HARDEEP SHARMA vs. DCIT/ACIT, CIRCLE, PATIALA

Facts

The petitioners, represented by Mr. Harsh Jain, Advocate, filed a writ petition before the High Court of Punjab and Haryana at Chandigarh. The petition challenged notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated under faceless assessment as envisaged by Section 144B of the Act. The assessment years are not explicitly stated. The respondent-Income Tax Department, represented by Mr. Saurabh Kapoor, Senior Standing Counsel, accepted notice. The High Court noted that the issue was similar to previously decided cases: Jasjit Singh vs. Union of India and others, decided on 19.07.2024, and Jatinder Singh Bhangu vs. Union of India and others, decided on 19.07.2024. The amount in dispute is not stated. The procedural history involves the issuance of notices under Section 148 and subsequent faceless assessment proceedings which are now under challenge.

Held

The High Court held that circulars or instructions issued by the Board cannot override statutory provisions or render them otiose or obsolete. The Court agreed with the view taken by a Coordinate Bench that legislative enactments having financial implications must be followed mandatorily. Exercising powers under Sections 119 and 120 of the Income Tax Act, 1961, as well as Section 144B (7 & 8), authorities cannot usurp legal provisions for their convenience, causing hardship and confusion to assessees. Instructions and circulars can only supplement statutory provisions for their implementation. Consequently, notices issued by the JAO under Section 148 of the Act, 1961, and subsequent proceedings initiated without conducting the assessment in a faceless manner as envisaged under Section 144B, were found to be contrary to the provisions of the Act, 1961. The Court set aside the notices dated 28.02.2023, 16.03.2023, 20.03.2024, 30.03.2023, and 30.03.2023 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 present writ petition was allowed, and the notice dated 28.08.2024 (Annexure P-9) issued by the Jurisdictional Assessing Officer u/s 148 of the Income Tax Act, 1961, and all consequential proceedings were set aside.

Key Issues

1. Whether circulars or instructions issued by the Board can override statutory provisions or make them otiose or obsolete, thereby impacting the legal process and potentially causing hardship and confusion to assessees, as contemplated under Sections 119 and 120 of the Income Tax Act, 1961, and Section 144B(7 & 8)? Assessee's Contention: The assessee, through their counsel, relied on the judgment in Jasjit Singh vs. Union of India and others, which held that instructions by the Board cannot override statutory provisions. The argument is that faceless assessment proceedings initiated without adhering to statutory provisions, potentially due to misinterpretation or misapplication of Board instructions, are invalid. Revenue's Contention: The revenue, represented by Mr. Saurabh Kapoor, Senior Standing Counsel, did not explicitly record any separate contentions beyond accepting notice and acknowledging the similarity of the issue to previous cases. However, the judgment implies the revenue's position was considered in light of the prior rulings.