SURENDER SINGH DESWAL,PANCHKULA vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE, PKL, PANCHKULA

From the case records, it emerges that the assessee’s case was reopened on the ground that it advanced loan to M/s GLM Infratech Ltd. To verify the creditworthiness, Jurisdictional Assessing Officer (JAO) of the assessee passed order u/s 148A(d) on 30-03-2023 and issued notice u/s 148 on the same very day. In the assessment order, Ld. AO made addition u/s 69 for Rs.54.83 Lacs. The Ld. CIT(A) upheld the addition against which the assessee is in further appeal before us.

The Ld. AR raised pertinent legal ground to state that reopening was bad-in-law and in derogation of the provisions of Sec.151A read with CBDT Notification no.18/2022 dated 29-03-2022 which mandate issuance of such notice by Faceless Assessing Officer (FAO) only. The Ld. AR asserted that in terms of ratio of various decisions of jurisdictional High Court, issuance of notice u/s 148 by Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO) would vitiate the assessment proceedings. The Ld. Sr. DR opposed admission of any such ground at this stage of proceedings.

The undisputed fact that emerges is that notice u/s 148 has been issued on 30-03-2022 by Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO). This notice, in terms of notification of the Central Government dated 29-03-2022 u/s 151A sub-section (1) and (2) of the Income Tax Act, was required to be issued by FAO. The failure to do so would vitiate the assessment proceedings as per the lead decision of Hon’ble High Court of Punjab & Haryana in the case of Jatinder Singh Bhangu (165 Taxmann.com 115), the substantive portion of which read as under: - 15. From the perusal of Section 151A, it is quite evident that scheme of faceless assessment is applicable from the stage of show cause notice under Section 148 as well as 148A. Clause 3 (b) of notification dated 29.03.2022 issued under Section 151A clearly provides that scheme would be applicable to notice under Section 148. Even otherwise, it is a settled proposition of law that assessment proceedings commence from the stage of issuance of show cause notice. The object of introduction of faceless assessment would be defeated if show cause notice under Section 148 is issued by Jurisdictional Assessing Officer. The respondents are heavily placing reliance upon office memorandum and letter issued by departmental authorities. It is axiomatic in tax jurisprudence that circulars, instructions and letters issued by Board or any other authority cannot override statutory provisions. The circulars are binding upon authorities and Courts are not bound by circulars. The mandate of Section 144B, 151A read with notification dated 29.03.2022 issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, office memorandum or any other instruction issued by Board or any other authority cannot be relied upon. Instructions/circulars can supplement but cannot supplant statutory provisions.