Asamannoor Service Co-operative Bank Ltd No.317 V. The Income Tax Officer Ward-2, Aluva

WP(C)/7474/2024

AI Insights

The case involves Asamannoor Service Co-operative Bank Ltd, which challenged an order under Section 148A of the Income Tax Act, 1961, concerning the assessment year 2019-2020. The bank had not filed a return for the said year, and subsequent investigations led the assessing officer to believe that income from banking transactions had escaped assessment. The petitioner argued that the reassessment should have been conducted in a faceless manner as per the new provisions introduced by the Finance Act, 2021, and related schemes. However, the court found that the proceedings in question were initiated before the introduction of these provisions and thus were not required to be faceless.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 814356 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-02-2024
• Assessment Year: misc
• Other Referred Cases: Chandra Kishore Jha vs. Mahaveer & Others, Cherukuri Mani Vs. Chief Secretary Government of Andhra Pradesh & Others, Opto circuit India Limited v. Axis Bank and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: PREMJIT NAGENDRAN
• Keywords: Automated allocation; Faceless assessment; Income escaping assessment; Jurisdiction of income tax authorities
• Section: 148; 144B; 148A(b); 151A; 130; 148A(a)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 27TH DAY OF FEBRUARY 2024 / 8TH PHALGUNA, 1945 WP(C) NO. 7474 OF 2024 PETITIONER/S: ASAMANNOOR SERVICE CO-OPERATIVE BANK LTD NO.317, ASAMANNOR, ERNAKULAM, REPRESENTED BY ITS SECRETARY KIRAN P ASHOK,, PIN - 683549 BY ADV PREMJIT NAGENDRAN RESPONDENT/S: THE INCOME TAX OFFICER WARD-2 , ALUVA, PIN - 683101 OTHER PRESENT: JOSE JOSEPH-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 7474 OF 2024 2 JUDGMENT Dated this the 27th day of February, 2024 The present writ petition has been filed impugning Ext.P9 order passed under Clause d of Section 148A(a) of the Income Tax Act, 1961 (‘the IT Act’ for short) for the assessment year 2019-2020 whereby, the assessing officer has decided to open the assessment of the petitioner for the said assessment year and issue notice under Section 148 of the IT Act. The petitioner, the assessee under the provisions of the Income Tax Act, 1961 had not filed any return of income for the assessment year 2019-2020. The information in possession of the assessing officer and those collected from the cooperative department during the course of proceedings and petitioner’s reply to the enquiry notice under Section 148A(a) of the IT Act and show cause notice under Section 148A(b) of the IT Act would suggest that income chargeable to tax attributable to the banking transactions of the assessee for the financial year 2018-2019, relevant to the assessment year 2019-2020 had escaped assessment. Therefore, the assessment officer recorded satisfaction that it was a fit case for issue of notice under Section 148 of the IT Act. 2.Learned counsel for the petitioner has made an attempt to challenge the said order in Ext.P9 on the ground that the Finance Act, 2021 had brought the procedure of faceless regime for the purposes of WP(C) NO. 7474 OF 2024 3 governing the assessment under the Income Tax Act. The new provisions got introduced in Section 144B, Section 151A and Section 130 of the IT Act. In furtherance to the powers conferred under Section 130(1) and Section 130(2) of the IT Act, the Central Board of Direct Taxes has framed a scheme called “Faceless Jurisdiction of Income Tax Authorities Scheme, 2022. In the said Scheme, automated allocation, is defined under Section 2(b), which reads as ‘ automated allocation’ means an algorithm for randomized allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimize the use of resources;’. 3.Section 3(b) of the said Scheme deals with vesting of the jurisdiction with the Assessing Officer and reads as: \"Vesting the jurisdiction with the Assessing officer as referred to in section 24 of the Act, shall be in a faceless manner, through automated allocation, in accordance with and to the extent provided in-” 4.The Central Board of Direct Taxes, in exercise of its power conferred under Section 151A(1) and Section 151A(2) of the IT Act has framed another Scheme called the E-assessment of Income Escaping Assessment Scheme, 2022. Under the said scheme, “automated allocation,' means an algorithm for randomized allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimize the use of resources. \" WP(C) NO. 7474 OF 2024 4 5.Section 3 of the said scheme provides as \"for the purpose of this Scheme,- assessment, reassessment or re computation under section 147 of the Act, issuance of notice under Section 148 of the Act, shall be 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 notice and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. 6.On the basis of the aforesaid provisions and the scheme or faceless assessment, the learned counsel for the petitioner has submitted that with respect to the proceedings to be drawn under Section 148A of the IT Act, the same has necessarily to be faceless. Two mandatory conditions are required to be adhered to by the Department; “1) the allocation maybe made through the automated allocation system management strategy formulated by the Board under Section 148 of the IT Act; 2) the re-assessment has to be done in a faceless manner to the extent provided under Section 144B of the Act.” 7.It is further submitted that after introduction of the aforesaid two WP(C) NO. 7474 OF 2024 5 schemes, it is now mandatory for the Revenue to conduct / initiate proceedings pertaining to reassessment under Section 147, 148 & 148A of the Act in a faceless manner. 8.In the present case, the proceedings under Section 148A of the IT Act, has been commenced by the local jurisdictional officer and not in the prescribed faceless manner. 9.Learned counsel for the petitioner submits that “it is well settled principle of law that where the power is given to do certain things in certain way / manner, the thing has to be done in that way/ manner and not any other manner which is otherwise not provided under the law, as observed in; Chandra Kishore Jha vs. Mahaveer & Others [(1999) 8 SCC 266],Cherukuri Mani Vs. Chief Secretary Government of Andhra Pradesh & Others (2015) 13 SCC 722 and Opto circuit India Limited v. Axis Bank and others [(2021) 6 SCC 707]. 10.Learned counsel for the petitioner submits that under Section 148A of the IT Act, the proceedings have not been faceless as it mandated under the two schemes formulated by the CBIC, the impugned proceedings have not been done in the manner prescribed and therefore, the order impugned is vitiated and liable to be set aside. 11.Sri. Jose Joseph, the learned Senior Standing counsel for the Income Tax Department has submitted that the faceless assessment WP(C) NO. 7474 OF 2024 6 procedure as prescribed under Section 144B of the IT Act has been introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.04.2021. Section 144B(1) provides that the assessment, re assessment and re-computation under 143(3) of the IT Act or under Section 144 or 147 of the IT Act, as the case may be, shall be made in a faceless manner. He therefore, submits that what is contemplated or mandated under Section 144 B is the faceless procedure for the assessment, reassessment or re computation under sub-section (3) of Section 143 or under Section 144 or under Section 147 of the IT Act, but not the procedure or the proceedings before the stage of assessment/reassessment…etc. He therefore, submits that there is no substance in the submission made by the learned counsel for the petitioner. He also submits that the reassessment in pursuance to the notice issued under Section 148 of the IT Act, after the impugned order has been passed shall be faceless. There is no illegality in the order passed under Section 148A(b) of the IT Act which is impugned in this writ petition. It is also submitted that the assessment year is 2019-2020 and the faceless procedure for assessment, reassessment or re computation has been introduced with effect from 01.04.2021. Therefore even otherwise, the petitioner cannot urge that the proceedings prior to the WP(C) NO. 7474 OF 2024 7 reassessment are bad in law as they are not the faceless proceedings. 12.I have considered the submissions advanced. 13.Sub-section (1) of Section 144B which prescribes the faceless procedure for assessment etc., reads thus; “(1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or re-computation under subsection (3) of Section 143 or Section 144 or under Section 147 as the case maybe with respect of the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure,….” 14.Sub-section (2) provides that faceless assessment under Sub-section (1) shall be made in respect of such territorial area, or persons or class of persons or class of incomes or cases or class of cases, as may be specified by the court. 15.Thus, what is provided under sub-section (1) which has a non obstante clause is that the faceless procedure for assessment, re-assessment, re computation and not the proceedings interior to the said assessment, re-assessment, re computation. Further, sub-section (2) provides that the faceless procedure for assessment, re-assessment and re computation shall be in respect of the persons, class of persons, class of cases, as may be, specified by the Central Board of Direct Taxes. The petitioner has not brought on record to submit that his case is covered by WP(C) NO. 7474 OF 2024 8 the notification issued by the CBIC. Even otherwise, the assessment year is of 2019-2020 and the faceless procedure has been introduced with effect from 01.04.2021. 16.Considering the aforesaid facts, provision of the Act and the submission, I am of the considered view that even if the petitioner’s case is covered to be completed under the faceless assessment procedure, the proceedings interior to the reassessment proceedings are not illegal as those are not completed under the faceless procedure as prescribed under Section 144B of the IT Act and the scheme framed by the CBIC. Hence, I find no substance in this writ petition which is hereby dismissed. Sd/- DINESH KUMAR SINGH JUDGE SJ WP(C) NO. 7474 OF 2024 9 APPENDIX OF WP(C) 7474/2024 PETITIONER EXHIBITS Exhibit P-1 NOTICENO. ITBA/COM/F/17/2022-23/1049148617(1) DATED 27.01.2023 ISSUED BY THE RESPONDENT. Exhibit P-2 A TRUE COPY OF THE REPLY OF THE PETITIONER DATED 01.02.2023 Exhibit P-3 A TRUE COPY OF NOTICE NO. ITBA/AST/F/148A (SCN)/ 2022-23/1050325679 (1) DATED 02.03.2023 ISSUED BY THE RESPONDENT Exhibit P-4 A TRUE COPY OF THE REPLY OF THE PETITIONER DATED 08.03.2023 Exhibit P-5 A TRUE COPY OF THE ORDER UNDER SECTION 148A (D) NO. ITBA/AST/F/148A/2022-23/1051469323 (1) DATED 28.03.2023 ISSUED BY THE RESPONDENT Exhibit P-6 A TRUE COPY OF THE NOTICE UNDER SECTION 148 NO. ITBA/AST/S/148/2022-23/1051490565 (1) DATED 28.03.2023 ISSUED BY THE RESPONDENT Exhibit P-7 A PHOTOCOPY OF THE SAID LETTER AND THE ADDITIONAL OBJECTIONS FILED BY THE PETITIONER DATED 26.10.2023 DULY ACKNOWLEDGED BY THE OFFICE OF THE RESPONDENT Exhibit P-8 A PHOTOCOPY OF THE SAID LETTER AND THE ARGUMENT NOTE FILED BY THE PETITIONER DATED 23.11.2023 DULY ACKNOWLEDGED BY THE OFFICE OF THE RESPONDENT Exhibit P-9 A COPY OF THE ORDER UNDER SECTION 148A (D) OF THE ACT DATED 13.02.2024 Exhibit P10 FACELESS JURISDICTION OF INCOME TAX AUTHORITIES SCHEME, 2022 DATED 28-03-2022 Exhibit P-11 E-ASSESSMENT OF INCOME ESCAPING ASSESSMENT SCHEME 2022 DATED 29-03-2022 "