IMPORTANT POINT
The court established that compliance with the faceless assessment scheme under Section 151A is mandatory for the validity of notices issued under Sections 148 and 148A.

JUDGMENT :

G.S. KULKARNI, J.

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 is filed to challenge a notice dated 25 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 notice under Section 148 of the Act has been issued to the Petitioner in respect of returns filed by the Petitioner-Assessee for the Assessment Year 2017-18.

3. On perusal of the record, it is apparent that the impugned notice dated 30 March, 2024 issued under Section 148A(b) and the order passed thereon under Section 148A(d) dated 25 April, 2024 and the consequent notice dated 25 April, 2024 issued under Section 148 of the Act are issued by the Jurisdictional Assessing Officer (“JAO”) and not by a Faceless Assessing Officer (“FAO”), as 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 faceless mechanism has been introduced. Thus, necessarily by resorting to a procedure under Section 148A the consequent notice is required to be issued under Section 148 of the Act, the Assessing Officer needs to adhere to the provisions of Section 151 read with the said notification. Thus, for a notice under Section 148 of the Act to be validly issued, the Respondent-Revenue is required to comply with the provisions of 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 and Others, (2024) 464 ITR 430 (“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 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 pe