SAI VINAYAKKA EDUCATION SOCIETY vs. ASSISTANT COMMISSIONER OF INCOME TAX EXEMPTION

Facts

The petitioners, Sai Vinayak Education Society, challenged notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings. The revenue department issued these notices and initiated faceless assessments under Section 144B of the Act. The petitioners argued that these actions were contrary to the provisions of the Act. The High Court of Punjab and Haryana at Chandigarh considered the matter. The judgment refers to previous decisions in CWP No. 1509 of 2023 (Jasjit Singh vs. Union of India) and CWP No. 15745 of 2024 (Jatinder Singh Bhangu vs. Union of India), which dealt with similar issues regarding the validity of notices and faceless assessment procedures.

Held

The High Court held that instructions issued by the Joint Assessment Officer (JAO) under Section 148 of the Income Tax Act, 1961, and the subsequent faceless assessment proceedings, as envisaged under Section 144B of the Act, were contrary to the provisions of the Act. The Court agreed with the view taken by a Coordinate Bench, stating that circulars or instructions by the Board cannot override statutory provisions or render them obsolete. Legislative enactments with financial implications must be strictly followed. The authorities cannot exercise powers to their own satisfaction or convenience, causing hardship to assessees. Consequently, the notices dated 28.02.2023, 16.03.2023, 20.03.2024, and 30.03.2023, along with the order dated 30.03.2023, 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 interim orders were to merge with the final order.

Key Issues

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, and subsequent faceless assessment proceedings initiated under Section 144B of the Act, were valid when found to be contrary to the provisions of the Act. (Question of law and fact, concerning Sections 148 and 144B of the Income Tax Act, 1961). Assessee's Contention: The notices and proceedings were contrary to the provisions of the Act. The assessee relied on the decisions in Jasjit Singh vs. Union of India and Jatinder Singh Bhangu vs. Union of India, which held that instructions by the Board could not override statutory provisions and that authorities cannot exercise powers to their own satisfaction or convenience, causing hardship and confusion to taxpayers. Revenue's Contention: The revenue's counsel accepted notice and did not present any arguments against the assessee's position, indicating agreement with the view taken by the Coordinate Bench in the cited cases.