DHEERAJ BHATIA vs. INCOME TAX OFFICER AND OTHERS

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CWP/28515/2024HC Punjab & HaryanaPHHC01143715202421 October 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
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What did the High Court hold?

The High Court, following its own prior decisions in Jasjit Singh vs. Union of India and Jatinder Singh Bhangu vs. Union of India, allowed the writ petition. The Court held that circulars or instructions issued by the Board cannot override statutory provisions or render them obsolete. Legislative enactments with financial implications must be strictly followed. The Court found that authorities cannot usurp legal provisions for their convenience, causing hardship to assessees, and that instructions and circulars can only supplement statutory provisions. Consequently, notices issued under Section 148 of the Act and subsequent proceedings initiated without conducting faceless assessments as envisaged under Section 144B of the Act were found to be contrary to the Act. The notices and orders 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 order merged with the final order. No issue was expressly left undecided.

What were the facts?

The petitioner, Dheeraj Bhatia, 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 proceedings. The revenue, represented by the Income Tax Officer and others, accepted notice. Both parties agreed that the substantial issue had been decided by the High Court in previous writ petitions, specifically in Jasjit Singh vs. Union of India and others (decided on 29.07.2024) and Jatinder Singh Bhangu vs. Union of India and others (decided on 19.07.2024). The core of the dispute revolved around the validity of assessment proceedings initiated without adhering to the faceless assessment scheme envisaged under Section 144B of the Act.

What were the issues?

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings are invalid if conducted without adhering to the faceless assessment procedure mandated by Section 144B of the Act, 1961? (Question of law and mixed fact and law, turning on Sections 148 and 144B of the Income Tax Act, 1961). Assessee's Contention: The assessee argued, by relying on the precedents set in Jasjit Singh and Jatinder Singh Bhangu, that notices issued under Section 148 and subsequent proceedings are contrary to the Act if they bypass the faceless assessment procedure under Section 144B. The High Court's previous rulings held that circulars or instructions cannot override statutory provisions and that faceless assessment is a mandatory requirement. Revenue's Contention: The revenue, through its counsel, accepted notice and did not present any distinct arguments, implicitly agreeing that the matter was concluded by the prior judgments of the High Court. The judgment does not record any specific arguments made by the revenue against the assessee's position.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

131 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-28515-2024 (O&M) Date of Decision: 21.10.2024 Dheeraj Bhatia …Petitioner Vs. Income Tax Officer and others

…Respondents CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON’BLE MR. JUSTICE SANJAY VASHISTH Present: Mr. Nikhil Goyal, Advocate and Mr. Rana Gurtej Singh, Advocate for the petitioner.

SANJEEV PRAKASH SHARMA, J.(Oral) 1. Notice of motion. 2. Mr. Saurabh Kapoor, Sr. Standing Counsel and Pridhi Sandhu, Junior Standing Counsel accept notice on behalf of the revenue. 3. Learned counsel for the parties are ad idem that the substantial issue involved in the present petition stands finally examined and concluded by this Court in CWP No.21509 of 2023 titled as Jasjit Singh vs. Union of India and others, decided on 29.07.2024, and by the Coordinate Bench in CWP No.15745 of 2024 titled as Jatinder Singh Bhangu vs. Union of India and others, decided on 19.07.2024. This Court in Jasjit Singh (supra) held as under: “16. We are in agreement with the view taken by the Coordinate Bench and hold that such circular or instructions by the Board could not have been issued to override statutory provisions or to JOYTI RANI 2024.10.22 17:17 I attest to the accuracy and integrity of this document

[2] CWP-28515-2024 (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. JOYTI RANI 2024.10.22 17:17 I attest to the accuracy and integrity of this document

[3] CWP-28515-2024 (O&M) 20. All the writ petitions are allowed. The interim order passed by the Court shall stand merged with the present order.” 4. 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 of the Income Tax Act, dated 31.08.2024 and all consequential proceedings are set aside. 5. All pending applications also stand disposed of accordingly. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH ) JUDGE 21.10.2024 joyti 1. Whether speaking/reasoned? : Yes/No 2. Whether reportable? : Yes/No JOYTI RANI 2024.10.22 17:17 I attest to the accuracy and integrity of this document

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