The Punjab & Haryana High Court while indicating that the scheme of faceless assessment is applicable from the phase of SCN under section 148 as well as 148A, held that notice under section 148 could not be issued via the jurisdictional assessing officer post introduction of the faceless assessment scheme.
As SCN has been issued via the revenue department under section 148 laying on the Board’s Memorandum and Instructions, the High Court explained that circulars, instructions, and letters issued by the Board or any other authority cannot override statutory provisions.
According to Section 148 of the Income Tax Act, before making the assessment, reassessment, or re-computation u/s 147, and subject to the provisions of section 148A, the Assessing Officer will furnish a notice to the assessee, along with a copy of the order passed, if required, under clause (d) of section 148A, directing him to provide within such period, as may be set in such notice, a return of his income.
The Central Government as per Section 151A of the Income Tax Act may make a scheme, by notification in the Official Gazette, for assessment, reassessment, or re-computation u/s 147 or issuance of notice u/s 148 or running of inquiries or issuance of SCN or passing of order u/s 148A or sanction for the issue of these notice u/s 151, to provide efficiency, transparency and accountability by removing the interface between the income-tax authority and the taxpayer or any other person to the extent technologically possible.
The Bench of Chief Justice Sheel Nagu and Justice Jagmohan Bansal marked that “assessment proceedings commence from the stage of issuance of show cause notice. The object of introduction of faceless assessment will be defeated if SCN (Show Cause Notice) under Section 148 is issued by Jurisdictional Assessing Officer”. (Para 15)
Case Validities
The taxpayer a farmer has obtained the compensation based on the land acquisition. Under section 148 he received a notice in which it was cited that the authority had obtained the data of escaping tax. He also obtained the intimation that his matter has been chosen for the faceless assessment and proceedings shall be undertaken in a faceless manner.
Therefore the taxpayer contended the notice that has been issued under section 148 and the intimation for the assessment as per the procedure mentioned under section 144B arguing that the notice issued under section 148 is in breach of the notification on Mar 29, 2022, and Section 151A whereby Faceless Assessment concept was presented.
Read Also:- Madras HC New SCN Shall be Issues U/S 148 of the IT Act That Have not Been Raised Earlier
Tribunal Observation
It was accepted by the Bench that the applicant has furnished his return within the said time and the JAO has issued the notice under section 148 post getting the approval via the Principal Commissioner of Income Tax. It was indeed remarked via the Bench that the respondent has intimated to the applicant that his assessment shall be finished as per the mentioned procedure under section 144B.
In the case of Kankanala Ravindra Reddy a Division Bench of Telangana High Court ruled that the notice under section 148 could not get issued via Jurisdictional AO, the Bench mentioned.
Directing to the decision of Bombay High Court in Hexaware Technology Ltd. Vs. Assistant Commissioner of Income Tax, (2024) 464 ITR 430 (Bombay), to repeat that notice under section 148 after the introduction of the Finance Act, 2021, cannot be issued via Jurisdictional Assessing Officer.
The Bench, every taxpayer is required to file the yearly return showing their total taxable income and the tax obligation, and in the matter that AO does not agree with the shown income he has the authority to re-assess the tax obligation of the taxpayer.
The Bench also noted that without granting the opportunity to the taxpayer re-assessment cannot be produced through issuing notice followed by a personal hearing.
Read Also:- Bombay HC: IT Section 148A(d) Order Cannot Be Passed Without a Valid Sanction Under Section 151
The Bench elaborating on section 151A noted that the purpose of the faceless assessment is to remove the interface between the income tax authority and taxpayer to the extent possible.
Therefore the petition of the taxpayer has been permitted by the High Court and quashed the notices issued via the Jurisdictional Assessing Officer under section 148.
| Case Title | Jatinder Singh Bhangu V/S Union of India & Others |
| Case No.: | CWP-15745-2024 |
| Date | 19.07.2024 |
| Counsel For Appellant | Rishab Singla, Sandeep Goyal, Aakriti, Nitish Bansal and Nazuk Singhal, Peyush Pruthi |
| Counsel For Respondent | Amanpreet Singh |
| Haryana and Punjab High Court | Read Order |