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T.K.S. BUILDERS PVT. LTD. vs INCOME TAX OFFICER WARD 25(3) NEW DELHI

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: October 04, 2024
Judgment pronounced on: October 28, 2024

+ W.P.(C) 1968/2023
T.K.S. BUILDERS PVT. LTD. …..Petitioner
Through: Mr. Kapil Goel and Mr. Sandeep Goel, Advs.

versus

INCOME TAX OFFICER WARD 25(3)
NEW DELHI …..Respondent

Through: Mr. Aseem Chawla, SSC with Ms. Pratishta, Ms. Nivedita, Ms. Priya Sarkar, Advs.

+ W.P.(C) 4512/2023 & CM APPL. 17291/2023 (Interim Relief)
GDR FINANCE AND LEASING PRIVATE
LIMITED …..Petitioner

Through: Mr. Prakash Kumar & Mr. Rupinder Kumar, Advs.

versus

INCOME TAX OFFICER, WARD 10(1), NEW
DELHI …..Respondent

Through: Mr. Abhishek Maratha, SSC with Ms. Nupur Sharma, Mr. Parth Semwal & Mr. Apoorv Agarwal, JSCs, Mr. Gaurav Singh, Mr. Bhanukaran Singh, Ms. Muskan Goel, Ms. Parithi Kohli, Mr. Himanshu Gaur, Advs.

+ W.P.(C) 8891/2023 & CM APPL. 33614/2023( stay)
SULOCHNA GOEL …..Petitioner
Through: Mr. Kapil Goel and Mr. Sandeep Goel, Advs.

versus

ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 43(1) DELHI AND ANR. …..Respondents

Through: Mr. Aseem Chawla, SSC with Ms. Pratishta, Ms. Nivedita & Ms. Priya Sarkar, Advs.

+ W.P.(C) 5246/2023& CM APPL. 20477/2023 (stay)
BISHAMBER DAYAL CHANDER MOHAN …..Petitioner
Through: Mr. Kapil Goel and Mr. Sandeep Goel, Advs.

versus

INCOME TAX OFFICER WARD 58(3) …..Respondent

Through: Mr. Gaurav Gupta, SSC with Mr. Shivendra Singh & Mr. Yojit Pareek, JSCs for IT Deptt.

+ W.P.(C) 6777/2023 & CM APPL. 26479/2023 (stay)
BISHAMBER DAYAL CHANDER MOHAN (ACTING THROUGH COMPETENT PARTNER, MR. CHANDER MOHAN AGARWAL) …..Petitioner

Through: Mr. Kapil Goel and Mr. Sandeep Goel, Advs.

versus

INCOME TAX OFFICER, WARD 58(3),
DELHI …..Respondent

Through: Mr. Gaurav Gupta, SSC with Mr. Shivendra Singh & Mr. Yojit Pareek, JSCs for IT Deptt.

+ W.P.(C) 7178/2023 & CM APPL. 27960/2023 (stay)
BISHAMBER DAYAL CHANDER MOHAN (ACTING THROUGH COMPETENT PARTNER MR CHANDER MOHAN AGARWAL) …..Petitioner

Through: Mr. Kapil Goel and Mr. Sandeep Goel, Advs.

versus

INCOME TAX OFFICER WARD 58(3),
DELHI …..Respondent

Through: Mr. Gaurav Gupta, SSC with Mr. Shivendra Singh & Mr. Yojit Pareek, JSCs for IT Deptt.

CORAM:
HON’BLE MR. JUSTICE YASHWANT VARMA
HON’BLE MR. JUSTICE RAVINDER DUDEJA

J U D G M E N T

TABLE OF CONTENTS

A. FACTUAL BACKGROUND 4
B. ARGUMENTS ADVANCED BY RESPECTIVE SIDES 11
C. STATUTORY PROVISIONS RELEVANT TO THE FACELESS SCHEME OF ASSESSMENT 41
D. NOTIFICATIONS AND INSTRUCTIONS PERTAINING TO THE FACELESS SCHEME OF ASSESSMENT 58
E. RATIONALE AND LEGISLATIVE INTENT UNDERLYING THE FACELESS SCHEME OF ASSESSMENT 69
F. RMS AND OTHER MODES OF SELECTION OF CASES 76
G. “INFORMATION” RELEVANT FOR ASSESSMENTS 80
H. THE CONCURRENT CONFERRAL OF JURISDICTION 84
I. ASSESSMENT AND RE-ASSESSMENT ACTION IN LIGHT OF THE FACELESS ASSESSMENT REGIME 86
J. DISPOSITION 106

YASHWANT VARMA, J.

A. FACTUAL BACKGROUND

1. This batch of writ petitions assail the validity of reassessment action initiated under Section 148 of the Income Tax Act, 19611. Although that action is impugned on various grounds, learned counsels for the writ petitioners have confined their submissions to the issue of whether a notice issued by the Jurisdictional Assessing Officer2 would be valid and compliant with the Faceless Scheme of Assessment which had come to be adopted by virtue of Sections 144B and 151A of the Act. We, consequently, restrict the present judgment to the aforesaid issue alone and reserve the right of the writ petitioners to address all other objections which are taken to the commencement of reassessment in independent and appropriate proceedings.
2. For purposes of disposal of the present batch, we propose to take note of the salient facts which obtain in lead petition, W.P.(C) 8891/2023, and which pertains to Assessment Year3 2014-15. On 31 March 2021, a notice under Section 148 of the Act came to be issued against the writ petitioner. That notice was challenged by way of W.P.(C) 965/2022 and which formed part of a larger batch of writ petitions which has since then come to be commonly known as Suman Jeet Agarwal v. Income Tax Officer, Ward 61(1) and Others4. The aforenoted writ petition was duly entertained and interim orders passed on 24 March 2022, restraining the respondents from taking any coercive action against the petitioner in pursuance of the notice referable to Section 148.
3. On 04 May 2022, the Supreme Court pronounced its judgment in a batch of Special Leave Petitions and appeals titled Union of India v. Ashish Agarwal5. The said batch was principally concerned with the validity of notices of reassessment issued after the promulgation of Finance Act, 2021 and the respondents, despite the above, having chosen to commence reassessment proceedings in accordance with the erstwhile statutory regime which existed.
4. In order to lend a quietus to that controversy and which had resulted in numerous challenges being mounted before various High Courts, the Supreme Court in Ashish Agarwal modified the judgments handed down by different High Courts in the following terms:-
“25. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:
25.1. The respective impugned Section 148 notices issued to the respective assessees shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of Section 148-A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter.
25.2. The requirement of conducting any enquiry with the prior approval of the specified authority under Section 148-A(a) be dispensed with as a one-time measure vis-a-vis those notices which have been issued under Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts.
25.3. The assessing officers shall thereafter pass an order in terms of Section 148-A(d) after following the due procedure as required under Section 148-A(b) in respect of each of the assessees concerned.
25.4. All the defences which may be available to the assessee under
Section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available.
25.5. The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended Section 148 of the IT Act irrespective of whether they have been assailed before this Court or not.
26. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective asses sees. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assessees as because of a bona fide belief of the officers of the Revenue in issuing approximately 90,000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer.
27. Therefore, we have proposed to pass the present order with a view to avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.
28. In view of the above and for the reasons stated above, the present appeals are allowed in part. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in WT No. 524 of 2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:
28.1. The impugned Section 148 notices issued to the respective assessees which were issued under unamended Section 148 of the IT Act, which were the subject-matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show cause notices in terms of Section 148-A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter.
28.2. The requirement of conducting any enquiry, if required, with the prior approval of specified authority under Section 148-A(a) is hereby dispensed with as a one-time measure vis-a-vis those notices which have been issued under Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts.
28.3. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the assessing officers concerned to hold any enquiry, if required.
28.4. The assessing officers shall thereafter pass orders in terms of
Section 148-A(d) in respect of each of the assessees concerned; Thereafter after following the procedure as required under Section 148-A may issue notice under Section 148 (as substituted).
28.5. All defences which may be available to the assessees including those available under Section 149 of the IT Act and all rights and contentions which may be available to the assessees concerned and Revenue under the Finance Act, 2021 and in law shall continue to be available.
29. The present order shall be applicable PAN INDIA and all judgments and orders passed by the different High Courts on the issue and under which similar notices which were issued after 1-4-2021 issued under Section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of lndia so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that the present order shall also govern the pending writ petitions, pending before various the High Courts in which similar notices under Section 148 of the Act issued after 1-4-2021 are under challenge.
30. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.”

5. Pursuant to the liberty so accorded in Ashish Agarwal, a notice under Section 148A(b) came to be issued in respect of the petitioner on 02 June 2022. The petitioner furnished a response to that notice on 15 June 2022. Ultimately and in compliance with the procedure as prescribed in Section 148A, the JAO passed an order under Section 148A(d) dated 22 July 2022 rejecting the objections raised to the commencement of reassessment. This was followed by the issuance of a consequential notice under Section 148 of the same date.
6. Pursuant to the judgment rendered by the Supreme Court in Ashish Agarwal, the batch of writ petitions pending before this Court in Suman Jeet Agarwal came to be disposed of on 27 September 2022. It becomes relevant to note that Suman Jeet Agarwal was principally concerned with a challenge raised to various notices under Section 148 which had come to be issued at the cusp of Finance Act, 2021 coming into effect. While dealing with the categories of notices and the date when those notices would be deemed to have been issued, the Court had classified various notices into five stated categories. That batch ultimately came to be disposed of in the following terms:-
“209. For the reasons and principles that we have laid down, we dispose of these Writ Petitions with the following directions:
210. Category ‘A’ : The Notices falling under category ‘A’, which were digitally signed on or after 1st of April, 2021, are held to bear the date on which the said Notices were digitally signed and not 31st March 2021. The said petitions are disposed of with the direction that the said Notices are to be considered as show-cause-notices under Section 148A (b) of the Act as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
211. Category ‘B’ : The Notices falling under category ‘B’ which were sent through the registered e-mail ID of the respective JAOs, though not digitally signed are held to be valid. The said petitions are disposed of with the direction to the JAOs to verify and determine the date and time of its despatch as recorded in the ITBA portal in accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after 1 of April, 2021, the Notices are to be considered as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
212. Category ‘C : The petitions challenging Notices falling under category ‘C which were digitally signed on 31st of March 2021, are disposed of with the direction to the JAOs to verify and determine the date and time of despatch as recorded in the ITBA portal in accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after 1st of April, 2021, the Notices are to be considered as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
213. Category ‘D’: The petitions challenging Notices falling under category ‘D’ which were only uploaded in the E-filing portal of the assessees without any real time alert, are disposed of with the direction to the JAOs to determine the date and time when the assessees viewed the Notices in the E-filing portal, as recorded in the ITBA portal and conclude such date as the date of issuance in accordance with the law laid down in this judgment. If such date of issuance is determined to be on or after 1st of April 2021, the Notices will be construed as issued under Section 148A (b) of the Act of 1961 as per the Ashish Agarwal (Supra) judgment.
214. Category ‘E’: The petitions challenging Notices falling under category ‘E’ which were manually despatched, are disposed of with the direction to the JAOs to determine in accordance with the law laid down in this judgment, the date and time when the Notices were delivered to the post office for despatch and consider the same as date of issuance. If the date and time of despatch recorded is on or after 1 of April, 2021, the Notices are to be construed as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
215. Notices sent to unrelated e-mail addresses: The petitions challenging Notices which were sent to unrelated e-mail addresses are disposed of with the direction the JAOs to verify the date on which the Notice was first viewed by the assessee on the E-filing portal and consider the same as the date of issuance. If such date of issuance is determined to be on or after 01 April, 2021, the Notices will be construed as issued under Section 148A (b) of the Act of 1961 as per judgment in Ashish Agarwal (Supra).
216. We may note that in the writ petitions, the petitioners have raised additional defenses to challenge the impugned Notices. Such additional defenses have not been considered by this Court and the petitioners shall be at liberty to raise all such additional defenses as available inlaw.
217. We are conscious that the time granted by the Supreme Court in Ashish Agarwal to the Department has since expired on 3rd June, 2022 however, the proceedings in the present writ petitions were stayed on 24th March, 2022 until the pronouncement of this judgment. Therefore, we grant the JAOs in the first instance eight (8) weeks time from today to determine the date of issuance of the Notices as per the law laid down in this judgment.
218. The Notices which in accordance with the law laid down in this judgment has been verified by the JAOs to have been issued on or after 01st April 2021 and until 30th June, 2021 shall be deemed to have been issued under Section 148A of the Act of 1961 as substituted by the Finance Act, 2021 and construed to be show-cause notices in terms of Section 148A(b) as per the judgment of the apex Court in Ashish Agarwal (Supra) and the JAOs shall thereafter follow the procedure set down by the Supreme Court in the said judgment which reads as follows:
xxxx xxxx xxxx
219. With the aforesaid directions, present writ petitions and pending applications stand disposed of.”

7. It would appear that taking a cue from the aforesaid decision, yet another notice under Section 148A(b) dated 28 October 2022 came to be issued in respect of the petitioner. This was followed by an order dated 13 December 2022 being passed referable to Section 148A(d) along with a notice under Section 148 of even date. Although a final assessment order dated 24 May 2023 thereafter came to be framed, the said order alludes to the second notice under Section 148 dated 22 July 2022. We have not been informed of the fate of the notice dated 13 December 2022 and which represented the last of the multiple notices issued by the respondents. It is at this juncture that the present writ petition came to be filed before this Court.
8. The challenge to the notice under Section 148 was principally founded on the decisions handed down by the High Courts of Karnataka, Telangana, Bombay, and Gauhati, all of which have in unison, held that after the introduction of Sections 144B and 151A read together with the E- Assessment of Income Escaping Assessment Scheme, 20226 as embodied in the Notification dated 29 March 2022, the JAO would stand denuded of jurisdiction to commence proceedings under Section 148 of the Act.
B. ARGUMENTS ADVANCED BY RESPECTIVE SIDES
9. Both Mr. Goel as well as Mr. Kumar, learned counsels who appeared in support of the writ petitions, commended for our consideration the judgments handed down by the aforenoted High Courts and argued that once the respondents had chosen to adopt the faceless procedure for assessment even in respect of reassessment, the JAO would have no authority to invoke Section 148. It was their contention that the judgments of different High Courts have consistently taken the position as advocated above and consequently that view meriting affirmation and these writ petitions being allowed on this score alone.
10. The first of those judgments which appears to have dealt with this issue was of the Telangana High Court in Kankanala Ravindra Reddy vs. Income-tax Officer7. The challenge which was addressed before that High Court to the Section 148 notices was that once the respondents had adopted faceless assessment in terms of the scheme enacted under Section 151A, the JAO would stand denuded of power and authority to commence proceedings under Section 148A and that it was only the faceless route of assessment which could have been followed.
11. Dealing with this issue, the Telangana High Court in Kankanala Ravindra Reddy had observed as follows: –
“25. A plain reading of the aforesaid two notifications issued by the Central Board of Direct Taxes dated 28-3-2022 and 29-3-2022, it would clearly indicate that the Central Board of Direct Taxes was very clear in its mind when it framed the aforesaid two schemes with respect to the proceedings to be drawn under section 148A, that is to have it in a faceless manner. There were two mandatory conditions which were required to be adhered to by the Department, firstly, the allocation being made through the automated allocation system in accordance with the risk management strategy formulated by the Board under section 148 of the Act. Secondly, the re-assessment has to be done in a faceless manner to the extent provided under section 144B of the Act.
26. After the introduction of the above two schemes, it becomes mandatory for the Revenue to conduct/initiate proceedings pertaining to reassessment under section 147, 148 & 148A of the Act in a faceless manner. Proceedings under section 147 and section 148 of the Act would now have to be taken as per the procedure legislated by the Parliament in respect of reopening/re-assessment i.e., proceedings undersection 148A of the Act.
27. In the present case, both the proceedings i.e., the impugned proceedings under section 148A of the Act, as well as the consequential notices under section 148 of the Act were issued by the local jurisdictional officer and not in the prescribed faceless manner. The order under section 148A(d) of the Act and the notices undersection 148 of the Act are issued on 29-4-2022, i.e., after the “Faceless Jurisdiction of the Income-tax Authorities Scheme, 2022” and the “e-Assessment of Income Escaping Assessment Scheme, 2022” were introduced.”
We are informed that the Revenue has assailed that judgment by way of Special Leave Petition (Civil) Diary No. 2041/2024 before the Supreme Court and on which notice came to be issued on 02 February 2024.
12. A similar question arose for consideration of the High Court of Telangana yet again in Venkataramana Reddy Patloola vs. Deputy Commissioner of Income Tax and Others8. The Telangana High Court, while construing the Faceless Reassessment Scheme, 2022 which had come to be introduced on 29 March 2022, negated the argument of the Revenue of the JAO being concurrently empowered to undertake reassessment by observing:-
“18. Learned counsel for the petitioners, by placing reliance on the judgment of Bombay High Court in Hexaware Technologies Ltd.(supra), argued that the provision has already been interpreted by the Bombay High Court, and therefore, the aforesaid expression ‘to the extent provided in Section 144B of the Act’ does not deal with the aspect of issuance of notice under Section 148 of the Act.
19. As noticed, learned Senior Standing Counsel for Income Tax Department has taken a diametrically opposite stand by contending that the said expression, indeed, covers the issuance of notice under Section 148 of the Act. His contention was that issuance of notice under Section 148 of the Act was also part of assessment procedure.
20. In the considered opinion of this Court, clause 3(b) of the notification dated 29.03.2022, in specific, deals with issuance of notice under Section 148 of the Act. For that purpose, the notification seeks to apply e-assessment of income escaping assessment scheme, 2022. A microscopic reading of clause 3(b) shows that its only literal interpretation could be that issuance of notice under Section 148 of the Act is squarely covered under the scheme, and for the purpose of issuance of notice, the faceless procedure must be followed. The expression ‘to the extent provided in Section 144B of the Act’ in our judgment does not deal with ‘issuance of notice’ under Section 148. The said expression is applicable with reference to ‘assessment’ and ‘reassessment’. Sub-section (2) of Section 144B relates to “assessment” and does not deal with issuance of notice under Section 148 of the Act.
xxxx xxxx xxxx
22. A careful reading of the scheme points out that law makers consciously provided two different sub clauses (a) and (b). Clause 3 ‘(a)’ specifically deals with assessment, reassessment and recomputation whereas sub-clause ‘(b)’ deals with notice under Section 148 of the Act and gives reference of Section 144B for providing ‘extent’ for the purpose of ‘assessment’ and ‘reassessment’. Putting it differently, sub-clause (b) of Clause 3 of the scheme, before use of word ‘and’ is complete in itself and makes it obligatory to issue notice under Section 148 as per automated allocation procedure envisaged in clause 2 (b) of the scheme. The sentence after use of word ‘and’ in sub-clause (b) of clause 3 talks about ‘extent’ provided in Section 144B with reference to assessment and reassessment. The second portion of sub-clause (b) of clause 3 after ‘and’ does not deal with issuance of notice under Section 148 of the Act. Therefore, sub-clause (b) of clause 3 is in two parts. First part is confined to notice under Section 148 of the Act, whereas, second part after the word ‘and’ is confined to ‘assessment’ and ‘reassessment’.
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24. Thus, there is no cavil of doubt that Section 144B of the Act and order of CBDT dated 06.09.2021 give exemption from following the mandatory faceless procedure only in relation to passing of assessment orders in cases of central charges and international tax charges. Any other interpretation would amount to doing violence with the language employed in the scheme/notification dated 29.03.2022, Section 144B(2) of the Act and order dated 06.09.2021. Since in our view, the plain and unambiguous language used in the scheme and order dated 06.09.2021 shows that the notice under Section 148 does not fall within the ‘exception’, the judgments cited by the learned Senior Standing Counsel for Income Tax Department are of no assistance. The Taxpayer is nowhere distinguished between NRIs and Indian Citizens. The notice issued under Section 148 must comply with the requirement of the Scheme whether or not the Taxpayer is NRI/Indian Citizen. Thus, the second limb of argument of the learned Senior Standing Counsel for Income Tax Department deserves to be rejected.
25. Pertinently, this Court in Kankanala Ravindra Reddy (supra), held as under:
“25. A plain reading of the aforesaid two notifications issued by the Central Board of Direct Taxes dated 28.03.2022 and 29.03.2022, it would clearly indicate that the Central Board of Direct Taxes was very clear in its mind when it framed the aforesaid two schemes with respect to the proceedings to be drawn under Section 148A, that is to have it in a faceless manner. There were two mandatory conditions which were required to be adhered to by the Department, firstly, the allocation being made through the automated allocation system in accordance with the risk management strategy formulated by the Board under Section 148 of the Act. Secondly, the re-assessment has to be done in a faceless manner to the extent provided under Section 144B of the Act.”
(Emphasis Supplied)
13. By the time the Telangana High Court came to pronounce its verdict in Venkataramana Reddy Patloola, it also had the benefit of considering a detailed decision which had come to be pronounced by the Bombay High Court in Hexaware Technologies Ltd. v. Assistant Commissioner of Income Tax9. In Hexaware Technologies, the Bombay High Court, apart from the various other questions which were formulated, also had an occasion to examine the issue of whether a notice under Section 148, if issued by the JAO, would sustain in light of the scheme formulated in accordance with Section 151A of the Act. Since most of the High Courts have thereafter followed the opinion expressed in Hexaware Technologies, we deem it apposite to extract the following passages from that decision: –
“33. The guideline dated August 1, 2022 relied upon by the Revenue is not applicable because these guidelines are internal guidelines as is clear from the endorsement on the first page of the guideline “Confidential For Departmental Circulation Only”. The said guidelines are not issued under section 119 of the Act. Any such guideline issued by the Central Board of Direct Taxes is not binding on the petitioner. Further the said guideline is also not binding on respondent No. 1 as they are contrary to the provisions of the Act and the Scheme framed under section 151A of the Act. The effect of a guideline came up for discussion in Sofitel Realty LLP v. ITO (TDS) [(2023) 457 ITR 18 (Bom); 2023 SCC OnLine Bom 1498; (2023) 153 taxmann.com 496 (Bom).] wherein this court has held that the guidelines which are contrary to the provisions of the Act cannot be relied upon by the Revenue to reject an application for compounding filed by an assessee. The court held that guidelines are subordinate to the principal Act or Rules, it cannot restrict or override the application of specific provisions enacted by Legislature. The guidelines cannot travel beyond the scope of the powers conferred by the Act or the Rules.
33.1. The guidelines do not deal with or even refer to the Scheme dated March 29, 2022 ((2022) 442 ITR (Stat) 198) framed by the Government under section 151A of the Act. Section 151A(3) of the Act provides that the Scheme so framed is required to be laid before each House of the Parliament. Therefore, the Scheme dated March 29, 2022 under section 151A of the Act, which has also been laid before Parliament, would be binding on the Revenue and the guideline dated August 1, 2022 cannot supersede the Scheme and if it provides anything to the contrary to the said Scheme, then the same is required to be treated as invalid and bad in law.
34. As regards Income-tax Business Application step-by-step Document No. 2 regarding issuance of notice under section 148 of the Act, relied upon by the Revenue, an internal document cannot depart from the explicit statutory provisions of, or supersede the Scheme framed by the Government under section 151A of the Act which Scheme is also placed before both the Houses of Parliament as per section 151A(3) of the Act. This is specially the case when the document does not even consider or even refer to the Scheme. Further the said document is clearly intended to be a manual/guide as to how to use the Income-tax Department’s portal, and does not even claim to be a statement of the Revenue’s position/stand on the issue in question. Our observations with respect to the guidelines dated August 1, 2022 relied upon by the Revenue will equally be applicable here.
35. Further, in our view, there is no question of concurrent jurisdiction of the jurisdictional Assessing Officer and the Faceless Assessing Officer for issuance of notice under section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the jurisdictional Assessing Officer or the Faceless Assessing Officer in the Scheme dated March 29, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of the Revenue is to be accepted, then even when notices are issued by the Faceless Assessing Officer, it would be open to an assessee to make submission before the jurisdictional Assessing Officer and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both Faceless Assessing Officer or the jurisdictional Assessing Officer with respect to the issuance of notice under section 148 of the Act. The Scheme dated March 29, 2022 ((2022) 442 ITR (Stat) 198) in paragraph 3 clearly provides that the issuance of notice “shall be through automated allocation” which means that the same is mandatory and is required to be followed by the Department and does not give any discretion to the Department to choose whether to follow it or not. That automated allocation is defined in paragraph 2(b) of the Scheme to mean an algorithm for randomised allocation of cases by using suitable technological tools including artificial intelligence and machine learning with a view to optimise the use of resources. Therefore, it means that the case can be allocated randomly to any officer who would then have jurisdiction to issue the notice under section 148 of the Act. It is not the case of respondent No. 1 that respondent No. 1 was the random officer who had been allocated jurisdiction.
36. With respect to the arguments of the Revenue, i.e., the Notification dated March 29, 2022 ((2022) 442 ITR (Stat) 198) provides that the Scheme so framed is applicable only “to the extent” provided in section 144B of the Act and section 144B of the Act does not refer to issuance of notice under section 148 of the Act and hence, the notice cannot be issued by the Faceless Assessing Officer as per the said Scheme, we express our view as follows:
36.1 Section 151A of the Act itself contemplates formulation of Scheme for both assessment, reassessment or recomputation under section 147 as well as for issuance of notice under section 148 of the Act. Therefore, the Scheme framed by the Central Board of Direct Taxes, which covers both the aforesaid aspect of the provisions of section 151A of the Act cannot be said to be applicable only for one aspect, i.e., proceedings post the issue of notice under section 148 of the Act being assessment, reassessment or recomputation under section 147 of the Act and inapplicable to the issuance of notice under section 148 of the Act. The Scheme is clearly applicable for issuance of notice under section 148 of the Act and accordingly, it is only the Faceless Assessing Officer which can issue the notice under section 148 of the Act and not the jurisdictional Assessing Officer. The argument advanced by the respondent would render clause 3(b) of the Scheme otiose and to be ignored or contravened, as according to the respondent, even though the Scheme specifically provides for issuance of notice under section 148 of the Act in a faceless manner, no notice is required to be issued under section 148 of the Act in a faceless manner. In such a situation, not only clause 3(b) but also the first two lines below clause 3(b) would be otiose, as it deals with the aspect of issuance of notice under section 148 of the Act. The respondents, being an authority subordinate to the Central Board of Direct Taxes, cannot argue that the Scheme framed by the Central Board of Direct Taxes, and which has been laid before both Houses of Parliament is partly otiose and inapplicable. The argument advanced by the respondent expressly makes clause 3(b) otiose and impliedly makes the whole Scheme otiose. If clause 3(b) of the Scheme is not applicable, then only clause 3(a) of the Scheme remains. What is covered in clause 3(a) of the Scheme is already provided in section 144B(1) of the Act, which section provides for faceless assessment, and covers assessment, reassessment or recomputation under section 147 of the Act. Therefore, if the Revenue’s arguments are to be accepted, there is no purpose of framing a Scheme only for clause 3(a) which is in any event already covered under faceless assessment regime in section 144B of the Act. The argument of the respondent, therefore, renders the whole Scheme redundant. An argument which renders the whole Scheme otiose cannot be accepted as correct interpretation of the Scheme. The phrase “to the extent provided in section 144B of the Act” in the Scheme is with reference to only making assessment or reassessment or total income or loss of the assessee. Therefore, for the purposes of making assessment or reassessment, the provisions of section 144B of the Act would be applicable as no such manner for reassessment is separately provided in the Scheme. For issuing notice, the term “to the extent provided in section 144B of the Act” is not relevant. The Scheme provides that the notice under section 148 of the Act, shall be issued through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act and in a faceless manner. Therefore, “to the extent provided in section 144B of the Act” does not go with issuance of notice and is applicable only with reference to assessment or reassessment. The phrase “to the extent provided in section 144B of the Act” would mean that the restriction provided in section 144B of the Act, such as keeping the International Tax Jurisdiction or Central Circle Jurisdiction out of the ambit of section 144B of the Act would also apply under the Scheme. Further the exceptions provided in sub-sections (7) and (8) of section 144B of the Act would also be applicable to the Scheme.
37. When an authority acts contrary to law, the said act of the authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to the assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income-tax authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to the assessee. Therefore, there is no question of the petitioner having to prove further prejudice before arguing the invalidity of the notice.”

14. A reading of the decision in Hexaware Technologies would compel one to notice a detailed reference being made to an Office Memorandum dated 20 February 2023. It, however, becomes pertinent to clarify here that the document dated 20 February 2023, and which has been described to be an “Office Memorandum”, was actually instructions provided to counsels for the Revenue in connection with the batch of writ petitions which were pending before that High Court. They were thus rightly construed as not being statutory instructions which the Central Board of Direct Taxes10 is otherwise, and undoubtedly, empowered to issue under the Act.
15. However, those instructions were duly examined and dealt with by the Bombay High Court in the following terms: –
“38. With respect to the Office Memorandum dated February 20, 2023, the said Office Memorandum merely contains the comments of the Revenue issued with the approval of Member (L&S) Central Board of Direct Taxes and the said Office Memorandum is not in the nature of a guideline or instruction issued under section 119 of the Act so as to have any binding effect on the Revenue. Moreover, the arguments advanced by the Revenue on the said Office Memorandum dated February 20, 2023 is clearly contrary to the provisions of the Act as well as the Scheme dated March 29, 2022 and the same are dealt with as under—
(i) It is erroneously stated in paragraph 3 of the Office Memorandum that “The scheme clearly lays down that the issuance of notice under section 148 of the Act has to be through automation in accordance with the risk management strategy referred to in section 148 of the Act”. The issuance of notice is not through automation but through “automated allocation”. The term “automated allocation” is defined in clause 2(1)(b) of the said Scheme to mean random allocation of cases to the Assessing Officers. Therefore, it is clear that the Assessing Officers are randomly selected to handle a case and it is not merely a case where notice is sought to be issued through automation.
(ii) It is further erroneously stated in paragraph 3 of the Office Memorandum that “To this end, as provided in section 148 of the Act, the Directorate of Systems randomly selects a number of cases based on the criteria of Risk Management Strategy”. The term “randomly” is further used at numerous other places in the Office Memorandum with respect to selection of cases for consideration/issuance of notice under section 148 of the Act. The respondent is clearly incorrect in its understanding of the said Scheme as the reference to random in the said Scheme is reference to selection of Assessing Officer at random and not selection of section 148 cases as random. If the cases for issuance of notice under section 148 of the Act are selected based on criteria of the risk management strategy, then, obviously, the same are not randomly selected. The term “randomly” by definition mean something which is chosen by chance rather than according to a plan. Therefore, if the cases are chosen based on risk management strategy, they certainly cannot be said to be random. The computer/system cannot select cases on random but selection can be based on certain well-defined criteria. Hence, the argument of the respondents is clearly unsustainable. If the case of the respondent is that the applicability of section 148 of the Act is on random basis, then the provisions of section 148 itself would become contrary to article 14 of the Constitution of India as being arbitrary and unreasonable. Randomly selecting cases for reopening without there being any basis or criteria would mean that the section is applied by the Revenue in an arbitrary and unreasonable manner. The word “random” is used in clause 2(1)(b) of the said Scheme in the definition of “automated allocation”.“Automated allocation” is defined in the said clause to mean “an algorithm for randomised allocation of cases….”. The term “random”, in our view, has been used in the context of assigning the case to a random Assessing Officer, i.e., an Assessing Officer would be randomly chosen by the system to handle a particular case. The term “random” is not used for selection of case for issuance of notice under section 148 as has been alleged by the Revenue in the Office Memorandum. Further, in paragraph 3.2 of the Office Memorandum, with respect to the reassessment proceedings, the reference to “random allocation” has correctly been made as random allocation of cases to the Assessment Units by the National Faceless Assessment Centre. When random allocation is with reference to officer for reassessment then the same would equally apply for issuance of notice under section 148 of the Act.
(iii) The conclusion at the bottom of page 2 in paragraph 3 of the Office Memorandum that “Therefore, as provided in the Scheme the notice under section 148 of the Act is issued on automated allocation of cases to the Assessing Officer based on the risk management criteria” is also factually incorrect and on the basis of incorrect interpretation of the Scheme. Clause 2(1)(b) of the Scheme defined “automated allocation” to mean “an algorithm for randomised allocation of cases by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources”. The said definition does not provide that the automated allocation of case to the Assessing Officer is based on the risk management criteria. The reference to risk management criteria in clause 3 of the Scheme is to the effect that the notice under section 148 of the Act should be in accordance with the risk management strategy formulated by the Board which is in accordance with Explanation 1 to section 148 of the Act. In our view, the Revenue is misinterpreting the Scheme, perhaps to cover its deficiency of not following the Scheme for issuing notice under section 148 of the Act.
(iv) In paragraph 3.1 of the Office Memorandum, it is stated that the case is selected prior to issuance of notice are decided on the basis of an algorithm as per risk management strategy and are, therefore, randomly selected. It is further stated that these cases are “flagged” to the jurisdictional Assessing Officer by the Directorate of Systems and the jurisdictional Assessing Officer does not have any control over the process. It is further stated that the jurisdictional Assessing Officer has no way of predicting or determining before hand whether the case will be “flagged” by the system. The contention of the Revenue is that only cases which are “flagged” by the system as per the risk management strategy formulated by the Central Board of Direct Taxes can be considered by the Assessing Officer for reopening, however, in clause (i) in the Explanation 1 to section 148 of the Act, the term “flagged” has been deleted by the Finance Act, 2022, with effect from April 1, 2022. In any case, whether only cases which are flagged can be reopened or not is not relevant to decide the scope of the Scheme framed under section 151A of the Act, which required the notice under section 148 of the Act to be issued on the basis of random allocation and in a faceless manner.
(v) The Revenue has wrongly contended in paragraph 3.1 of the Office Memorandum that “Therefore, whether jurisdictional Assessing Officer or National Faceless Assessment Centre should issue such notice is decided by administration keeping in mind the end result of natural justice to the assessees as well as completion of required procedure in a reasonable time”. In our opinion, there is no such power given to the administration under either section 151A of the Act or under the said Scheme. The Scheme is clear and categorical that notice under section 148 of the Act shall be issued through automated allocation and in a faceless manner. Therefore, the argument of the Revenue is clearly contrary to the provisions of the Scheme.
(vi) In paragraph 3.3 of the Office Memorandum, it is again erroneously stated that “Here it is pertinent to note that the said notification does not state whether the notices to be issued by the National Faceless Assessment Centre or the jurisdictional Assessing Officer (“JAO”)… It states that issuance of notice under section 148 of the Act shall be through automated allocation in accordance with the risk management strategy and that the assessment shall be in a faceless manner to the extent provided in section 144B of the Act. The Scheme is categoric as stated aforesaid that the notice under section 148 of the Act shall be issued through automated allocation and in a faceless manner. The Scheme clearly provides that the notice under section 148 of the Act is required to be issued by National Faceless Assessment Centre and not the jurisdictional Assessing Officer. Further, unlike as canvassed by the Revenue that only the assessment shall be in faceless manner, the Scheme is very clear that both the issuance of notice and assessment shall be in faceless manner.
(vii) In paragraph 5 of the Office Memorandum, a completely unsustainable and illogical submission has been made that section 151A of the Act takes into account that procedures may be modified under the Act or laid out taking into account the technological feasibility at the time. Reading the said Scheme along with section 151A of the Act makes it clear that neither the section or the Scheme speak about the detailed specifics of the procedure to be followed therein. This argument of the Revenue is clearly contrary to the Scheme as the Scheme is very specific to provide, inter alia, that the issuance of notice under section 148 of the Act shall be through automated location and in a faceless manner. Therefore, the Scheme is mandatory and provides the specification as to how the notice has to be issued. Further the argument of the Revenue that section 151A of the Act takes into account that the procedure may be modified under the Act is without appreciating that if the procedure is required to be modified then the same would require modification of the notified Scheme. It is not open to the Revenue to refuse to follow the Scheme as the Scheme is clearly mandatory and is required to be followed by all Assessing Officers.
(viii) The argument of the Revenue in paragraph 5.1 of the Office Memorandum that the section and Scheme have left it to the administration to device and modify procedures with time while remaining confined to the principles laid down in the said section and Scheme, is without appreciating that one of the main principles laid down in the Scheme is that the notice under section 148 of the Act is required to be issued through automated allocation and in a faceless manner. There is no leeway given on the said aspect and, therefore, there is no question of the administration to device and modify procedures with respect to the issuance of notice.”

16. The reasoning assigned by the Bombay High Court in Hexaware Technologies then came to be adopted by the High Court of Gauhati in Ram Narayan Sah v. Union of India and Others11. This becomes apparent from the following passages of that judgment: –
“8. A careful perusal of the scheme reveals that the scope of the scheme is for the purpose of the assessment, reassessment, recomputation under section 147 of the Act and issuance of notices under section 148 of the Act and the same shall be by a process through automated allocation in accordance with the risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of the notice and in a faceless manner and to the extent provided under section 144B of the Act with reference to making the assessment or reassessment of total income or loss of the assessee.
9. A perusal of section 151A along with the scheme reveals that the statute in order to obviate prejudice and bias has resorted to issuance of notices by automated allocation through the risk management strategy. The judgments referred to by the learned counsel for the petitioner supports the contention raised by the writ petition and hold that the notices are required to be issued in an automated manner without there being any interface between the Department and the assessee. The judgment relied upon by the learned counsel for the respondent however had discussions on the issue as to whether there is any vested or any fundamental right in respect of the assessee’s demand for automated issuance of notice. The Delhi High Court vide judgment and order dated May 26, 2023 passed in W.P. (C) No. 3535 of 2021 (Sanjay Gandhi Memorial Trust v. CIT (Exemptions) and C.M. Appl. No. 10693 of 2021 Magick Woods Exports P. Ltd. v. Addl./Joint/Dy./Asst. CIT/ITO has categorically held that there is no fundamental right or legal right available to an assessee to demand that the notices though automated digital allocation should be issued.
10. The question of whether the petitioner has the fundamental right or not may not be required to be answered in the present proceedings inasmuch as Mr. Keyal has fairly submitted that in terms of the provisions of section 151A, the Department has already framed a scheme and the same is notified by notification dated March 29, 2022 ((2022) 442 ITR (Stat) 198).
11. As discussed above, the scope of the scheme is for the purposes of the assessment, reassessment, recomputation under section 147 and for issuance of notices under 148 and which shall be done through automated allocations by the Department.”

17. A challenge to reassessment action on identical lines thereafter came to be addressed before the High Court of Punjab and Haryana in Jatinder Singh Bhangu and Another v. Union of India and Others12. The question of whether the JAO could commence reassessment in light of the Faceless Reassessment Scheme, 2022 was ultimately answered in favor of the assessee as would be evident from the following passages forming part of that decision: –
“15. From the perusal of section 151A, it is quite evident that the scheme of faceless assessment is applicable from the stage of show-cause notice under section 148 as well as section 148A. Clause 3(b) of notification dated March 29, 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 the jurisdictional Assessing Officer. The respondents are heavily placing reliance upon the office memorandum and letter issued by the Departmental authorities. It is axiomatic in tax jurisprudence that circulars, instructions and letters issued by the Board or any other authority cannot override statutory provisions. The circulars are binding upon the authorities and the courts are not bound by such circulars. The mandate of sections 144B, 151A read with notification dated March 29, 2022 ((2022) 442 ITR (Stat) 198) issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, the office memorandum or any other instruction issued by the Board or any other authority cannot be relied upon. Instructions/circulars can supplement but cannot supplant statutory provisions.
16. In the wake of the above discussion and findings, we find it appropriate to subscribe the view expressed by the Bombay, Telangana and Gauhati High Courts. The instant petitions deserve to be allowed and accordingly allowed.
17. The notices issued by the jurisdictional Assessing Officer under section 148 are hereby quashed with liberty to the respondent to proceed in accordance with procedure prescribed by law.”

18. A Division Bench of the Bombay High Court in Kairos Properties Private Limited v. Assistant Commissioner of Income-tax and Others13 then reaffirmed the view taken in Hexaware Technologies, albeit on the basis of the following reasoning: –
“12. On a plain reading of sub-section (1) of Section 151A, it is seen that it clearly provides that the Central Government may make a scheme by notification in the Official Gazette for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 or conducting of enquiries etc., or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability which could be in terms of clauses (a), (b) and (c) of sub-section (1) of Section 151A, namely, eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible; optimising utilisation of resources through economies of scale and functional specialisation; and introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. Sub-section (2) makes it explicit that for the purpose of giving effect to the Scheme made under sub-section (1), by notification in the Official Gazette, the Central Government can also direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification and further under sub-section (3), every notification issued under sub-section (1) and sub-section (2) shall be laid before each House of Parliament.
13. It is thus clear from the implications as brought about by the provisions of Section 151A that the notification dated 29th March, 2022 is issued in terms of what has been provided under Section 151A. It has been issued after the amendments were incorporated in subsection (1) by Finance Act, 2021 with effect from 1 April, 2022. It would be thus difficult to accept a proposition when in paragraph 3(a) of the Scheme defining the scope of the Scheme when the words “assessment”, “reassessment” or “re-computation” under Section 147 of the Act are explicitly provided, and further when clause (b) in paragraph 3 of the Scheme provides for issuance of notice under Section 148 of the Act, it would not take within its ambit the provisions of Section 148A which are the initial steps, which in a given case are required to be taken in issuance of notice under Section 148 of the Act. Section 148A provides for “Conducting inquiry, providing opportunity before issue of notice under section 148”. Thus, this provision postulates a procedure inextricably linked to Section 148 which would apply to all cases of reassessment with a proviso stipulating exceptions to the rule. In other words, Section 148A in its object, intent and purpose is inextricably connected with the assessment, re-assessment or recomputation, for which a notice under Section 148 may be issued. Any other view would mean that the requirement to adopt the faceless procedure under the Scheme is a mere ministerial requirement for issuance of the notice. Such a reading would not be in conformity with the objectives spelt out in clauses (a), (b) and (c) of Section 151A(1).
14. Thus, to accept a contention that merely because the notification does not explicitly refer to the provisions of Section 148A, the scope of the Scheme as defined in paragraph 3 would exclude the applicability of Section 148A, would lead to an absolute absurdity, and more particularly, considering the express provisions of subsection (1) of Section 151A. Also it is not possible to accept reading of the provisions of Section 144B de-hors Section 151A(1). Sub-section (2) of Section 151A is specifically incorporated to empower the Central Government to exclude the applicability of any of the provisions of the Act and/or to make such provisions applicable with exceptions, modifications and adaptations. Nothing of this nature is found in the notification to infer any exclusion of Section 148A, and when it clearly concerns the entire assessment, reassessment or re-computation under Section 147 and issuance of notice in that regard under Section 148 of the Act.
15. Thus, the Central Government has not applied the provisions of subsection (2) of Section 151A to specifically exclude the application of Section 148A from the scope of the Scheme in paragraph 3 of the notification dated 29th March, 2022, it would hence be not be possible to accept the Revenue’s contention that the provision of Section 148A stands excluded from the applicability of the faceless mechanism.”
In view of the above, the petitioner would contend that the impugned notices under Section 148, all of which have come to be issued by the JAO, would not sustain.
19. We had, while taking note of those judgments, the issues that stood raised in these petitions and being mindful of the impact which our decision was likely to have on a large number of matters which were flooding our board daily, on 29 August 2024 passed a direction for an appropriate affidavit being filed by the respondents bearing in mind the larger ramifications of an action annulling innumerable notices which had come to be issued in the meanwhile.
20. Pursuant to the said direction, a detailed additional affidavit came to be submitted by the respondents. We deem it apposite to extract paragraphs 6 to 19 thereof hereunder: –
“6. That as envisioned in the Section 148 of the Act, the Directorate of Systems randomly selects a number of cases based on the criteria of the Risk Management Strategy. The Assessing Officer has no role to play in such selection. Consequent to such selection, the information is made available to the Assessing Officer who, with the prior approval of specified authority, determines which of these cases are fit for proceedings under the Section 147 of the Act as per the procedure provided in Section 148A of the Act. This involves conducting an enquiry, if needed and giving the assessee an opportunity of hearing.
7. That the procedure outlined under Section 148A of the Act is a mandatory process (for cases other than search cases) and initiation of proceedings under Section 148A is based on risk assessment strategy and randomness. The notice under Section 148A issued thereafter is naturally based on risk management strategy and automated allocation.
8. That the scheme provides for randomized allocation of cases. The intent behind is to ensure fair and reasonableness in the selection of cases. In the procedure for issuance of notice under Section 148 of the Act this is ensured as cases selected prior to issuance of the said notice are decided on the basis of an algorithm as per the Risk Management Strategy and are, therefore, randomly selected.
9. That such cases are flagged to the JAO by the Directorate of Systems and the JAO does not have any control over the process.
10. That the cases are selected on the basis of risk management strategy in a random manner, and the JAO has no way of predicting or determining beforehand whether a case will be flagged by the Systems.
11. That consequent to the issuance of notice under Section 148 of the Act as per the procedure discussed above are again randomly allocated to the Assessment Units by the National Faceless Assessment Centre as per clause (i) of sub-Section (1) of Section 144B of the Act.
12. That the assessment is conducted as per the procedure provided in Section 144B of the Act in a faceless manner, as is also stated in the scheme. From the above, it is quite clear that the procedure for issuance of notices under Section 148 of the Act as well as the consequent assessment proceedings are following the scheme notified under Section 151A of the Act.
13. That it is also pertinent to note here that under the provisions of the Act both the JAO as well as units under NFAC have concurrent jurisdiction. The Act does not distinguish between JAO or NFAC with respect to jurisdiction over a case. This is further corroborated by the fact that under Section 144B of the Act the records in a case are transferred back to the JAO as soon as the assessment proceedings are completed.
14. That Section 144B of the Act lays down the role of NFAC and the units under it for the specific purpose of conduct of assessment proceedings in a specific case in a particular Assessment Year. This cannot be construed to mean that the JAO is bereft of the jurisdiction over a particular assessee or with respect to procedures not falling under the ambit of Section 144B of the Act. Since, Section 144B of the Act does not provide for issuance of notice under Section 148 of the Act, there can be no ambiguity in the fact that the JAO still has the jurisdiction to issue notice under Section 148 of the Act.
15. That in the present context it is apt not to lose sight of the parent Section, that is Section 151A of the Act, as the power to notify the scheme originates in the said Section.
16. That in terms of sub-section (1) of the said Section it has been provided that the Central Government may notify a scheme for conduct of procedures mentioned therein by:-
(a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;
(b) optimizing utilisation of the resources through economies of scale and functional specialisation;
(c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.
Therefore, the parent Section takes in to account that procedures may be modified under the Act or laid down taking into account their technological feasibility at the time. Further, instead of laying down specifics of the procedure, the Section clarifies that the scheme so notified should make optimal utilisation of resources through economies of scale and functional specialisation.
17. That reading the Section 151A of the Act in tandem with the scheme as given in Notification S.O. 1466(E) dated 29.03.2022, it is quite clear that neither the Section nor the scheme speak about the detailed specifics of the procedure to be followed therein. They lay down the general principles that should be followed so as to impart greater efficiency, transparency and accountability to the procedures contained therein. The said scheme lays down that the issuance of notice under Section 148 of the Act shall be through automated allocation in accordance with the risk management strategy and that the assessment shall be in a faceless manner to the extent provided in Section 144B of the Act.
18. That the specifics of the various parts of the procedure will evolve with time as the technology evolves and the structures in the Income-tax Department change. The Section and the scheme have left it to the administration to devise and modify procedures with time while remaining confined to the principles laid down in the said Section and scheme. By conducting the procedures under the e-Assessment vide Notification No. S.O. 1466(E) [NO. 18/2022/F. NO. 370142/16/2022, Dated- March 29, 2022 (Scheme on automated allocation) at two levels, one with the JAO and other with NFAC, an attempt has been made to introduce checks and balances within the system that the assessee can submit evidences and can avail oppo