SAI VINAYAKKA EDUCATION SOCIETY vs. ASSISTANT COMMISSIONER OF INCOME TAX

Facts

The petitioner, KKA Education Society, filed a writ petition challenging a notice dated 16.03.2024 issued by the Jurisdictional Assessing Officer under Section 148 of the Income Tax Act, 1961, and all consequential proceedings. The petitioner argued that the assessment proceedings were initiated without conducting a faceless assessment as envisaged by Section 144B of the Act. The revenue, represented by the Income Tax Department, accepted notice. The High Court noted that similar issues had been decided by coordinate benches in previous writ petitions, specifically citing 'Jasjit Singh vs. Union of India and others' and 'Jatinder Singh Bhangu vs. Union of India and others'. The Court was informed that both counsel were in agreement regarding the stands finally examined and concluded in these prior judgments.

Held

The High Court held that instructions by the Board could not override statutory provisions or be issued to make them obsolete. Legislative enactments having financial implications are required to be mandatorily followed. By exercising powers under Sections 119 and 120 of the Act, as well as Section 144B (7 & 8), authorities cannot be allowed to usurp legal provisions to their own satisfaction and convenience, causing hardship and confusion to assessees. Instructions and circulars can only supplement statutory provisions and aid in their implementation. In view of the law laid down by a coordinate bench in 'Jasjit Singh vs. Union of India and others' (supra), notices issued by the JAO under Section 148 of the Act, 1961, and the proceedings initiated thereafter without conducting faceless assessment as envisaged under Section 144B, were found to be contrary to the provisions of the Act. Consequently, the notices dated 28.02.2023, 16.03.2023, 20.03.2023, 30.03.2023, and the order dated 30.03.2024 were set aside for want of jurisdiction. The revenue was granted liberty to follow the procedure as laid down under the Act, 1961, and proceed accordingly if so advised. The writ petition was allowed, and all pending applications stood disposed of.

Key Issues

1. Whether the faceless assessment procedure, as envisaged under Section 144B of the Income Tax Act, 1961, is mandatory for assessment proceedings initiated under Section 148 of the Act, and if failure to adhere to this procedure vitiates the assessment notice and subsequent proceedings. Assessee's Contention: The assessee contended that the assessment proceedings were initiated without conducting a faceless assessment as mandated by Section 144B of the Act, rendering the notice and subsequent actions invalid. Revenue's Contention: The revenue's counsel accepted notice and did not present any arguments against the assessee's position, indicating agreement with the prior judgments on the issue.