TARUN KUMAR JAKHODIA S/O MURARI LAL vs. OFFICE OF THE INCOME TAX

Facts

The petitioner, Tarun Kumar Jakhodia, challenged a notice dated April 13, 2023, issued under Section 148 of the Income Tax Act, 1961. The respondent is the Income Tax Officer, Ward 7(2), Jaipur. The petitioner contended that the notice was issued by a Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO). The respondent's counsel agreed that one of the grounds raised was covered by a previous judgment of the High Court. The respondent also mentioned that a Special Leave Petition (SLP) had been filed and notice issued in the case of Hexaware Technologies Ltd. (a case relied upon), and sought liberty to revive the notice if the Apex Court interfered with the judgments in the cited cases. The petitioner reserved the right to raise other grounds at an appropriate stage.

Held

The High Court quashed and set aside the notice dated April 13, 2023, issued under Section 148 of the Income Tax Act, 1961. The Court acknowledged that the ground raised by the petitioner, concerning the issuance of the notice by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO), was covered by its own previous judgments in Shree Cement Limited and Sharda Devi Chhajer, which followed the principle laid down in Hexaware Technologies Ltd. The Court granted the petitioner's prayer for the present. However, in view of the pending SLP in the Hexaware Technologies Ltd. case, the Court granted liberty to the Revenue to revive the notice issued under Section 148 if the Apex Court were to interfere with the aforementioned judgments. The Court also stated that any re-assessment order passed pursuant to the quashed notice would also stand quashed and set aside. All rights and contentions of the parties were kept open.

Key Issues

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) is invalid. (Question of law) Contentions: Assessee: The notice dated April 13, 2023, issued under Section 148 of the Income Tax Act, 1961, is bad and invalid because it was issued by a Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO). This contention is supported by the High Court's judgments in Shree Cement Limited Vs. Assistant Commissioner of Income-Tax & Others and Sharda Devi Chhajer Vs. The Income Tax Officer & Another. Revenue: The revenue agreed that the ground raised by the assessee is covered by the High Court's judgment. However, it was stated that an SLP has been filed and notice issued in the case of Hexaware Technologies Ltd. The revenue sought liberty to revive the Section 148 notice if the Apex Court were to interfere with the judgments in Shree Cement Limited, Sharda Devi Chhajer, or Hexaware Technologies Ltd. The revenue did not otherwise contest the invalidity of the notice based on the cited precedents.