ASHOK KUMAR HUF vs. PR COMMISSIONER OF INCOME TAX PATIALA AND ANOTHER

Facts

The petitioner, Ashok Kumar HUF, filed a writ petition before the High Court of Punjab and Haryana challenging notices issued under Section 148 of the Income Tax Act, 1961, and consequential assessment proceedings. The assessment years are not explicitly stated but the notices challenged are dated between February 28, 2023, and March 30, 2023. The revenue is represented by the Principal Commissioner of Income Tax, Patiala. The High Court noted that similar issues were decided in previous writ petitions, specifically Jasjit Singh vs. Union of India and others and Jatinder Singh Bhangu vs. Union of India and others, both decided on July 9, 2024. The core of the dispute revolves around the validity of faceless assessment proceedings initiated without proper adherence to statutory provisions.

Held

The High Court held that notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated without conducting the assessment as envisaged under Section 144B of the Act, 1961, are contrary to the provisions of the Act. The Court relied on its previous decisions in Jasjit Singh vs. Union of India and others and Jatinder Singh Bhangu vs. Union of India and others. The reasoning was that administrative instructions or circulars issued by the Board cannot override statutory provisions or make them obsolete. The authorities cannot usurp legal provisions for their own convenience or satisfaction, causing hardship and confusion to taxpayers. Instructions can only supplement statutory provisions for their implementation. Consequently, the notices dated February 28, 2023, March 20, 2023, March 23, 2023, March 28, 2023, March 30, 2023, and the order dated March 30, 2023, were set aside for want of jurisdiction. The revenue was granted liberty to follow the procedure laid down under the Act, 1961, if so advised. The writ petition was allowed, and the interim order stood merged 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 without conducting the assessment as envisaged under Section 144B of the Act, 1961, are valid and have jurisdiction, turning on the interpretation of Sections 148, 144B, 119, and 120 of the Income Tax Act, 1961. Assessee's Contention: The assessee implicitly argues that the notices and proceedings are invalid due to procedural irregularities, specifically the failure to conduct assessments under Section 144B and the potential conflict between administrative instructions and statutory provisions. Revenue's Contention: The revenue, through its counsel, accepted notice and did not present arguments against the petitioner's case, implicitly conceding to the points raised by the petitioner and the precedents cited. The judgment notes that the revenue's counsel was ad idem with the petitioner's counsel on the issue being finally examined and concluded by the court.