers not only issuance of notice under Section 148 but also proceedings under Section 148A(b) and (d), as the Scheme's scope includes 'assessment, reassessment or recomputation under Section 147' and issuance of notice under Section 148. Therefore, the JAO's notice under Section 148A(b) and order under Section 148A(d) were also invalid. (Paras 8-11)
Issue of Consideration
Whether a notice under Section 148 of the Income Tax Act, 1961 issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required under Section 151A and the Faceless Scheme is valid.
Final Decision
The court allowed the writ petition, quashing the notice under Section 148 dated 25 April 2024, the notice under Section 148A(b) dated 30 March 2024, and the order under Section 148A(d) dated 25 April 2024. Rule made absolute.
Law Points
- Faceless assessment scheme is mandatory
- no concurrent jurisdiction of JAO and FAO
- violation of statutory scheme invalidates notice without proof of prejudice
- Section 151A overrides manual issuance
