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2025 Supreme(Raj) 323
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI, HON'BLE MR. JUSTICE MUNNURI LAXMAN, JJ
Sharda Devi Chhajer W/o Shri Jatan Lal Chhajer - Appellant
Versus
The Income Tax Officer - Respondent
D.B. Civil Writ Petition No. 11787/2024
Decided On : 19-03-2025
Advocate Appeared:
For the Appellant :Mr. Vikas Balia, Senior Advocate assisted by Mr. Sachin Saraswat & Mr. Priyansh Arora. Mr. Anjay Kothari Mr. Sharad Kothari Mr. Prateek Gattani Mr. Pranjul Mehta Mr. J.S. Saluja Mr. Shafi Mohd. through VC.
For the Respondent: Mr. K.K. Bissa.
The Jurisdictional Assessing Officer lacks authority to issue notices under Section 148 of the Income Tax Act, as the CBDT Scheme mandates that such notices must be issued by the National Faceless Assessment Centre.
Headnote:
(A) Income Tax Act, 1961 - Sections 144B, 147, 148, and 151A - Writ petitions challenging notices issued under Section 148 for income escaping assessment - Notices quashed as they were issued by Jurisdictional Assessing Officer (JAO) instead of National Faceless Assessment Centre (NFAC) as mandated by the CBDT Scheme dated 29.03.2022 - The court emphasized that the Scheme requires automated allocation of cases and eliminates the interface between the income-tax authority and the assessee. (Paras 5, 6, 10, 20)
(B) Jurisdiction - The court held that the JAO does not possess the authority to issue notices under Section 148, as this would undermine the legislative intent behind the faceless assessment regime. (Paras 20, 21)
Facts of the case:
The petitioners challenged the validity of notices issued under Section 148 of the Income Tax Act, arguing they were not in compliance with the CBDT's e-Assessment Scheme, which mandates faceless assessments. (Paras 1, 2)
Findings of Court:
The court found that the notices were invalid as they were issued by the JAO, contrary to the provisions of the Income Tax Act and the CBDT Scheme. (Paras 20, 21)
Issues: The main issue was whether the notices issued by the JAO were valid under the Income Tax Act and the CBDT Scheme. (Paras 5, 6)
Ratio Decidendi: The court reasoned that the legislative intent behind the faceless assessment regime was to eliminate the discretion of tax officers and ensure assessments are conducted in a transparent and efficient manner. (Paras 10, 20)
Result: Writ petitions allowed; impugned notices quashed. (Paras 21)
Key Points: - The Jurisdictional Assessing Officer lacks authority to issue notices under Section 148, as the CBDT Scheme mandates notices must be issued by the National Faceless Assessment Centre (!) (!) (!) . - Notices issued by the Jurisdictional Assessing Officer are invalid and bad in law as they violate the faceless assessment regime and automated allocation mandate (!) (!) (!) . - The legislative intent of Section 151A and the CBDT Scheme is to eliminate the interface between tax authorities and assessee, ensuring transparency and efficiency through technology-driven processes (!) (!) (!) . - An act done contrary to the provisions of the statute is jurisdictional and requires to be quashed, and the person seeking relief is not required to establish prejudice (!) . - The Scheme allows for dynamic jurisdiction and team-based assessment, but issuance of notice under Section 148 is exclusively vested with the National Faceless Assessment Centre (!) (!) . - The phrase "automated allocation" refers to an algorithm for randomized allocation of cases, and cannot be based on risk management criteria or open to manual intervention (!) (!) (!) . - Non-compliance with mandatory procedural requirements under Section 144C constitutes a jurisdictional error, which is incurable and void ab initio (!) . - The Faceless Assessment Scheme applies to both assessment and notice issuance, and cannot be interpreted restrictively to allow manual notice issuance (!) (!) . - Tax statutes must be interpreted strictly, and any interpretation that defeats the legislative purpose of faceless assessment is not permissible (!) (!) . - The Central Government has the power to make schemes under Section 151A to impart greater efficiency and accountability, and such schemes are binding on revenue authorities (!) (!) .
What is the authority to issue notices under Section 148 of the Income Tax Act?
How to ensure compliance with the faceless assessment scheme while issuing notices?
What are the rights of the assessee against notices issued by the Jurisdictional Assessing Officer?
Judgment :
Dr. Pushpendra Singh Bhati, J:
1. The instant Civil Writ Petitions have been preferred claiming, in sum and substance, the following reliefs:
“It is, therefore humbly prayed that Your Lordships may graciously be pleased to accept and allow this writ petition and by an appropriate writ, order or direction:-
i) quash and set aside the notice issued u/s 148 dated 23.03.2024 (Ann.-6) and all other subsequent proceedings because :-
(a) the notice is issued is in contravention of the “e-Assessment of Income Escaping Assessment Scheme, 2022” issued by notification dated 29.03.2022 (Ann.7) by the CBDT, as well as section 144B of the Act of 1961 as such is out of jurisdiction hence ultra-virus to the notification dated 29.03.2022, and section 144B is arbitrary, unfair and unreasoned.
(b) the approval of the specified authority (Ann-5) is also invalid because it is unsigned, hence unjustified, unreasoned, unfair and arbitrary.
(ii) Any other suitable order or direction, which the Hon’ble Court may deem just and proper in the facts and circumstances of the case, may kindly be passed in favor of the Petitioner.”
2. The facts of the lead case, in which all submissions have been made combinedly, are that the petitioners filed their Income- Tax Returns. The respondents issued notices under Section 133(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act of 1961’). The said notices culminated into forwarding of the matters under Section 151 of the Act of 1961 for initiation of the proceedings under Section 148 of the Act of 1961. The approvals were granted by the respondents for issuance of notices under Section 148 of the Act of 1961, and thereafter, the notices were issued under the said provision of law.
2.1. The pertinent issue before this Court is that the Central Board of Direct Taxes (in short, ‘CBDT’), framed a Scheme, namely, “e-Assessment of Income Escaping Assessment Scheme, 2022”, vide Notification No.18 of 2022/S.O. 1466(E) dated 29.03.2022 (hereinafter referred to as ‘Scheme of 2022’). In the said notification, the procedure for assessment, reassessment & re-computation of income under Sections 147 & 148 of the Act of 1961 has been notified.
2.2. The notices which were issued under Sections 147 & 148 of the Act of 1961 were required to comply with the Scheme of 2022 and thus, ought to have been Faceless as enshrined in the CBDT Notification dated 29.03.2022.
2.3. The core question raised by learned counsel for the petitioners is that whether the notices issued by Jurisdictional Assessing Officer (JAO) are to be declared invalid & bad in law, being in contravention of Section 151A of the Act of 1961 read with Notification dated 29.03.2022.
The said notification, for ready reference, reads as under:
“MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 29th March, 2022
S.O. 1466(E).-In exercise of the powers conferred by sub- sections (1) and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:-
1. Short title and commencement.- (1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022.
(2) It shall come into force with effect from the date of its publication in the Official Gazette.
2. Definitions.-(1) In this Scheme, unless the context otherwise requires.-
(a) “Act” means the Income-tax Act, 1961 (43 of 1961);
(b) “automated allocation” means an algorithm for randomised allocations of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources.
(2) Words and expressions used herein and not defined, but denied in the Act, shall have the meaning respectively assigned to them in the Act.
3. Scope of the Scheme.- For the purpose of this Scheme,-
(a) assessment, reassessment and recomputation under section 147 of the Act,
(b) issuance of notice under section 148 of the Act, shall be through automa
