MARK GULATI vs. DY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE KARNAL

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CWP/23830/2024HC Punjab & HaryanaPHHC01125201202418 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 notices issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961, and the subsequent proceedings initiated under the faceless assessment scheme as envisaged by Section 144B of the Act, were found to be contrary to the provisions of the Act. The Court relied on its previous decisions in Jasjit Singh vs. Union of India and Jatinder Singh Bhangu vs. Union of India. The reasoning was that administrative instructions and circulars, including those related to faceless assessment, cannot override statutory provisions or be issued in a manner that makes them otiose. Legislative enactments with financial implications must be followed mandatorily. The Court observed that powers contained in Sections 119 and 120 of the Act, as well as Section 144B (7 & 8), do not allow authorities to usurp legal provisions for their convenience, causing hardship and confusion to assessees. Instructions and circulars can only supplement statutory provisions and aid in their implementation. Consequently, the notices dated 28.02.2023, 16.03.2023, 20.03.2024, 30.03.2023, and 30.03.2023 were set aside for want of jurisdiction. The revenue was granted liberty to follow the procedure laid down under the Act and proceed accordingly, if advised. The writ petition was allowed, and all pending applications were disposed of.

What were the facts?

The petitioners, Ess Kay, filed a writ petition before the High Court of Punjab and Haryana challenging notices issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated under faceless assessment envisaged by Section 144B. The assessment years are not explicitly stated. The petition was filed in CWP No. 23830 of 2024. The High Court referred to two previous decisions: Jasjit Singh vs. Union of India and others, decided on 19.07.2024, and Jatinder Singh Bhangu vs. Union of India and others, decided on 19.07.2024. The revenue was represented by Ms. Gauri Neo Rampal, Senior Standing Counsel. The court noted that both counsel were in agreement that the issue had been concluded by the previous judgments.

What were the issues?

1. Whether notices issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961, and subsequent faceless assessment proceedings under Section 144B are valid when they are found to be contrary to the provisions of the Act and circulars issued by the Board, particularly concerning the overriding nature of statutory provisions over administrative instructions. (Mixed question of law and fact, turning on Sections 148 and 144B of the Income Tax Act, 1961). Assessee's Contention: The assessee implicitly argued that the notices and proceedings were invalid, relying on the precedent set in Jasjit Singh and Jatinder Singh Bhangu. The core of their argument, as reflected in the court's reasoning, was that administrative instructions and circulars cannot override statutory provisions or render them obsolete, and that legislative enactments with financial implications must be followed mandatorily. They contended that faceless assessment procedures, if not implemented strictly in accordance with the Act, could lead to usurpation of legal provisions and hardship to assessees. Revenue's Contention: The revenue's counsel, Ms. Gauri Neo Rampal, accepted notice and was in agreement with the assessee's counsel that the issue was concluded by previous judgments. This implies the revenue did not contest the findings of the coordinate benches in similar matters.

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

122 IN TH MARK GULA

DEPUTY CO KARNAL

CORAM: H

Present: M M

M f

* SANJEEV PR

1.

N 2. M on behalf of th 3. B present petitio No.21509 of decided on 29 2024 titled a decided on 19

C i o o i HE HIGH COURT OF PUNJA CHANDIGAR

CWP-2 Date of ATI

V OMMISSIONER OF INCOME

HON'BLE MR. JUSTICE SANJ HON'BLE MR. JUSTICE SANJ

(Through Video Conferencin Mr. Anand Chaudhari, Advocate Mr. Mahesh Kumar, Advocate fo Ms. Gauri Neo Rampal, Senior S for the respondent-Income Tax D ***** RAKASH SHARMA, J. (Oral) Notice of motion. Ms. Gauri Neo Rampal, Senior S he respondents/Income Tax Dep Both the counsel are ad idem on stands finally examined and c f 2023 titled as Jasjit Singh vs 9.07.2024, and by the Coordina as Jatinder Singh Bhangu vs. 9.07.2024. This Court in Jasjit Si “16. We are in agreement with Coordinate Bench and hold t instructions by the Board could n override statutory provisions or t obsolete. Legislative enactmen implications are required to be AB AND HARYANA AT RH 23830-2024 (O&M) f Decision:18.09.2024

..…...Petitioners (s) V/s. ME TAX, CENTRAL CIRCLE …......Respondent(s) NJEEV PRAKASH SHARMA NJAY VASHISTH ng/Hybrid Mode) e and or the petitioner. Standing Counsel Department. Standing Counsel, accepts notice partment. that the issue involved in the concluded by this Court in CWP s. Union of India and others, ate Bench in CWP No.15745 of . Union of India and others, Singh (supra) held as under: the view taken by the that such circular or not have been issued to to make them otiose or nts having financial e followed strictly and E e e P , f , Suresh Kumar 2024.09.19 10:38 I attest to the accuracy and integrity of this document

CWP-23830-202

m S S a s a t a s i 1 o s w 1 C u p f o p d 3 f 1 l A 2 o p 4. K aforesaid term 024 (O&M) Page 2 of 3

mandatorily. By exercising the Sections 119 and 120 of the A Section 144B (7 & 8), the a allowed to usurp the legal pro satisfaction and convenience ca assessees. It also leaves confusio taxpayers. In the opinion of th and circulars can be issued on supplementing the statutory pro implementation. 17. In view of the aforesaid d occasion to distinguish or take suggested by the learned counse what has already been held by th 18. Keeping in view the law Coordinate Bench (supra), notic under Section 148 of the proceedings initiated thereafter w faceless assessment as envisage of the Act, 1961, have been foun provisions of the Act, 1961 an dated 28.02.2023, 16.03.202 30.03.2023 and order dated 30. for want of jurisdiction. 19. The respondents-revenue w liberty to follow the procedure a Act, 1961 and proceed according 20. All the writ petitions are order passed by the Court shall present order.” Keeping in view above, we a ms. The observations and order p powers contained in Act, 1961 as well as authorities cannot be ovisions to their own ausing hardship to the on in the minds of the his Court, instructions nly for the purpose of ovisions and for their discussion, there is no e a different view as el for the revenue from he Coordinate Bench. w laid down by the ces issued by the JAO Act, 1961 and the without conducting the ed under Section 144B d to be contrary to the nd accordingly notices 23, 20.03.2024 and 03.2023, are set aside would be, however, at as laid down under the gly, if so advised. allowed. The interim stand merged with the allow this Writ Petition in the passed above shall apply mutatis e s Suresh Kumar 2024.09.19 10:38 I attest to the accuracy and integrity of this document

CWP-23830-202

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September 18 Ess Kay

Whether speak Whether Repor 024 (O&M) Page 3 of 3

the present case. Accordin Assessing Officer u/s 148 dated sequential proceedings are set asi All pending applications also stan [SANJEEV 8, 2024 [SAN

king / reasoned :

Y rtable

Y gly, notice(s) issued by the d 30.03.2024 (Annexures P-1 to ide. nd disposed of accordingly.

V PRAKASH SHARMA] JUDGE

NJAY VASHISTH] JUDGE Yes / No Yes / No e o Suresh Kumar 2024.09.19 10:38 I attest to the accuracy and integrity of this document

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