Mark Studio India Private Limited v. Income Tax Officer, Non-Corporate Ward 10(6)

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HON'BLE Mr. JUSTICE KRISHNAN RAMASAMY W.P.Nos.25223 & 25227 of 2024 and W.M.P.Nos.27545, 27547, 27549 & 27550 of 2024 Mark Studio India Private Limited,No.11/6, First Floor Ramanathan Street,Mahalingapuram, Nungambakkam,Chennai 600 034, Tamil Nadu. ...Petitioner in both petitions versus 1.Income Tax Officer, Non-Corporate Ward 10(6), 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034 2.National Faceless Assessment Unit, New Delhi. New Delhi. ...Respondents in both petitions Common Prayer: The Writ Petition is filed under Article 226 of the Constitution of India, to call for the records on the file of the 1[st] respondent in PAN Page No.1/102 https://www.mhc.tn.gov.in/judis W.P.Nos.25223 of 2024 etc. No.AAHCM5005B and quash the impugned order in ITBA/AST/F/148A/2024-25/1064082954(1) and ITBA/AST/F/148A/2024-25/1064083220(1) dated 15.04.2024 under Section 148A(d) of the Income Tax Act, 1961, and the consequential impugned notice in ITBA/AST/S/148_1/2024-25/1064084739(1)and ITBA/AST/S/148_1/2024-25/1064084684(1) dated 15.04.2024 under Section 148 of the Act passed by the 1[st] respondent for the Assessment Year 2017-18 an 2019-20 respectively as illegal and not in accordance with law. For Petitioner in both petitions For Respondents in both petitions :Ms.G.Vardhini Karthik,:Dr.B.Ramaswamy,Senior Standing counsel & Mr.V.Mahalingam,Senior Standing counselAssisted by Ms.S.Premalatha,Junior Standing counsel COMMON ORDER These writ petitions have been filed challenging the impugned orders dated 15.04.2024 and the consequential impugned notices dated 15.04.2024 issued by the 1[st] respondent. Page No.2/102 W.P.Nos.25223 of 2024 etc. 2. Submission made by the learned counsel for the petitioner: 2.1 Ms.G.Vardhini Karthik, learned counsel appearing for the petitioner would submit that the present writ petitions were filed challenging the jurisdiction of the Jurisdictional Assessment Officer (JAO) to issue notice under Section 148 of the Income Tax Act, 1961 (hereinafter called as “IT Act”). Initially, she would submit that the JAO will not have any power to issue any notice under Section 148 subsequent to the incorporation of Section 151A of the IT Act and introduction of two Schemes, viz., “E-Assessment of Income Escaping Assessment Scheme, 2022, dated 29.03.2022” and “Faceless Jurisdiction of Income-tax Authorities Scheme, 2022, dated 28.03.2022” (hereinafter called as “Scheme”). 2.2 She would submit that the aforesaid Schemes were brought in, in terms of the provisions of Section 151A of the IT Act, which enables the Central Government to bring in a Scheme to conduct assessment, re-assessment or re-computation in faceless manner. Accordingly, the aforesaid two Schemes were brought in by the Central Government. Once if Page No.3/102 W.P.Nos.25223 of 2024 etc. such Scheme was brought in to conduct assessment, re-assessment or re-computation under Section 147 of the IT Act in faceless manner, the JAO will have no role to play and all the process has to be carried out only by Faceless Assessment Officer (FAO). In the present case, Scheme was introduced for conducting assessment, re-assessment or re-computation under Section 147 of the IT Act and for issuance of notice under Section 148 of the IT Act. Hence, by referring the Scheme, she would contend that Section 148 or 148A notices shall be issued only by NaFAC. However, in this case, the impugned notices were issued by JAO, by mentioning his name. Thus, she would submit that the said impugned notices were issued without any jurisdiction and the same is liable to be quashed. such Scheme was brought in to conduct assessment, re-assessment or re-computation under Section 147 of the IT Act in faceless manner, the JAO will have no role to play and all the process has to be carried out only by Faceless Assessment Officer (FAO). In the present case, Scheme was introduced for conducting assessment, re-assessment or re-computation under Section 147 of the IT Act and for issuance of notice under Section 148 of the IT Act. Hence, by referring the Scheme, she would contend that Section 148 or 148A notices shall be issued only by NaFAC. However, in this case, the impugned notices were issued by JAO, by mentioning his name. Thus, she would submit that the said impugned notices were issued without any jurisdiction and the same is liable to be quashed. 2.3 Further, she would submit that the re-assessment procedure would only commence when the notice under Section 148A/148 of the IT Act is issued calling for the return of income and that is why, Section 144B of the IT Act does not refer to Section 148 notice. In the Scheme dated 29.03.2022, it has been specifically directed to issue the Section 148 notice in faceless manner. Page No.4/102 W.P.Nos.25223 of 2024 etc. 2.4 After the issuance of Section 148 notice, the Assessee shall be permitted to file their returns. On the other hand, if any assessee had intended to file the return of income voluntarily upon receipt of show cause notice, it would be impossible since the portal would not be upon for him to file his returns at that stage. 2.5 By referring the Scheme dated 29.03.2022, she would submit that the said Scheme was issued only in the nature of guidelines for internal circulation. 2.6 Therefore, she would strongly contend that there is no concurrent jurisdiction for JAO as well as FAO for issuance of notice under Section 148 or 148A for making assessment under Section 147 of the IT Act and only the FAO will have the authority to issue such notice in faceless manner. 2.7 She would also submit that she has filed her return submissions and insisted this Court to take the same into consideration and pass appropriate orders.Page No.5/102 W.P.Nos.25223 of 2024 etc. 2.8 For all these reasons, she would submit that the show cause notices issued by the respondent are liable to be quashed. In support of her contentions, she referred the following judgements: i) the judgment of the Telangana High Court in Kankanala Ravindra Reddy vs. Income-Tax Officer reported in (2023) 156 taxmann.com 178 (TELANGANA). ii) the judgment of the Hon'ble Bombay High Court in Hexaware Technologies Limited vz. Asistant Commissioner of Income Tax and others reported in 2024 SCC OnLine Bom 1249. iii) the judgment of the Hon'ble Gujarat High Court in Talati and Talati LLP vs. Office of Assistant Commissioner of Income Tax reported in 2024: GUJHC: 54567-DB. 3.Submissions made by the learned Senior Standing counsel forthe respondent: 3.1Dr.B.Ramaswamy, learned Senior Standing counsel, has strongly opposed the submissions made by the learned counsel for the petitioner and would submit that the Scheme as well as the provisions of Section 144B had explicitly provide that the JAO will have the jurisdiction in the process of issuing the notice under Section 148 and 148A of the IT Act. Page No.6/102 3.2 By referring the Scheme, he has made an elaborate submissions on the aspect of Automated Allocation System based on the risk management strategy formulated by the Board from time to time to the extent provided in Section 148 of the IT Act and also as to how the notices were sent in faceless manner. 3.Submissions made by the learned Senior Standing counsel forthe respondent: 3.1Dr.B.Ramaswamy, learned Senior Standing counsel, has strongly opposed the submissions made by the learned counsel for the petitioner and would submit that the Scheme as well as the provisions of Section 144B had explicitly provide that the JAO will have the jurisdiction in the process of issuing the notice under Section 148 and 148A of the IT Act. Page No.6/102 3.2 By referring the Scheme, he has made an elaborate submissions on the aspect of Automated Allocation System based on the risk management strategy formulated by the Board from time to time to the extent provided in Section 148 of the IT Act and also as to how the notices were sent in faceless manner. 3.3 Further, he referred the impugned notices and would submit that the impugned show cause notices were not served physically. The cases were selected by the Directorate of Income Tax (Systems) through Automated Allocation System based on the risk management strategy formulated under Section 148 of the IT Act and thereafter, the same was forwarded to the JAO based on the PAN card jurisdiction and the said JAO will have no role to play in selection of cases. Subsequently, the notices have been sent to the e-mail id of the registered account of the assessee through the web portal of ITBA. Hence, he would submit that the impugned notices have been sent by the respondents in faceless manner. Page No.7/102 3.4 Further, he would submit that in terms of the provisions of the Scheme, three requirements have to be complied with for issuance of notice under Section 148 of the IT Act: i) Automated Allocation System ii) Risk management strategy formulated by the Board as referred to in section 148 of the Act. iii) Faceless manner. 3.5 In this case, all the aforesaid three requirements have been duly complied with while sending the impugned notice. Therefore, at no stretch of imagination, one could say that the notices have been sent in any manner, other than the faceless manner. 3.6 By referring the guidelines dated 24.05.2023, he would submit that in terms of the power available under Section 144B(2) of the IT Act, the Board has been specifically excluded the cases of international taxation, central circle charges and also for search and seizure from the purview of the faceless assessment. Further, he would submit that the said guidelines had prescribed the manner as to how the JAO has to collect reply, Page No.8/102 W.P.Nos.25223 of 2024 etc.information and documents subsequent to the issuance of Section 148 notice and upload the same on the ITBA portal for the access by NaFAC. After uploading the Section 148 notice along with the relevant documents, which were collected by the JAO, the Directorate of Income Tax (Systems) shall forward the cases to the NaFAC. Subsequently, the NaFAC shall issue notice, under Section 143(2) or 142(1) of the IT Act, in appropriate cases in terms of Clause (iii) of Sub-Section (1) of Section 144B of the IT Act. 3.7 Therefore, he would contend that in the process of assessment, re-assessment or re-computation under Section 147 of the IT Act by the NaFAC, the FAO would come into picture only from the stage of issuance of notice under Section 143(2) or 142(1) of the IT Act and allocation of cases by NaFAC to the assessment unit, subsequent to the receipt of information from the Directorate of Income Tax (Systems). Therefore, he would contend that the Board had issued the guidelines within the power available to them under Section 144B(2) of the IT Act. Page No.9/102 3.7 Therefore, he would contend that in the process of assessment, re-assessment or re-computation under Section 147 of the IT Act by the NaFAC, the FAO would come into picture only from the stage of issuance of notice under Section 143(2) or 142(1) of the IT Act and allocation of cases by NaFAC to the assessment unit, subsequent to the receipt of information from the Directorate of Income Tax (Systems). Therefore, he would contend that the Board had issued the guidelines within the power available to them under Section 144B(2) of the IT Act. Page No.9/102 W.P.Nos.25223 of 2024 etc.3.8 Further, by referring Clause (iv) of Sub-Section (1) of Section 144B of the IT Act, he would submit that if any additional information is required, after the allotment of Section 148 cases along with the documents to the respective assessment units by virtue of Automated Allocation System by NaFAC, the concerned assessment unit shall request the NaFAC to send notice to get additional information from the Assessee. By referring the word “additional information”, he would submit that at the time of allotment , Section 148 notice and its reply and Section 148A notice and its reply along with all the other documents will be made available with the concerned assessment unit, by the NaFAC. Therefore, Section 144B makes it very clear that the proceedings at NaFAC level would commence only from the stage of issuance of notice under Section 142(1) or 143(2) of the IT Act. Before the said stage, only JAO will have power to issue Section 148/148A notice. Thereafter, the Directorate of Income Tax (Systems) shall forward these cases to NaFAC to take further action. The guidelines has been issued by the Board on this aspect elaborately. Page No.10/102 W.P.Nos.25223 of 2024 etc. 3.9 He would also contend that the said guidelines had been issued by the Board, within the power available to them under Section 144B of the IT Act, without touching upon the Scheme and issuance of such guidelines will not amount to making exemptions, modification or alteration in the Scheme. Hence, he would submit that the power of Central Government to bring any modification and alteration to the Scheme is entirely different from the notification brought in by the Board through guidelines, which was issued in terms of the provisions of Section 144B(2) of the IT Act. 3.10 Further, he has filed his written submissions and insisted this Court to take the same into consideration and pass appropriate orders. All the other learned Standing counsel have adapted the submissions made by Dr.B.Ramaswamy, learned Senior Standing counsel. In support of their contentions, they had referred to the following judgements and requests this Court to dismiss these writ petitions: i)the judgment of Hon'ble Delhi High Court in T.K.S.Builders Private Limited vs. Income Tax Officer rendered in W.P.(C).No.1968 of 2023. ii)the judgment of Hon'ble Calcutta High Court in Dhiraj Lakhotia vs. Union of India and another rendered in W.P.(A).No.1458 of 2024. Page No.11/102 W.P.Nos.25223 of 2024 etc. 4. I have given my anxious consideration to the submissions made by the respective learned counsel for the petitioners and the learned Senior Standing counsel for the respondents. 5. The central issue that arises for consideration in these Writ Petitions is, who is the appropriate authority to issue Notice under Section 148 of the IT Act after the introduction of E-Assessment of Income Escaping Assessment Scheme, 2022, dated 29.03.2022 and Faceless Jurisdiction of Income-tax Authorities Scheme, 2022, dated 28.03.2022? ii)the judgment of Hon'ble Calcutta High Court in Dhiraj Lakhotia vs. Union of India and another rendered in W.P.(A).No.1458 of 2024. Page No.11/102 W.P.Nos.25223 of 2024 etc. 4. I have given my anxious consideration to the submissions made by the respective learned counsel for the petitioners and the learned Senior Standing counsel for the respondents. 5. The central issue that arises for consideration in these Writ Petitions is, who is the appropriate authority to issue Notice under Section 148 of the IT Act after the introduction of E-Assessment of Income Escaping Assessment Scheme, 2022, dated 29.03.2022 and Faceless Jurisdiction of Income-tax Authorities Scheme, 2022, dated 28.03.2022? 6. Ms.G.Vardhini Karthik, learned counsel appearing for the petitioner would submit that after the introduction of E-Assessment of Income Escaping Assessment Scheme, 2022 vide notification SO 1466(E) dated 29.03.2022 with effect from 01.04.2022, the assessment, re-assessment or re-computation under Section 147 of the IT Act shall be made in faceless manner in terms of the provisions of the Scheme read with Section 144B of the IT Act. Page No.12/102 W.P.Nos.25223 of 2024 etc. 7. On the other hand, Dr.B.Ramaswamy, learned Senior Standing counsel and other learned Standing counsel appearing for the respondents would submit that the assessment, re-assessment or re-computation under Section 147 of the IT Act, with regard to the income escaped assessment, has to be carried out in faceless manner in terms of the provisions of Section 144B of the IT Act. However, Section 144B of the IT Act shall not enable the National Faceless Assessment Centre (NaFAC) to issue the notice under Section 148A and 148 of the IT Act in the faceless manner. 8. In reply, the learned counsel for the petitioner had consistently submitted that notice under Section 148A and 148 shall be issued by the NaFAC in terms of the provisions of Section 144B of the IT Act read with the Scheme. 9. Now, let me analyze the provisions of Section 144B of the IT Act, which was introduced, vide the Finance Act, 2022, with effect from 01.04.2022, which is both in substantive and procedural in nature. For ready reference, Section 144B of the IT Act is reproduced hereunder: Page No.13/102 “Faceless Assessment. 144B.(1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147, as the case referred to in Sub-Section (2) shall be made in a faceless manner as per the following procedure, namely:- (i) the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit through an automated allocation system; (ii) the National Faceless Assessment Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section; (iii) a notice shall be served on the assessee, through the National Faceless Assessment Centre, under sub-section (2) of section 143 or under sub- section (1) of section 142 and the assessee may file his response to such notice within the date specified therein, to the National Faceless Assessment Centre which shall forward the same to the assessment unit; Page No.14/102 https://www.mhc.tn.gov.in/judis (iv) where a case is assigned to the assessment unit, under clause (1), it may make a request through the National Faceless Assessment Centre for- (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (b) conducting of enquiry or verification by verification unit; (c) seeking technical assistance in respect (iii) a notice shall be served on the assessee, through the National Faceless Assessment Centre, under sub-section (2) of section 143 or under sub- section (1) of section 142 and the assessee may file his response to such notice within the date specified therein, to the National Faceless Assessment Centre which shall forward the same to the assessment unit; Page No.14/102 https://www.mhc.tn.gov.in/judis (iv) where a case is assigned to the assessment unit, under clause (1), it may make a request through the National Faceless Assessment Centre for- (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (b) conducting of enquiry or verification by verification unit; (c) seeking technical assistance in respect of determination of arm's length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter by referring to the technical unit; (v) where a request under sub-clause (a) of clause (iv) has been initiated by the assessment unit, the National Faceless Assessment Centre shall serve appropriate notice or requisition on the assessee or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit and the assessee or any other person, as the case may be, shall file his response to such notice within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National Faceless Assessment Centre which shall forward the reply to the assessment unit; Page No.15/102 (vi) where a request.- (a) for conducting of enquiry or verification by the verification unit has been made by the assessment unit under sub-clause (b) of clause (iv), the request shall be assigned by the National Faceless Assessment Centre to a verification unit through an automated allocation system; or (b) for reference to the technical unit has been made by the assess ment unit under sub-clause (c) of clause (iv), the request shall be meigned by the National Faceless Assessment Centre to a technical unit through an automated allocation system; (vii) the National Faceless Assessment Centre shall send the report received the Nathe verification unit or the technical unit, as the case may be, based on the request referred to in clause (vi) to the concerned assessment unit; (viii) where the assessee fails to comply with the notice served under clause (v) or notice issued under sub-section (1) of section 142 or the terms of notice issued under sub-section (2) of section 143, the National Face less Assessment Centre shall intimate such failure to the assessment unit; (ix) the assessment unit shall serve upon such assessee, as referred to in clause (viii), a notice, through the National Page No.16/102 Faceless Assessment Centre, under section 144, giving him an opportunity to show-cause on a date and time as specified in such notice as to why the assessment im his case should not be completed to the best of its judgment; (x) the assessee shall, within the time specified in the notice referred toin clause (ix) or such time as may be extended on the basis of an application in this regard, file his response to the National Faceless Assessment Centre which shall forward the same to the assessment unit; (xi) where the assessee fails to file response to the notice served under clause (ix) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit; (xii) the assessment unit shall, after taking into account all the relevant material available on the record, prepare, in writing,- (a) an income or loss determination proposal, where no variation prejudicial to assessee is proposed and send a copy of such income or loss determination proposal to the National Faceless Assessment Centre; or Page No.17/102 (xi) where the assessee fails to file response to the notice served under clause (ix) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit; (xii) the assessment unit shall, after taking into account all the relevant material available on the record, prepare, in writing,- (a) an income or loss determination proposal, where no variation prejudicial to assessee is proposed and send a copy of such income or loss determination proposal to the National Faceless Assessment Centre; or Page No.17/102 (b) in any other case, a show cause notice stating the variations prejudicial to the interest of assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice, on the assessee, through the National Faceless Assessment Centre; (xiii) the assessee shall file his reply to the show cause notice served under sub-clause (b) of clause (xii) on a date and time as specified therein or such time as may be extended on the basis of an application made in this regard, to the National Faceless Assessment Centre, which shall forward the reply to the assessment unit; (xiv) where the assessee fails to file response to the notice served under sub- clause (b) of clause (xii) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit; (xv) the assessment unit shall, after considering the response received under clause (xiii) or after receipt of intimation under clause (xiv), as the case may be, and taking into account all relevant material available on record, Page No.18/102 prepare an income or loss determination proposal and send the same to the National Faceless Assessment Centre; (xvi) upon receipt of the income or loss determination proposal, as referred to in sub-clause (a) of clause (xii) or clause (xv), as the case may be, the National Faceless Assessment Centre may, on the basis of guidelines issued by the Board,- (a) convey to the assessment unit to prepare draft order in accordance with the income or loss determination proposal, which shall thereafter prepare a draft order, or (b) assign the income or loss determination proposal to a review unit through an automated allocation system, for conducting review of such proposal; (xvii) the review unit shall conduct review of the income or loss determination proposal assigned to it by the National Faceless Assessment Centre, under sub-clause (b) of clause (xvi), whereupon it shall prepare a review report and send the same to the National Faceless Assessment Centre; (xviii) the National Faceless Assessment Centre shall, upon receiving the review report under clause (xvii), forward the same to the assessment unit which had proposed the income or loss determination proposal; Page No.19/102 (xix) the assessment unit shall, after considering such review report, accept or reject some or all of the modifications proposed therein and after recording reasons in case of rejection of such modifications, prepare a draft order; (xx) the assessment unit shall send such draft order prepared under sub- clause (a) of clause (xvi) or under clause (xix) to the National Faceless Assessment Centre; (xxi) in case of an eligible assessee, where there is a proposal to make any variation which is prejudicial to the interest of such assessee, as mentioned in sub-section (1) under section 144C, the National Faceless Assessment Centre shall serve the draft order referred to in clause (xx) on the assessee; (xxii) in any case other than that referred to in clause (xxi), the National Faceless Assessment the final assessment order in accordance with such draft order, which order and proceedings, if any, and send it to the National Faceless Assessment Centre; (xx) the assessment unit shall send such draft order prepared under sub- clause (a) of clause (xvi) or under clause (xix) to the National Faceless Assessment Centre; (xxi) in case of an eligible assessee, where there is a proposal to make any variation which is prejudicial to the interest of such assessee, as mentioned in sub-section (1) under section 144C, the National Faceless Assessment Centre shall serve the draft order referred to in clause (xx) on the assessee; (xxii) in any case other than that referred to in clause (xxi), the National Faceless Assessment the final assessment order in accordance with such draft order, which order and proceedings, if any, and send it to the National Faceless Assessment Centre; Page No.20/102 W.P.Nos.25223 of 2024 etc. (xxiii) upon receiving the final assessment order as per clause (xxii), the National Faceless Assessment Centre shall serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; (xxiv) where a draft order is served on the assessee as referred to in clause (xxi), such assessee shall,- (a) file his acceptance of the variations proposed in such draft order to the National Faceless Assessment Centre; or (b) file his objections, if any, to such variations, with- (I) the Dispute Resolution Panel, and (II) the National Faceless Assessment Centre, within the period specified in the sub-section (2) of section 144C (xxv) the National Faceless Assessment Centre shall,- (a) upon receipt of acceptance from the eligible assessee; or (b) if no objections are received from the eligible assessee, within the period specified in sub-section (2) of section 144C, intimate the assessment unit to complete the assessment on the basis of the draft order, Page No.21/102 (xxvi) the assessment unit shall, upon receipt of intimation under clause (xxv), pass the assessment order, in accordance with the relevant draft order, within the time allowed under sub-section (4) of section 144C and initiate penalty proceedings, if any, and send the order to the National Faceless Assessment Centre; (xxvii) where the eligible assessee files objections with the Dispute Resolution Panel, under sub-clause (b) of clause (xxiv), the National Faceless Assessment Centre shall send such intimation along with a copy of objections filed to the assessment unit; (xxviii) the National Faceless Assessment Centre shall, in a case referred to in clause (xxvii), upon receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, forward such directions to the assessment unit; (xxix) the assessment unit shall, in conformity with the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, complete the assessment within the time allowed in sub-section (13) of section 144C and Page No.22/102 W.P.Nos.25223 of 2024 etc. initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre, (xxx) the National Faceless Assessment Centre shall, upon receipt of the assessment order referred to in clause (xxvi) or clause (xxix), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice. specifying the sum payable by, or the amount of refund due to the assessee on the basis of such assessment; (xxxi) the National Faceless Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the provisions of this Act; initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre, (xxx) the National Faceless Assessment Centre shall, upon receipt of the assessment order referred to in clause (xxvi) or clause (xxix), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice. specifying the sum payable by, or the amount of refund due to the assessee on the basis of such assessment; (xxxi) the National Faceless Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the provisions of this Act; (xxxii) if at any stage of the proceedings before it, the assessment unit having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary to do so, it may, upon Page No.23/102 https://www.mhc.tn.gov.in/judis recording its reasons in writing. refer the case to the National Faceless Assessment Centre stating that the provisions of sub-section (2A) of section 142 may be invoked and such case shall be dealt with in accordance with the provisions of sub-section (7). (2) The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons or incomes or class of incomes or cases or class of cases, as may be specified by the Board.(3) to (10)................” 10. A reading of the Sub-Section (1) of Section 144B of the IT Act would show that notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147, in the cases referred to in Sub-Section (2) shall be made in faceless manner. Therefore, it is clear that the assessment, re-assessment or re-computation under Section 147 of the IT Act shall be made in terms of provisions of Section 144B to the extent provided under Sub-Section (2) of Section 144B of the IT Act. Page No.24/102 W.P.Nos.25223 of 2024 etc. 11. A reading of the Sub-Section (2) of Section 144B would show that for the purpose of making faceless assessment in terms of Section 144B of the IT Act, the Board (Central Board of Direct Taxes) can specify territorial area, or persons or class of persons, or income or class of income, or cases or class of cases. Therefore, Sub-Section (2) enables the Board to specify area or class of cases to be handled in faceless assessment in terms of Section 144B. Further, this Sub-Section (2) empowers the Board to include or exclude certain type of cases from the purview of the faceless assessment. Therefore, based on the circular, guideline or notification issued from time to time, the Authorities shall conduct the faceless assessment. 12. That apart, Sub-Section (1) of Section 144B further provides the procedure for conducting the faceless assessment. 12.1 Clause (i) (a) In terms of Clause (i) of Sub-Section (1) of Section 144B of the IT Act, the NaFAC shall assign the cases selected for the purpose of faceless assessment to a specific assessment unit through Automated Allocation System. Page No.25/102 (b) Thus, it is clear that the NaFAC is doing the process of selection of cases for faceless assessment and thereafter, it will be assigned to various assessment unit through Automated Allocation System. (c) The “Automated Allocation System” has been defined in Explanation to Section 144B, which reads as follows: (b)... 12. That apart, Sub-Section (1) of Section 144B further provides the procedure for conducting the faceless assessment. 12.1 Clause (i) (a) In terms of Clause (i) of Sub-Section (1) of Section 144B of the IT Act, the NaFAC shall assign the cases selected for the purpose of faceless assessment to a specific assessment unit through Automated Allocation System. Page No.25/102 (b) Thus, it is clear that the NaFAC is doing the process of selection of cases for faceless assessment and thereafter, it will be assigned to various assessment unit through Automated Allocation System. (c) The “Automated Allocation System” has been defined in Explanation to Section 144B, which reads as follows: (b)... (c) “automated allocation system” means 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” (d) Therefore, in the manner stated above, the NaFAC will select the cases and thereafter, assign the same through the Automated Allocation System. 12.2 Clause (ii) (a) In terms of Clause (ii) of Sub-Section (1) of Section 144B of the IT Act, the NaFAC shall send intimation/notice to the Assessee stating that Page No.26/102 W.P.Nos.25223 of 2024 etc. the assessment in his/her case shall be completed in accordance with the procedure laid down under Section 144B of the IT Act. 12.3 Clause (iii) (a) In terms of Clause (iii) of the Sub-Section (1) of Section 144B of the IT Act, a notice under Section 143(2) or 142(1) of the IT Act shall be served on the assessee, through NaFAC and the assessee shall file his/her response to such notice, within the date specified therein, to the NaFAC and thereafter, the NaFAC shall forward the same to the respective assessment unit. (b) Out of the cases selected for the purpose of faceless assessment by the NaFAC, the NaFAC shall send notice to the respective Assessee under Section 143(2) or 142(1) of the IT Act. After receipt of the responses from the respective Assessees, the said responses along with the notice shall be forwarded to the respective assessment unit by the NaFAC. Therefore, Clause (iii) of Sub-Section (1) of Section 144B of the IT Act enables the NaFAC to send notice under Section 143(2) or 142(1) of the IT Act. Page No.27/102 13. Now, let me examine the situation, under which, the notice shall be sent by NaFAC under Section 143(2) or 142(1) of the IT Act. For ready reference, Section 142(1) and 143(2) of IT Act are extracted hereunder: “142.-Inquiry before Assessment. (1) For the purpose of making an assessment under this Act, the [Assessing] Officer may serve on any person who has made a return under Section 115WD or Section 139 or in whose case the time allowed under sub-section (1) of section 139 for furnishing the return has expired, a notice requiring him, on a date to be therein specified,- (i) where such person has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. or Provided that where any notice has been served under this sub. section for the purposes of this clause after the end of the relevant assessment year commencing on or after the Ist day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section: Provided further that a notice under this sub-section for the pur poses of this clause may also be served by the prescribed income-tax authority, Provided that where any notice has been served under this sub. section for the purposes of this clause after the end of the relevant assessment year commencing on or after the Ist day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section: Provided further that a notice under this sub-section for the pur poses of this clause may also be served by the prescribed income-tax authority, [(ii)] to produce, or cause to be produced, such accounts or documents as the [Assessing] Officer may require, or [(iii)] to furnish in writing and verified in the prescribed manner informa- tion in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the [Assessing] Officer may require: 143.- Assessment (1).... (2) Where a return has been furnished under Section 139 or in response to a notice under sub-section (1) of Section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return” Page No.29/102 W.P.Nos.25223 of 2024 etc. 14. A reading of the above provisions of Section 142(1) would show that for the purpose of assessment under this Act, the Assessing Officer may serve on any person, who has made returns under Section 115WD or Section 139 or in whose case the time allowed under Sub-Section (1) of Section 139 for furnishing the returns expires a notice requiring him as on the date to be therein specified in the manner stated in Section 142(1) of the IT Act to the NaFAC. 15. Further, a reading of Section 143(2) of the IT Act would state that where the return has been furnished under Section 139 or in response to a notice under Section 142(1) of the IT Act, the NaFAC, if considered it necessary or expedite to ensure that the Assessee has not understated the income or has not computed excessive loss or has not under-paid taxes in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return Page No.30/102 W.P.Nos.25223 of 2024 etc. 16. Upon reading the provisions of Section 144B of the IT Act, it is clear that Section 144B of the IT Act would enable the NaFAC alone to send notice under Section 142(1) and Section 143(2) of the IT Act, to the cases to the extent provided under Sub-Section (2) of Section 144B of the IT Act, by the Board, for the purpose of assessment, reassessment or re-computation of profit or loss. The said Sections 142(1) and 143(2) deal with the sending of notices when the Assessee has not filed returns in time or the Assessee have filed the returns and to ensure the correctness of the details furnished in the returns. 17. As far as the income escaping assessment is concerned, it is also equally necessary to send notice under Section 142(1) or 143(2) of the IT Act. This would arise in the following point of time: i) After serving notice under Section 148 of the IT Act, if no returns has been furnished in response to the said notice, in such case, the notice will be send under Section 142(1) of the IT Act. Page No.31/102 W.P.Nos.25223 of 2024 etc. 17. As far as the income escaping assessment is concerned, it is also equally necessary to send notice under Section 142(1) or 143(2) of the IT Act. This would arise in the following point of time: i) After serving notice under Section 148 of the IT Act, if no returns has been furnished in response to the said notice, in such case, the notice will be send under Section 142(1) of the IT Act. Page No.31/102 W.P.Nos.25223 of 2024 etc. ii) In cases, where the returns were furnished after the receipt of notice issued under Section 148 of the Act, in such case, the notice under Section 143(2) of the IT Act will be sent. 18. In the above two cases of income escaping assessment, i.e., whether the return has been filed or no return has been filed, notice under Section 143(2) or 142(1) of the IT Act as the case may be, shall be served on the Assessee calling upon information through NaFAC. 19. With regard to the said aspect, the Board had issued guidelines on 24.05.2023 for compulsory selection of returns for complete scrutiny for the financial year 2023-24. Clause (4) of the said guidelines deals with the cases, in which, notice under Section 148 of the IT Act has been issued and the same reads as follows: Page No.32/102 S.ParameterProcedure for Compulsory SelectionNo furnished or not furnishedin responseto notice u/s 148 of the Act seizure/survey actions conducted on or in after the 1 day of April, 2021:to These cases shall be selected for compulsory scrutiny with prior administrative approvalofPr.CIT/Pr.DIT/CIT/DIT concerned who shall ensure that such cases, if lying outside Central Charges, are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act calling for information by the Jurisdictional Assessing Officer concerned. (ii) Cases other than search & seizure/survey: a) For those cases which are to be completed by NaFAC on or before 31.03.2024, Jurisdictional Assessing Officers (JAOs) shall upload the underlying documents, on the basis of which notice u/s 148 was issued, on ITBA, for access by NaFAC. The Directorate of Income-tax (Systems) shall forward these cases to NaFAC, which will take further necessary action. Notice u/s 143(2)/142(1) of the Act calling for information shall be served on the assessed through NaFAC. (ForAssessingOfficersin International Taxation and Central Circle Charges; refer para 4.1 at page No.06) Page No.33/102 W.P.Nos.25223 of 2024 etc. 20.Clause (4) of the guidelines dated 24.05.2023: (a) The Sub-clause (i) of Clause (4) deals with the seizure and survey actions and hence, the same will not comes under faceless assessment scheme. (b) The Sub-clause (ii) of Clause (4) deals with cases, other than the search and seizure, wherein it states that for those cases, which are to be completed by NaFAC on or before 31.03.2024, the Jurisdictional Assessment Officer (JAO) shall upload underlying documents, on the basis on which the notice under Section 148 was issued, on ITBA,