SUNIL KUMAR vs. PR CHIEF COMMISSIONER OF INCOME TAX NWR, AYA

Facts

The petitioners, Sunil Kumar and others, challenged notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated under the faceless assessment scheme. The challenge was based on the contention that these proceedings were initiated without jurisdiction and were contrary to the provisions of the Act and relevant circulars. The revenue, represented by the Chief Commissioner of Income Tax, NWR, and others, accepted notice. The High Court noted that similar issues had been decided by coordinate benches in previous writ petitions, specifically Jasjit Singh vs. Union of India and Jatinder Singh Bhangu vs. Union of India, which dealt with the validity of faceless assessment proceedings and the overriding effect of statutory provisions over administrative instructions.

Held

The High Court held that notices issued under Section 148 of the Income Tax Act, 1961, and subsequent faceless assessment proceedings initiated without conducting the assessment as envisaged by Section 144B of the Act, were found to be contrary to the provisions of the Act. The Court agreed with the view taken by coordinate benches, stating that administrative instructions or circulars cannot override statutory provisions or be issued to make them otiose. The Court emphasized that legislative enactments with financial implications must be followed mandatorily. Exercising powers under Sections 119 and 120 of the Act, authorities cannot usurp legal provisions for their convenience, causing hardship and confusion. Instructions can only supplement statutory provisions and aid in their implementation. Consequently, the notices dated 10.04.2023 (Annexure P-6), and other consequential proceedings were set aside for want of jurisdiction. The revenue was granted liberty to follow the procedure laid down under the Act if so advised. The writ petition was allowed.

Key Issues

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, and subsequent faceless assessment proceedings initiated without conducting the assessment in accordance with the provisions of the Act, are valid and have jurisdiction. Assessee's contention: The assessee argued that administrative instructions and circulars, including those related to faceless assessment, cannot override statutory provisions or make them obsolete. They contended that authorities cannot usurp legal provisions for their convenience, causing hardship and confusion to assessees. The assessee relied on the principles laid down in previous judgments by coordinate benches. Revenue's contention: The revenue's counsel accepted notice and did not present any arguments against the assessee's position, implicitly agreeing with the outcome of previous similar cases.