Facts of the Case

The petitioner, GDR Finance and Leasing Private Limited, was subjected to reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) through issuance of a notice under Section 148 of the Income Tax Act, 1961.

The notice was issued after 29 March 2022, i.e., after the Central Government notified the Faceless Reassessment Scheme, 2022 under Section 151A, mandating that reassessment proceedings, including issuance of notice under Section 148, be conducted through automated allocation and in a faceless manner.

Issues Involved

  1. Whether, after notification of the Faceless Reassessment Scheme, 2022, a Jurisdictional Assessing Officer could validly issue a notice under Section 148.
  2. Whether there existed concurrent jurisdiction between the JAO and the Faceless Assessing Officer.
  3. Whether reassessment proceedings initiated in violation of the mandatory faceless procedure were legally sustainable.

 Petitioner’s Arguments

The petitioner contended that:

  • After the introduction of Sections 144B and 151A, read with the Faceless Reassessment Scheme, 2022, the JAO stood denuded of jurisdiction to issue notices under Section 148.
  • Clause 3(b) of the Scheme expressly mandates issuance of Section 148 notices through automated allocation and in a faceless manner.
  • The impugned notice, having been issued manually by the JAO, was contrary to statutory provisions and therefore void.
  • The issue was no longer res integra and stood covered by decisions of the Bombay, Telangana, Gauhati, and Punjab & Haryana High Courts, particularly Hexaware Technologies Ltd. v. ACIT.

 

Respondent’s Arguments

The Revenue argued that:

  • The Jurisdictional Assessing Officer continued to have authority to issue notices under Section 148.
  • The faceless mechanism applied only to the assessment stage and not to issuance of notice.
  • Administrative instructions and internal guidelines permitted issuance of notice by the JAO.
  • There existed concurrent jurisdiction between the JAO and faceless assessment units.

 Court Order / Findings

The Delhi High Court held that:

  • Section 151A empowers the Central Government to frame a scheme covering both issuance of notice under Section 148 and reassessment proceedings.
  • The Faceless Reassessment Scheme, 2022, notified on 29 March 2022, clearly mandates that issuance of notice under Section 148 shall be through automated allocation and in a faceless manner.
  • There is no concept of concurrent jurisdiction between the Jurisdictional Assessing Officer and the Faceless Assessing Officer once jurisdiction is assigned under the Scheme.
  • Administrative instructions or internal guidelines cannot override statutory provisions or a scheme laid before Parliament.
  • Any reassessment action initiated contrary to the mandatory faceless procedure is void ab initio, irrespective of proof of prejudice.

Accordingly, the Court quashed the impugned notice issued under Section 148 and all consequential proceedings, granting liberty to the Revenue to proceed strictly in accordance with law.

 Important Clarification

The Court clarified that:

  • The faceless reassessment regime is mandatory, not directory.
  • Issuance of notice under Section 148 is an integral part of reassessment and cannot be excluded from the faceless framework.
  • Any action taken by an authority lacking jurisdiction is invalid per se and need not be tested on the anvil of prejudice.

 Link to download the order - https://www.mytaxexpert.co.in/uploads/1770113619_GDRFINANCEANDLEASINGPRIVATELIMITEDVsINCOMETAXOFFICERWARD101NEWDELHI.pdf  

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