CHITTORH TRADECOM PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX AND OTHERS

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CWP/30837/2024HC Punjab & HaryanaPHHC01158516202418 November 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 JAO under Section 148 of the Income Tax Act, 1961, and the proceedings initiated thereafter, without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, are contrary to the provisions of the Act. The court agreed with the coordinate bench's view that circulars or instructions by the Board cannot override statutory provisions or make them otiose. Legislative enactments with financial implications must be followed strictly. The court found that by exercising powers under Sections 119 and 120 of the Act, as well as Section 144B (7 & 8), authorities cannot usurp legal provisions to their convenience, causing hardship and confusion. Therefore, the notices dated 28.02.2023, 16.03.2023, 20.03.2024, and 30.03.2023, and the order dated 30.03.2023, were set aside for want of jurisdiction. The revenue was granted liberty to follow the procedure laid down under the Act. The specific notice dated 29.08.2024, issued to the petitioner, and all consequential proceedings were also set aside. The ratio is that faceless assessment provisions under Section 144B are mandatory and cannot be circumvented by issuing notices under Section 148 without following the prescribed procedure.

What were the facts?

The petitioner, Chittorh Tradecom Pvt. Ltd., filed a writ petition before the High Court of Punjab and Haryana challenging notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, and subsequent proceedings. The petitioner argued that these actions were taken without conducting a faceless assessment as envisaged under Section 144B of the Act. The revenue contended that the notices were valid. The High Court noted that the issue was identical to previously decided cases, specifically CWP No. 21509 of 2023 (Jasjit Singh vs. Union of India and others) and CWP No. 1574 of 2024 (Jatinder Singh Bhangu vs. Union of India and others). The court was asked to decide if the notices and proceedings were valid in light of the faceless assessment provisions.

What were the issues?

1. Whether notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, and the proceedings initiated thereafter, are valid when a faceless assessment, as envisaged under Section 144B of the Act, 1961, was not conducted? (Question of law and mixed fact and law, turning on Section 148 and Section 144B of the Income Tax Act, 1961). Assessee's Contention: The notices and proceedings are invalid because they were initiated without adhering to the mandatory faceless assessment procedure prescribed under Section 144B of the Act. The petitioner relied on the decisions in Jasjit Singh vs. Union of India and others and Jatinder Singh Bhangu vs. Union of India and others. Revenue's Contention: The revenue argued that the notices were valid, suggesting a distinction or different view from the precedents cited by the petitioner. The specific grounds for this contention were not detailed in the judgment, beyond the learned counsel for the revenue suggesting a different view.

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

121

Chittorh Trad

Assistant Com CORAM: H

Present: M

SANJEEV P 1.

N 2.

M behalf of the r 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 decom Pvt. Ltd.

Vs. mmissioner of Income Tax and o

HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN Mr. Kartik Bansal, Advocate for

*** RAKASH SHARMA, J.(Oral) Notice of motion. Mr. Yogesh Putney, Sr. Standi revenue. 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-30837-2024 (O&M) Date of Decision: 18.11.2024

…Petitioner others …Respondents NJEEV PRAKASH SHARMA NJAY VASHISTH the petitioner. ) ing Counsel accepts notice on 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 d f n a s e d

RAJESH KUMAR 2024.11.19 10:57 I attest the accuracy and authenticity of this order/judgment.

[2] CWP-30837-2024 (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 2024.11.19 10:57 I attest the accuracy and authenticity of this order/judgment.

[3] CWP-30837-2024 (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 of the Income Tax Act, 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 18.11.2024 rajesh 1. Whether speaking/reasoned? : Yes/No 2. Whether reportable?

: Yes/No RAJESH KUMAR 2024.11.19 10:57 I attest the accuracy and authenticity of this order/judgment.

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