ROCKMAN INDUSTRIES LIMITED LTD vs. CHIEF COMMISSIONER OF INCOME TAX AMRITSAR AND OTHERS

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CWP/21962/2024HC Punjab & HaryanaPHHC01116440202403 September 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
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What did the High Court hold?

The High Court held that circulars or instructions issued by the Income Tax Board cannot override statutory provisions or render them otiose. Legislative enactments with financial implications must be strictly followed. The court affirmed that authorities cannot use powers under Sections 119 and 120, read with Section 144B(7) & (8), to usurp legal provisions for their convenience, causing hardship and confusion to assessees. Instructions and circulars are meant to supplement, not supersede, statutory provisions. Consequently, notices issued by the JAO under Section 148 and subsequent proceedings initiated without conducting faceless assessments under Section 144B were found to be contrary to the Act. The court set aside the notices dated 28.02.2023, 16.03.2023, 20.03.2024, and 30.03.2023, and the order dated 30.03.2023, for want of jurisdiction. The revenue was granted liberty to follow the prescribed procedure. The specific notice dated 29.08.2024 issued to the petitioner and consequential proceedings were also set aside. The ratio is that faceless assessment procedures mandated by Section 144B are a jurisdictional prerequisite for notices under Section 148 and subsequent proceedings.

What were the facts?

The petitioner, Rockman Industries Ltd., filed a writ petition before the Punjab and Haryana High Court challenging notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, and subsequent proceedings. The revenue, represented by the Chief Commissioner of Income Tax, Amritsar, and others, accepted notice. The High Court noted that the issue involved in the present petition was identical to that decided in previous cases, specifically CWP No. 21509 of 2023 (Jasjit Singh vs. Union of India and others) and CWP No. 15745 of 2024 (Jatinder Singh Bhangu vs. Union of India and others). The court was informed that the parties were in agreement regarding the substantial issue. The judgment refers to specific notices dated 28.02.2023, 16.03.2023, 20.03.2024, and 30.03.2023, and an order dated 30.03.2023, which were set aside in the cited cases.

What were the issues?

1. Whether notices issued by the JAO under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated without conducting a faceless assessment as envisaged under Section 144B of the Act, are contrary to the provisions of the Act, 1961. The assessee (petitioner) contended that the notices and proceedings were invalid because they bypassed the mandatory faceless assessment procedure stipulated under Section 144B. The revenue, while not explicitly recorded as making a separate argument, implicitly defended the notices. The court's decision was based on its prior rulings in Jasjit Singh and Jatinder Singh Bhangu, which addressed the validity of faceless assessment procedures. The core of the dispute revolved around whether circulars or instructions issued by the Board could override statutory provisions and whether the faceless assessment mechanism was a mandatory prerequisite for such notices and proceedings.

Which sections of the Income-tax Act were involved?

Section 119,Section 120,Section 144B,Section 148

AI-generated summary — verify with the full judgment below

110

I Rockman Indu

Chief Commi CORAM: H

Present M

SANJEEV P 1.

N 2.

M behalf of resp accepts notice 3.

L issue involved by this Court India and oth CWP No.1574 and others, de under: “ B c IN THE HIGH COURT OF PUN AT CHANDIGA C D ustries Ltd.

Vs. issioner of Income Tax, Amritsar

HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN Mr. Alok Mittal, Advocate for th ***

RAKASH SHARMA, J.(Oral) Notice of motion. Ms. Urvashi Dhugga, Sr. Stand pondent No.1 while Mr. Ranvij e on behalf of respondent Nos.2 a Learned counsel for the parties d in the present petition stands f in CWP No.21509 of 2023 title hers, decided on 29.07.2024, an 745 of 2024 titled as Jatinder Sin ecided on 19.07.2024. This Cour “16. We are in agreement with th Bench and hold that such circul could not have been issued to ove NJAB AND HARYANA ARH CWP- 21962-2024 (O&M) Date of Decision: 03.09.2024

…Petitioner r and others …Respondents NJEEV PRAKASH SHARMA NJAY VASHISTH he petitioner.

) ding Counsel accepts notice on ay Singh, Sr. Standing Counsel and 3. are ad idem that the substantial finally examined and concluded ed as Jasjit Singh vs. Union of nd by the Coordinate Bench in ngh Bhangu vs. Union of India rt in Jasjit Singh (supra) held as he view taken by the Coordinate lar or instructions by the Board erride statutory provisions or to

n l l d f n a s e d

RAJESH KUMAR 2024.09.04 09:39 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh.

[2]

CWP- 21962-2024 (O&M)

make them otiose or obsolete. Legislative enactments having financial implications are required to be followed strictly and mandatorily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 & 8), the authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees. It also leaves confusion in the minds of the taxpayers. In the opinion of this Court, instructions and circulars can be issued only for the purpose of supplementing the statutory provisions and for their implementation. 17. In view of the aforesaid discussion, there is no occasion to distinguish or take a different view as suggested by the learned counsel for the revenue from what has already been held by the Coordinate Bench. 18. Keeping in view the law laid down by the Coordinate Bench (supra), notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961 and accordingly notices dated 28.02.2023, 16.03.2023, 20.03.2024 and 30.03.2023 and order dated 30.03.2023, are set aside for want of jurisdiction. 19. The respondents-revenue would be, however, at liberty to follow the procedure as laid down under the Act, 1961 and proceed accordingly, if so advised. RAJESH KUMAR 2024.09.04 09:39 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh.

[3]

CWP- 21962-2024 (O&M)

20.

All the writ petitions are allowed. The interim order passed by the Court shall stand merged with the present order.”

Keeping in view above, we allow this Writ Petition in the aforesaid terms. The observations and order passed above shall apply mutatis mutandis to the present case. Accordingly, notice issued by the Jurisdictional Assessing Officer under Section 148 dated 29.08.2024 and all consequential proceedings are set aside. 5.

All pending applications also stand disposed of accordingly.

(SANJEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH)

JUDGE 03.09.2024 rajesh 1. Whether speaking/reasoned? : Yes/No 2. Whether reportable?

: Yes/No

RAJESH KUMAR 2024.09.04 09:39 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh.

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