Legally Bharat

Bombay High Court

Tlg India Private Limited vs Assistant Commissioner Of Income Tax … on 12 August, 2024

Author: G. S. Kulkarni

Bench: G. S. Kulkarni

2024:BHC-OS:12523-DB
              Digitally
              signed by
              PRAJAKTA
                                                                                              940-WPL 21719-24.DOC
     PRAJAKTA SAGAR
     SAGAR    VARTAK
     VARTAK   Date:
              2024.08.17
              11:07:06
              +0530

       Prajakta Vartak

                                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                         ORDINARY ORIGINAL CIVIL JURISDICTION

                                               WRIT PETITION (L.) NO. 21719 OF 2024

                           TLG India Pvt. Ltd.                                                 ..Petitioner
                                        Vs.
                           Assistant Commissioner of Income Tax
                           Circle - 8(3)(1) Mumbai & Ors.                                      ...Respondents
                                                          _______

                           Mr. Nishant Thakkar with Mr. Hiten Thakkar, Mr. Bhavesh Bhatia i/b.
                           Mint & Conferers for the Petitioner.
                           Mr. Devvrat Singh for Respondents.
                                                            _______

                                                    CORAM:        G. S. KULKARNI &
                                                                  SOMASEKHAR SUNDARESAN, JJ.
                                                    DATED:        12 August, 2024


                           P.C. :-

1. Rule. Rule made returnable forthwith. Learned Counsel for the

Respondents waives service. By consent of the parties, heard finally.

2. This Writ Petition under Article 226 of the Constitution of India has been

filed to challenge a notice dated 26 April 2024 (“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 2017-18.

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3. On perusal of the record, it is apparent that the impugned notice dated 27

March, 2024 issued under Section 148A(b), the order passed thereon under

Section 148A(d) dated 26 April, 2024 and the consequent notice dated 26 April,

2024 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.

4. 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 151 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 :

“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 29th 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

1 (2024) 464 ITR 430
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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
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

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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]

5. 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 before the

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, vitiates the proceedings.

6. 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

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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.

7. 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. (supra), the petition would be required to be

allowed.

8. Mr. Thakkar, learned counsel for the petitioner has also contended that the

impugned notice under Section 148A(b) of the Income Tax Act, 1961 (for short,

“the Act”) was hit by the provisions of sub-section 1(a) of Section 149 of the Act

being issued beyond the period of 3 years. As we are quashing and setting aside
2 Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
3 Writ Petition (L) No. 22686 of 2024 dated 05.08.2024
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the impugned notice, although there is substance in the contention as urged on

behalf of the petitioner, we are of the clear view that the impugned notice under

Section 148 and 148A(b) of the Act is issued contrary to Section 151A read with

the Notification issued by the Central Government dated 29 March 2022. We

do not intend to delve on such issues.

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 be pleased to issue a Writ of
Certiorari or a writ in the nature of Certiorari or any other
appropriate writ, order or direction under Article 226 and/or
Article 227 of the Constitution of India calling for the records of
the Petitioner’s case and after examining the legality and validity
thereof quash and set aside the Impugned Notice dated 27 March
2024 (Exhibit “E”) the Impugned Order dated 26 April 2024
(Exhibit “K”) and, Impugned Reassessment Notice dated 26 April
2024 (Exhibit “L”).”

10. We make it clear 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.)

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