The Bombay High Court quashed the income tax notice issued against Kairos Properties Pvt. Ltd. for the assessment year 2017-18. The court found that the notice issued under Section 148 of the Income Tax Act was invalid as it was not in compliance with the Faceless Assessment Scheme mandated under Section 151A of the Act. The court ruled that the notice should have been issued by a Faceless Assessing Officer (FAO) as per the central government's notification, rather than by a Jurisdictional Assessing Officer (JAO). The ruling reaffirms the necessity of strict adherence to procedural requirements under the Faceless Assessment Scheme.

Introduction

Quashing the income tax notice issued under Section 148 of the Income Tax Act, 1961. The court emphasized the importance of following the Faceless Assessment Scheme as laid out in Section 151A of the Act.

Background

Kairos Properties Pvt. Ltd. was served a notice by the Income Tax Department under Section 148, initiating reassessment proceedings for the assessment year 2017-18. The notice was issued by a Jurisdictional Assessing Officer (JAO), rather than by a Faceless Assessing Officer (FAO), as required under the Faceless Assessment Scheme introduced by the Central Government through a notification dated March 29, 2022.

Legal Issues

The primary legal contention was whether the issuance of the notice by the JAO instead of the FAO was valid. The petitioner argued that this action was contrary to the provisions of Section 151A, which mandates that such notices be issued through a faceless mechanism to ensure transparency and efficiency.

Court's Analysis

The court, referring to its earlier judgment in Hexaware Technologies Ltd. vs. Assistant Commissioner of Income Tax, held that the Faceless Assessment Scheme applies to the issuance of notices under Section 148 as well. The court found that the notice issued to Kairos Properties was not in compliance with this requirement, rendering it invalid.

Conclusion

The Bombay High Court quashed the notice issued under Section 148, reaffirming the importance of adhering to procedural rules under the Faceless Assessment Scheme. This judgment sets a precedent for future cases, emphasizing that any deviation from the mandated faceless procedure will be considered a violation of the law.

Implications

The judgment reinforces the mandatory nature of the Faceless Assessment Scheme, ensuring that all assessment and reassessment proceedings are conducted in a transparent and efficient manner, without the influence of any individual tax officer. This ruling is expected to impact similar cases where the faceless procedure was not followed.