T.K.S. Builders Pvt. Ltd. vs Income Tax Officer Ward 25(3) New Delhi

Court/Forum: HC

Bench: HON'BLE MR. JUSTICE YASHWANT VARMA, HON'BLE MR. JUSTICE RAVINDER DUDEJA

Order Date: 2024-10-28

Outcome: Assessee

Sections: Section 148, Section 148A, Section 144B, Section 151A

Core Ratio

Notices under Section 148 must be issued through automated allocation and in a faceless manner as per the Faceless Assessment Scheme.

Outcome

The High Court quashed the notices issued by the Jurisdictional Assessing Officer under Section 148, ruling in favor of the assessee, and held that such notices must comply with the Faceless Assessment Scheme.

Favourability

Assessee

Core Issue

The central legal question was whether the Jurisdictional Assessing Officer could issue notices under Section 148 after the introduction of the Faceless Assessment Scheme, which mandates automated allocation and faceless procedures.

Facts of the Case

The case involved multiple writ petitions challenging the validity of reassessment notices issued by Jurisdictional Assessing Officers under Section 148 of the Income-tax Act, 1961, after the introduction of the Faceless Assessment Scheme.

Arguments by Assessee

The assessee argued that the notices issued by the Jurisdictional Assessing Officer were invalid as they did not comply with the Faceless Assessment Scheme, which requires automated allocation and faceless procedures.

Arguments by Revenue

The Revenue contended that the Jurisdictional Assessing Officer had concurrent jurisdiction and that the notices were validly issued under the existing legal framework.

Key Sections & Provisions

Section 148 - Notice for reassessment; Section 148A - Procedure before issuing notice; Section 144B - Faceless assessment; Section 151A - Scheme for faceless assessment.

Ratio Decidendi

The court held that the Faceless Assessment Scheme mandates that notices under Section 148 be issued through automated allocation and in a faceless manner. The Jurisdictional Assessing Officer does not have the authority to issue such notices independently.

Court Reasoning & Analysis

• The Faceless Assessment Scheme requires that notices under Section 148 be issued through automated allocation.
• The Jurisdictional Assessing Officer does not have the authority to issue such notices independently.
• The scheme aims to eliminate bias and ensure transparency through faceless procedures.
• The court followed precedents set by other High Courts, which held similar views on the issue.

Key Observations

• The Faceless Assessment Scheme is mandatory and must be followed for issuing notices under Section 148.
• The Jurisdictional Assessing Officer's role is limited under the scheme.

Case Laws Cited

• Hexaware Technologies Ltd. v. Assistant Commissioner of Income Tax
• Kankanala Ravindra Reddy vs. Income-tax Officer

Related Issues

• Validity of reassessment notices under the Faceless Assessment Scheme
• Concurrent jurisdiction of JAO and NFAC
• Role of risk management strategy in notice issuance

Important Passages

• The scheme clearly lays down that the issuance of notice under section 148 of the Act has to be through automated allocation in accordance with the risk management strategy.

Not Decided / Remanded

The court reserved the right of the writ petitioners to address all other objections to the commencement of reassessment in independent and appropriate proceedings.

Practical Takeaway

Practitioners should ensure that notices under Section 148 comply with the Faceless Assessment Scheme, which mandates automated allocation and faceless procedures.

Supporting Judgments

• Hexaware Technologies Limited vs Assistant Commissioner of Income Tax (HC) — Reassessment notices issued after 1st April 2021 must comply with the amended provisions of the Income Tax Act, 1961, and cannot rely on the erstwhile provision
• Manju Somani vs Income Tax Officer Ward-70(1) & Ors. (HC) — A reassessment notice issued post-01 April 2021 must comply with the time limits prescribed by the pre-amendment provisions of Section 149 if the assessment yea
• Manisha Agarwal vs Income Tax Officer, Ward 59(1), Delhi & Ors. (HC) — A reassessment notice issued beyond the surviving time limit under the Income Tax Act read with TOLA is time-barred.
• Bhagwati Ferro Metal Pvt. Ltd. vs Assistant Commissioner of Income Tax (HC) — A notice under Section 148 must be issued by the Faceless Assessing Officer, and failure to do so is a fatal defect.
• Chhugamal Rajpal vs S. P. Chaliha & Ors. (SC) — A notice under Section 148 cannot be issued without the Income-tax Officer having prima facie grounds and the Commissioner's satisfaction based on recorded reas
• Nuclear Power Corporation of India Ltd. vs Deputy Commissioner of Income-tax (HC) — Reopening of assessment based on a change of opinion without new tangible material is not justified.

Contrary Judgments

• Union of India & Ors. vs Rajeev Bansal (SC) — Reassessment notices issued under the old regime are deemed valid under the new regime due to the application of TOLA and judicial directions.
• Union of India & Ors. vs Rajeev Bansal (SC) — Reassessment notices issued after 1 April 2021 should be treated as issued under the new regime, with TOLA extending the time limits for compliance.
• Union of India & Ors. vs Ashish Agarwal (SC) — Reassessment notices issued under the unamended Section 148 post-01.04.2021 are deemed valid under Section 148A of the Finance Act, 2021.
• Pawan Sachdeva vs Income-Tax Officer, Ward 19(3), Delhi & Anr. (HC) — Issuance of notice within the limitation period is sufficient for jurisdiction, even if the service occurs later or with errors.
• Arya Roadways Company Pvt. Ltd. vs I.T.O., Ward-12(1), Kolkata (ITAT) — The case was remanded to ensure a fair opportunity for the assessee to substantiate its claims regarding the expenditure.
• GKN Driveshafts (India) Ltd. vs Income Tax Officer and Ors. (SC) — When a notice under Section 148 is issued, the noticee should file a return and may seek reasons, which the assessing officer must provide, allowing the noticee