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:12451-DB
Digitally
signed by
939-WPL 21713-24.DOC
PRAJAKTA
PRAJAKTA SAGAR
SAGAR VARTAK
VARTAK Date:
2024.08.16
12:26:05
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L.) NO. 21713 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 30 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 2020-21.
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3. On perusal of the record, it is apparent that the impugned notice
dated 30 March, 2024 issued under Section 148A(b), the order passed
thereon under Section 148A(d) dated 30 April, 2024 and the consequent
notice dated 30 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 under1 (2024) 464 ITR 430
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939-WPL 21713-24.DOCSection 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 29 th 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
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
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939-WPL 21713-24.DOCunder 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
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
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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 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
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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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 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 :
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939-WPL 21713-24.DOC“(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 30 March 2024 (Exhibit “H”) the
Impugned Order dated 30 April 2024 (Exhibit “M”) and,
Impugned Reassessment Notice dated 30 April 2024
(Exhibit “N”).”
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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