KAMAL KISHORE GAMBHIR vs. INCOME TAX OFFICER

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CWP/28806/2024HC Punjab & HaryanaPHHC01144188202423 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 held that circulars or instructions issued by the Board could not override statutory provisions or render them otiose. Legislative enactments with financial implications must be followed strictly and mandatorily. Authorities cannot usurp legal provisions for their convenience, causing hardship to assessees and confusion. Instructions and circulars can only supplement statutory provisions and aid in their implementation. Consequently, notices issued by the JAO under Section 148 of the Act and subsequent proceedings initiated without conducting the faceless assessment as envisaged under Section 144B of the Act were found to be contrary to the Act. The Court set aside the notices and consequential proceedings for want of jurisdiction. The revenue was granted liberty to follow the prescribed procedure if advised. The ratio decidendi is that faceless assessment under Section 144B is mandatory, and non-compliance vitiates proceedings initiated under Section 148.

What were the facts?

The petitioner, Kamal Kishore Gambhir, filed a writ petition before the High Court of Punjab and Haryana at Chandigarh. The petition challenged notices issued by the Income Tax Officer, Ward-2(1), Amritsar, under Section 148 of the Income Tax Act, 1961, and consequential proceedings. The revenue, represented by Ms. Urvashi Dhugga, Sr. Standing Counsel, accepted notice. Both parties agreed that the issue was concluded by previous judgments of the same High Court in CWP No.21509 of 2023 (Jasjit Singh vs. Union of India and others) decided on 29.07.2024, and CWP No.15745 of 2024 (Jatinder Singh Bhangu vs. Union of India and others) decided on 19.07.2024.

What were the issues?

1. Whether notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, and subsequent proceedings are valid when the faceless assessment procedure envisaged under Section 144B of the Act was not conducted? Assessee's Contention: The assessee argued that the notices and proceedings were contrary to the provisions of the Income Tax Act, 1961, specifically because the mandatory faceless assessment procedure under Section 144B was not followed. The assessee relied on the High Court's decisions in Jasjit Singh (supra) and Jatinder Singh Bhangu (supra). Revenue's Contention: The revenue, through its counsel, acknowledged that the issue had been finally examined and concluded by this Court in the aforementioned cases. The revenue did not present any arguments to distinguish the present case from the precedents cited by the assessee.

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

CWP-28806-2024 - 1 - IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 121 CWP-28806-2024

Decided on : 23.10.2024 Kamal Kishore Gambhir . . . Petitioner(s) Versus Income Tax Officer, Ward-2(1), Aayakar Bhawan, Maqbool Road, CR Building, Amritsar, Punjab . . . Respondent(s) CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJAY VASHISTH PRESENT: Mr. Sunil K. Mukhi, Advocate for the petitioner(s). Ms. Urvashi Dhugga, Sr. Standing Counsel for the respondents – revenue. **** SANJEEV PRAKASH SHARMA

, J. (Oral) 1. Notice of motion. 2. Ms. Urvashi Dhugga, Sr. Standing Counsel, accepts notice for the respondents – revenue. 3. Both the counsel are ad idem that the 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 make them otiose or obsolete. Legislative enactments having JAWALA RAM 2024.10.25 13:52 I attest to the accuracy and authenticity of this document

CWP-28806-2024 - 2 - 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. 20. All the writ petitions are allowed. The interim order passed by the Court shall stand merged with the present order.” JAWALA RAM 2024.10.25 13:52 I attest to the accuracy and authenticity of this document

CWP-28806-2024 - 3 - 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 u/s 148 of the Income Tax Act, 1961, dated 23.03.2024, and consequential proceedings are set aside. 5. All pending applications also stand disposed of accordingly. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE October 23, 2024 J.Ram Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No JAWALA RAM 2024.10.25 13:52 I attest to the accuracy and authenticity of this document

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