PRADEEP KUMAR GARG vs. INCOME TAX OFFICER

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CWP/24807/2024HC Punjab & HaryanaPHHC01129540202419 December 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH7 pages
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What did the High Court hold?

The High Court held that the notice dated 18.06.2024, issued by the JAO under Section 143(2) of the Act, was without jurisdiction. The Court reasoned that Section 144B(1) mandates that assessment, reassessment, or recomputation under Section 143(2) or Section 147 must be made in a faceless manner. Specifically, a notice under Section 143(2) must be served through the National Faceless Assessment Centre (NFAC). The Court found it an admitted position that no notice under Section 148 was issued for AY 2023-24, and notices under Section 148 were issued for AYs 2020-21, 2021-22, and 2022-23. Therefore, the JAO would not have jurisdiction to issue a notice under Section 143(2) for AY 2023-24; only the NFAC, as per Section 144B(1)(iii), has the power to initiate proceedings under Section 143(2). The Court also referred to its previous decision in Jasjit Singh, which held that circulars cannot override statutory provisions. The Court quashed the notice and set aside the proceedings. The revenue was granted liberty to follow the procedure laid down under the Act if so advised. The writ petition was allowed.

What were the facts?

The petitioner, Pradeep Kumar Garg, filed his Income Tax Return for Assessment Year (AY) 2023-24. The case was to be assessed by the National Faceless Assessment Centre (NFAC) under Section 144B of the Income Tax Act, 1961. However, a notice under Section 143(2) of the Act for AY 2023-24 was issued by the Jurisdictional Assessing Officer (JAO), ITO Ward Sunam. The petitioner objected to the JAO's jurisdiction, citing CBDT's Guidelines for compulsory selection of returns for complete scrutiny. The JAO rejected these objections, relying on the Guidelines and stating the notice was issued after proper administrative approval. The petitioner argued that the notice was issued without jurisdiction, as per the CBDT Circular dated 03.05.2024, and that only the NFAC could issue such notices.

What were the issues?

1. Whether the notice issued by the Jurisdictional Assessing Officer (JAO) under Section 143(2) of the Income Tax Act, 1961, for Assessment Year (AY) 2023-24, is without jurisdiction, violating the faceless assessment scheme and CBDT Guidelines. Assessee's Contentions: - The petitioner argued that as per Section 144B(1)(iii) of the Act and the CBDT Circular dated 03.05.2024, notices under Section 143(2) must be issued through the National Faceless Assessment Centre (NFAC). - The JAO's notice was issued without jurisdiction, rendering it bad in law. - The petitioner relied on the judgment in Jasjit Singh vs. Union of India. Revenue's Contentions: - The revenue contended that the petitioner's return for AY 2023-24 fell within the jurisdiction of the concerned ITO, Ward Sunam, who issued the notice. - The revenue argued that the notice was issued under Section 143(2) in accordance with the CBDT Guidelines for compulsory selection of returns for complete scrutiny for FY 2024-25. - The revenue submitted that the petitioner had not filed returns in response to notices under Section 148 for AYs 2020-21, 2021-22, and 2022-23, and therefore, the case for AY 2023-24 would fall under the conditions for issuance of notice under Section 143(2).

Which sections of the Income-tax Act were involved?

Section 143(2),Section 144B,Section 148,Section 119,Section 120

AI-generated summary — verify with the full judgment below

CWP-24807-202 103+208 IN TH PRADEEP KU INCOME TA CORAM: H

H Present: M

M M M f SANJEEV P

CM-20488-CW

A petitioner alo exemption fro exceptions.

R CWP-24807-2 1. Learned 31.12.2 24 (O&M) Page 1 of 7 HE HIGH COURT OF PUNJA CHANDIGAR

UMAR GARG Vs. AX OFFICER **** HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN **** Ms. Radhika Suri, Sr. Advocate w Mr. Prateek Gupta, Advocate Mr. Abhinav Narang, Advocate Ms. Parnika Singla, Advocate for the petitioner. Mr. Saurabh Kapoor, Sr. Standin Ms. Pridhi Sandhu, Jr. Standing C Ms. Muskaan Gupta, Advocate for the respondent/Revenue. **** RAKASH SHARMA, J.(Oral) WP-2024 Application for placing on re ong with documents Annexur om filing certified copies thereo Registry to place the same at app 2024 (O&M) d counsel for the petitioner su 2024, the case may be taken up fo AB AND HARYANA AT RH CM-20488-CWP-2024 in/and CWP-24807-2024 (O&M) Date of Decision: 19.12.2024 . . . . Petitioner . . . . Respondent NJEEV PRAKASH SHARMA NJAY VASHISTH with ng Counsel with Counsel ) ecord rejoinder on behalf of re P-7 to P-12 and seeking of is allowed, subject to all just propriate place. ubmits that as the last date is for arguments.

d ) 4 r t f g t s MOHIT GOYAL 2024.12.19 17:16 I attest to the accuracy and integrity of this document

CWP-24807-202 2. We, the 3. The su that the require (for sho 1961 (f 4. Learned under Jurisdic said no by the N without assume were ho CBDT’ scrutiny 5. Learned dated 0 guidelin under s of the p Act for the pro 24 (O&M) Page 2 of 7 erefore, have heard both the coun ubmissions of learned counsel a e petitioner had filed return f d to be assessed by the Nation ort ‘NFAC’) in terms of Section for short ‘the Act’). d counsel submits that a notic section 143(2) of the Act ctional Assessing Officer (JAO), otice was to be issued in terms o NFAC, and therefore, she submi t jurisdiction. The petitioner ed by the JAO vide his objectio owever rejected by the JAO pla ’s Guidelines for compulsory se y during FY: 2024-25 vide instru d counsel for the petitioner has 03.05.2024, and submits that as nes, the cases could be taken on section 148 of the Act for compu petitioner, there was no notice i r the AY: 2023-24, the responde visions of the Circular dated 03 nsel finally on the case. appearing for the petitioner are for the AY: 2023-24 which is nal Faceless Assessment Centre n 144B of the Income Tax Act, ce was issued to the petitioner for the AY:2023-24 by the , ITO Ward Sunam, whereas the f section 144B(1)(iii) of the Act its that the impugned notice was objected to the jurisdiction ons dated 16.08.2024. The same cing reliance on para 4(i) of the election of returns for complete uctions dated 03.05.2024. invited attention to the Circular per clause 2(4) of the aforesaid ly where there is a notice issued ulsory scrutiny. Since in the case issued under section 148 of the ent’s action was clearly beyond .05.2024. She therefore submits

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CWP-24807-202 that the circular in law. 6. She als of 2023 on 29.0 7. Per con the ITR jurisdic under jurisdic of retur 8. The gu as per section the Act conduc return i section 9. Learned filed re to him 2022-2 24 (O&M) Page 3 of 7 e case of the petitioner would f r, and the assumption of jurisdic

o relies on the judgment passed 3 titled as Jasjit Singh vs. Unio 07.2024. ntra, learned counsel appearing R filed by the petitioner for ction of respondent/ITO, Ward section 143(2) of the Act, a ction in terms of the CBDT Guid rns for complete scrutiny during idelines were circulated vide ins para 2(4)(i) of these guideline 143(2) of the Act in a case wh t has been issued pursuant to se cted on or after 1st day of Apr is either furnished or not furnish 148 of the Act. d counsel for the Revenue subm eturns in response to notice unde on 30.03.2024 with respect t 3. In view thereto, the case of fall within the scope of the said tion by the JAO is therefore bad by this Court in CWP No.21509 on of India and others, decided for the respondent submits that AY: 2023-24 falls within the Sunam, who has issued notice and the concerned officer had delines for compulsory selection FY: 2024-25. structions dated 03.05.2024, and s, notice shall be issued under here notice under section 148 of earch and seizure/survey actions ril, 2021, and also cases where hed in response to notice under mits that the petitioner had not er section 148 of the Act issued o AYs: 2020-21, 2021-22 and the petitioner even for the AY:

d d 9 d t e e d n d r f s e r t d d : MOHIT GOYAL 2024.12.19 17:16 I attest to the accuracy and integrity of this document

CWP-24807-202 2023-24 and the 10. The im taking of Inco that the jurisdic 11. We ha provisio c a s s r m th s s n F to 12. In view assessm 24 (O&M) Page 4 of 7 4 would fall under the conditio e issuance of notice under section mpugned notice was issued by proper administrative approval ome Tax vide order dated 14.06 e impugned notice cannot be sa ction. ave carefully considered the ons of law. Section 144B(1) of th “144B(1) Notwithstanding a contained in any other provis assessment, reassessment or reco section (3) of section 143 or unde section 147, as the case may be, w referred to in sub-section (2), shal manner as per the following proced (i) xxx (ii) xxx iii) a notice shall be served o he National Faceless Assessmen section (2) of section 143 or un section 142 and the assessee may f notice within the date specified t Faceless Assessment Centre which o the assessment unit;”

w of above, it is apparent that the ment under section 144B would ns of the aforesaid instructions, n 143(2) of the Act is as per law. y the JAO on 18.06.2024 after of the Principal Commissioner .2024, and therefore he submits aid to have been issued without submissions and perused the he Act provides as under: anything to the contrary sion of this Act, the omputation under sub- er section 144 or under with respect to the cases ll be made in a faceless dure, namely:- on the assessee, through nt Centre, under sub- nder sub-section (1) of file his response to such therein, to the National shall forward the same e notice under section 143(2) for d be issued through the NFAC,

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CWP-24807-202 and the specifie 13. After t in the A purpose circums concern issuanc 14. The ci only be CBDT the JAO 15. On pe apparen up, and notice u year. It that no and 202 the JA 143(2) 144B(1 143(2) 24 (O&M) Page 5 of 7 e assessee would file a response ed therein. the Faceless Assessment Scheme Act through new regime, the juri e of issue of notice under sectio stances as provided under sec ned Principal Commissioner o ce of notice. ircumstances as mentioned in s e where a notice under section 1 Guidelines with respect to the O would arise only in terms there erusal of para 2(4)(i) of the C nt that the proceedings for scru d notice can be issued under sec under section 148 has been issue t is an admitted position from th tice under section 148 was issu 22-23, and was not issued for th O would not have jurisdiction of the Act, and it would be o 1)(iii) to have jurisdiction to ini of the Act. e to such notice within the date e was introduced by amendment isdiction has been ceased for the on 148, and it is only in special ction 144B(7) and (8) that the of Income Tax may direct for section 144B(7) and (8) would 48 has already been issued. The power of issuance of notice by eto. Circular dated 03.05.2024, it is utiny by the JAO can be picked ction 143(2) only in cases where ed for that particular assessment he reply filed by the respondent ued for AYs: 2020-21, 2021-22 e AY: 2023-24. In view thereto, n to issue notice under section only the NFAC as per section itiate proceedings under section

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CWP-24807-202 16. The no therefor the con jurisdic 17. In Jasj C in o o im m S 1 th c le o is p o s h C S th e fo a 24 (O&M) Page 6 of 7 otice dated 18.06.2024 issued un re found to be without jurisdictio ncerned Principal Commissioner ction to the JAO. jit Singh (supra), we have held a “16. We are in agreement wi Coordinate Bench and hold th nstructions by the Board could n override statutory provisions or t obsolete. Legislative enactmen mplications are required to be mandatorily. By exercising the Sections 119 and 120 of the Act, 1 144B (7 & 8), the authorities cann he legal provisions to their convenience causing hardship to eaves confusion in the minds of opinion of this Court, instructions ssued only for the purpose of supp provisions and for their implementa 17. In view of the aforesaid occasion to distinguish or take suggested by the learned counsel fo has already been held by the Coord 18. Keeping in view the Coordinate Bench (supra), notices i Section 148 of the Act, 1961 and th hereafter without conducting the envisaged under Section 144B of th found to be contrary to the provisio accordingly notices dated 28 nder section 143(2) of the Act is on. Merely taking approval from would not be sufficient to grant as under: ith the view taken by the hat such circular or not have been issued to to make them otiose or nts having financial followed strictly and powers contained in 1961 as well as Section not be allowed to usurp own satisfaction and the assessees. It also f the taxpayers. In the s and circulars can be plementing the statutory ation. d discussion, there is no e a different view as or the revenue from what dinate Bench. law laid down by the issued by the JAO under he proceedings initiated faceless assessment as he Act, 1961, have been ons of the Act, 1961 and 8.02.2023, 16.03.2023,

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CWP-24807-202 2 a l 1 o p 18. In view 18.06.2 initiated Accord 19. Writ P 20. All pen

December 19, Mohit goyal 1. Whethe 2. Whethe 24 (O&M) Page 7 of 7 20.03.2024 and 30.03.2023 and o are set aside for want of jurisdiction 19. The respondents-revenue iberty to follow the procedure as la 1961 and proceed accordingly, if so 20. All the writ petitions ar order passed by the Court shall present order.”

w thereto, the petition deserves 2024 issued under section 143( d by the JAO cannot be he dingly, the same quashed and set etition stands allowed according nding applications also stand dis

(SANJ 2024 r speaking/reasoned?

Y r reportable?

Y order dated 30.03.2023, n. e would be, however, at aid down under the Act, o advised. re allowed. The interim stand merged with the to be allowed. The notice dated (2) of the Act and proceedings eld to be sustainable in law. aside. Consequence to follow. gly. sposed of. JEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH) JUDGE Yes/No Yes/No

d s . MOHIT GOYAL 2024.12.19 17:16 I attest to the accuracy and integrity of this document

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