RAGA MOTORS PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX AND OTHERS

Facts

The petitioners, Raga Motors Pvt. Ltd. and others, filed writ petitions challenging notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings. The core of the challenge was that these notices and proceedings were initiated without conducting a faceless assessment as envisaged under Section 144B of the Act. The petitioners argued that the assessment proceedings were contrary to the provisions of the Act. The revenue, represented by the Income Tax Department, accepted notice. The High Court noted that the issues were similar to those decided in previous writ petitions, specifically Jasjit Singh vs. Union of India and others, decided on 29.07.2024, and Jatinder Singh Bhangu vs. Union of India and others, decided on 19.07.2024.

Held

The High Court held that instructions issued by the Board, including those related to faceless assessments, cannot override statutory provisions or render them otiose. Legislative enactments, especially those with financial implications, must be followed strictly and mandatorily. The Court reiterated that powers under Sections 119 and 120 of the Act, as well as Section 144B(7 & 8), cannot be exercised in a manner that usurps legal provisions for the convenience of authorities or causes hardship and confusion to assessees. The Court agreed with the view taken by a Coordinate Bench that circulars and instructions can only supplement statutory provisions and aid in their implementation. Consequently, notices issued by the JAO under Section 148 of the Act, dated 31.08.2024, and consequential proceedings initiated without conducting faceless assessment as per Section 144B, were found to be contrary to the Act and were set aside for want of jurisdiction. The revenue was granted liberty to follow the procedure laid down under the Act if so advised.

Key Issues

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings are valid if they are not conducted through the faceless assessment procedure as mandated by Section 144B of the Act. Assessee's Contention: The assessee argued that the notices and proceedings were contrary to the provisions of the Income Tax Act, 1961, specifically by not adhering to the faceless assessment procedure envisioned under Section 144B. They relied on the decisions of a Coordinate Bench in Jasjit Singh vs. Union of India and others and Jatinder Singh Bhangu vs. Union of India and others. Revenue's Contention: The revenue did not present any arguments against the assessee's contentions. The Senior Standing Counsel accepted notice and stated that the issue was concluded by previous judgments of the High Court.