Ontivillu Gopidoss Jothilakshmiw/O.o.b.gopidass v. The Income Tax Officer, Non Corporate Ward-2(3)

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT Reserved on 25.06.2024Pronounced on 24.01.2025 CORAM : THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.(MD) No.13626 of 2024 andW.M.P.(MD) Nos.11999 and 12000 of 2024 Ontivillu Gopidoss JothilakshmiW/o.O.B.Gopidass ... Petitioner Vs. 1.The Income Tax Officer, Non Corporate Ward-2(3), No.2, V.P.Rathinasamy Nadar Road, Central Revenue Building, Bibikulam, Madurai, Tamil Nadu – 625 002. 2.The Chief Commissioner of Income-Tax, No.2, V.P.Rathinasamy Nadar Road, Central Revenue Building, Bibikulam, Madurai, Tamil Nadu – 625 002. ... Respondents Prayer: Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorari, to call for the records in DIN & Notice No.ITBA/AST/F/148A/2023-2024/1063481722(1) dated 27.03.2024 under Section 148A(d) of the Income Tax Act on the file of the 1[st] respondent relating to the Assessment Year 2017-2018, quash the same. For Petitioner : Mr.G.Baskar _____________ Page No.1 of 45 For Respondents : Mr.N.Dilip Kumar Standing Counsel ORDER The petitioner has challenged the Impugned Order dated 27.03.2024, issued by the 1[st] respondent under Section 148A(d) of the Income Tax Act, 1961. 2. By the Impugned Order dated 27.03.2024, the 1[st] respondent, who is the jurisdictional Income Tax Officer of the petitioner, has held as under:- “In view of the above facts, the income chargeable to tax has escaped assessment to the tune of Rs.1,30,36,000/- in terms of section 147 of the Act. 7.All the due procedures laid down u/s 148A of the act have been duly complied with and after having perused the information available on record and the material evidence gathered, I am satisfied that all the conditions mentioned u/s 149(1) are fulfilled and it is a fit case to issue notice u/s 148 of the Income Tax Act, 1961 for the A.Y.2017-18. 8. This order is issued under the prior approval of the CCIT, Madurai as provided u/s 151(ii) of the Income Tax Act, 1961.” 3. The facts on record indicate that the petitioner appears to have had certain cash transactions and also had effected the sale of immovable property during the Financial Year 2016-2017. The petitioner had however failed to file _____________ Page No.2 of 45 W.P.(MD) No.13626 of 2024 a Return of Income for the corresponding Assessment Year 2017-2018. 4. In these circumstances, the petitioner was issued with a notice by the 1[st] respondent under Section 148A(b) of the Income Tax Act, 1961 on 30.01.2024. The petitioner has replied to the same vide two replies dated 11.03.2024 and 12.03.2024, which were ultimately culminated in the Impugned Order. 5. It is case of the petitioner that the Impugned Order dated 27.03.2024 is contrary to the procedure prescribed under Section 151A of the Income Tax Act, 1961, inasmuch as only the Authority viz., Faceless Assessing Officer is entitled to issue a notice under Section 148A(b) of the Income Tax Act, 1961. 6. In this connection, a reference was made to the Notification dated 29.03.2022 of the Central Board of Direct Taxes bearing reference Notification No.18/2022/F.No.370142/16/2022-TPL (Part 1). 7. That apart, it is submitted that as per Section 151 of Income Tax Act, 1961, before a notice is issued, sanction has to be obtained. _____________ W.P.(MD) No.13626 of 2024 8. It is submitted that in this case, no sanction has been obtained as no such sanction proceedings were enclosed along with the Impugned Order. However, the Impugned Order merely states that the order has been issued with the prior approval of Chief Commissioner of Income Tax, Madurai as provided under Section 151(ii) of the Income Tax Act, 1961. 9. In this connection, a reference was made to the decisions of Delhi High Court in the following cases:- i. SABH Infrastructure Ltd. Vs. Assistant Commissioner of Income tax, [2018] 99 taxmann.com 409 (Delhi);of Income tax, [2018] 99 taxmann.com 409 (Delhi); 7. That apart, it is submitted that as per Section 151 of Income Tax Act, 1961, before a notice is issued, sanction has to be obtained. _____________ W.P.(MD) No.13626 of 2024 8. It is submitted that in this case, no sanction has been obtained as no such sanction proceedings were enclosed along with the Impugned Order. However, the Impugned Order merely states that the order has been issued with the prior approval of Chief Commissioner of Income Tax, Madurai as provided under Section 151(ii) of the Income Tax Act, 1961. 9. In this connection, a reference was made to the decisions of Delhi High Court in the following cases:- i. SABH Infrastructure Ltd. Vs. Assistant Commissioner of Income tax, [2018] 99 taxmann.com 409 (Delhi);of Income tax, [2018] 99 taxmann.com 409 (Delhi); ii. Tia Enterprises (P.) Ltd. Vs. Income-tax Officer, [2024] 158 taxmann.com 63 (Delhi).158 taxmann.com 63 (Delhi). 10. That apart, the learned counsel for the petitioner would submit that the issue as to the jurisdiction of the jurisdictional Assessing Officer to issue notice under Section 148 of Income Tax Act, 1961 is no longer res integra and is covered by three decisions of the Telangana High Court, Bombay High Court and Gauhati High Court. In this connection, a reference was made to the following three cases:- i. Kankanala Ravindra Reddy Vs. Income-tax Officer, [2023] 156 taxmann.com 178 (Telangana);156 taxmann.com 178 (Telangana); ii. Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income-tax, Circle 15(1)(2), [2024] 162 taxmann.com 225 of Income-tax, Circle 15(1)(2), [2024] 162 taxmann.com 225 _____________ W.P.(MD) No.13626 of 2024 (Bombay); andiii. Ram Narayan Sah Vs. Union of India, [2024] 163 taxmann.com 478 (Gauhati). 11. That apart, the learned counsel for the petitioner would submit that reopening of assessment is barred by limitation in view of the limitation prescribed under Section 149 of the Income Tax Act, 1961 as amended with effect from 01.04.2022. 12. It is submitted that the net value after indexation of the cost is only Rs.36,20,731/- as detailed below:- 13. That apart, it is submitted that this Court has also granted interim stay, under similar circumstances vide its Order dated 23.02.2024 in _____________ Page No.5 of 45 W.P.(MD) No.13626 of 2024 Sundaravel Blue Metal Pvt. Ltd., Vs. Income Tax Officer in W.P.(MD) No.4312 of 2024. 14. The learned Standing Counsel for the respondents, on the other hand, would submit that there is no merit in this Writ Petition as the petitioner has not filed regular Returns under Section 139 of the Income Tax Act, 1961. 15. It is submitted that Section 148A of the Income Tax Act, 1961 indeed enjoins the Jurisdictional Assessing Officer to issue notice under Section 148A of Income Tax Act, 1961. 16. It is submitted that after the notice dated 30.01.2024 was issued, an order under Section 148A(b) of the Income Tax Act, 1961 was passed on 27.03.2024, assessment cannot be referred to Faceless Assessing Officer in terms of Section 151A read with Section 144B read with e-Assessment of Income Escaping Assessment Scheme, 2022. That apart, it is submitted that in this case, the prescription, which is taken place hitherto to e-Assessment proceedings was contemplated under Section 151 of the Income Tax Act, 1961. 17. It is also submitted that the petitioner cannot challenge the Impugned Order dated 27.03.2024 on merits of the case as the Court is really concerned _____________ W.P.(MD) No.13626 of 2024 with the decision making process. 18. I have considered the arguments of the learned counsel for the petitioner and the learned Standing Counsel for the respondents. The eco-sphere for the assessment has undergone a sea change with effect from 01.04.2021.A notice has to be first issued under Section 148A(b) of the Income Tax Act, 1961 by an Assessing Officer followed by an Order under Section 148A(d) of the Income Tax Act, 1961, before issuing a Notice under Section 148 of the Income Tax Act, 1961. 17. It is also submitted that the petitioner cannot challenge the Impugned Order dated 27.03.2024 on merits of the case as the Court is really concerned _____________ W.P.(MD) No.13626 of 2024 with the decision making process. 18. I have considered the arguments of the learned counsel for the petitioner and the learned Standing Counsel for the respondents. The eco-sphere for the assessment has undergone a sea change with effect from 01.04.2021.A notice has to be first issued under Section 148A(b) of the Income Tax Act, 1961 by an Assessing Officer followed by an Order under Section 148A(d) of the Income Tax Act, 1961, before issuing a Notice under Section 148 of the Income Tax Act, 1961. 19. The case of the petitioner is that the entire proceeding was without jurisdiction as only the authority prescribed under Section 144B of the Income Tax Act, 1961 can initiate proceedings under the provisions of the Income Tax Act, 1961 for the alleged escaped income. 20. It has to be also borne in mind that the first attempt to make assessment proceedings faceless was made in 2019 with the issuance of Notification No.61 of 2019 dated 12.09.2019 bearing Reference S.O.No.3264(E) in the exercise of power conferred under sub-section 3(A) of Section 143 of the Income Tax Act, 1961. _____________ W.P.(MD) No.13626 of 2024 21. By the said notification, the E-Assessment Scheme, 2019 was first introduced. By another Notification dated 12.09.2019 in S.O.No.3265(E) was issued in the exercise of powers conferred by sub-section (3B) of Section 143 of the Income Tax Act, 1961 for the purposes of giving effect to the E-Assessment Scheme, 2019. Sub-section (3A) to sub-section (3C) of Section 143 of the Income Tax Act, 1961 were inserted by Finance Act, 2018 with effect from 01.04.2018. The assessment was not fully made faceless. However, an attempt was made to digitize the filing of records in a bid to reduce interface between assessee/their Authorized Representatives with the officers of the Income Tax Department. 22. Thereafter, by Notification S.O.2745(E)/2746(E) both dated 13.08.2020, the E-Assessment Scheme, 2019 was amended as Faceless Assessment Scheme, 2019. The Central Board of Direct Taxes constituted the National e-Assessment Centre (NeAC). Thus, Faceless Assessment Scheme, 2019 was put in place vide Notification S.O.2745(E)/2746(E) dated 13.08.2020. 23. With a view to give further impetus to make the assessment faceless, an amendment to the provisions of the Income Tax Act, 1961 was made vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA, 2021 for brevity] with effect from 01.11.2020. Section 144B of the W.P.(MD) No.13626 of 2024 Income Tax Act, 1961 and Section 151A of the Income Tax Act, 1961 were introduced into the Income Tax Act, 1961 with effect from 01.11.2020 vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, certain other amendments were introduced to the Act by Finance Act, 2021 with effect from 01.04.2021. 24. Several provisions of the Income Tax Act, 1961 were replaced. The new provisions which were inserted and amended vide Finance Act, 2021 are as under:- * By the aforesaid amendment, even proceedings for conducting of enquiries or issuance of Show Cause Notice or passing of order under Section 148A was brought within the provisions of Section 151A of the Income Tax Act, 1961. _____________ W.P.(MD) No.13626 of 2024 25. The main purpose of faceless assessment was to eliminate direct interface between a tax payer and the Officers of the Income Tax Department in the matter of assessments under Section 143(3A) to Section 143(3C) of the Income Tax Act, 1961 with effect from 01.04.2018. 26. Both Section 144B of the Income Tax Act, 1961 and Section 151A of the Income Tax Act, 1961 deal with Faceless Assessments. * By the aforesaid amendment, even proceedings for conducting of enquiries or issuance of Show Cause Notice or passing of order under Section 148A was brought within the provisions of Section 151A of the Income Tax Act, 1961. _____________ W.P.(MD) No.13626 of 2024 25. The main purpose of faceless assessment was to eliminate direct interface between a tax payer and the Officers of the Income Tax Department in the matter of assessments under Section 143(3A) to Section 143(3C) of the Income Tax Act, 1961 with effect from 01.04.2018. 26. Both Section 144B of the Income Tax Act, 1961 and Section 151A of the Income Tax Act, 1961 deal with Faceless Assessments. 27. When Section 151A of the Income Tax Act, 1961 was inserted into the Income Tax Act, 1961 vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.11.2020, the Central Government was empowered to make a Scheme for Faceless Assessment even where income has escaped assessment under Section 148 of the Income Tax Act, 1961. 28. It has to be borne in mind that though Section 151A of the Income Tax Act, 1961 was inserted with effect from 01.11.2020, it did not include proceedings under Section 148A of the Income Tax Act, 1961. Only with effect from 01.04.2021, vide amendment in Finance Act, 2021, proceedings under Section 148A was brought within the purpose of Section 151A of the Income Tax Act, _____________ Page No.10 of 45 1961. 29. Section 151A of the Income Tax Act, 1961 reads as under:- “Section 151A. Faceless assessment of income escaping assessment.- (1) 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 or issuance of show-cause notice or passing of order under section 148A * or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by-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 or issuance of show-cause notice or passing of order under section 148A * or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by- a. eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;and the assessee or any other person to the extent technologically feasible; b. optimisingutilisation of the resources through economies of scale and functional specialisation;of scale and functional specialisation; c. introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, 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:the scheme made under sub-section (1), by notification in the Official Gazette, 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: Provided that no direction shall be issued after the 31[st] day of March, 2022.March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.”shall, as soon as may be after the notification is issued, be laid before each House of Parliament.” Inserted by the Finance Act, 2021 with effect from 01.04.2021. _____________ W.P.(MD) No.13626 of 2024 Provided that no direction shall be issued after the 31[st] day of March, 2022.March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.”shall, as soon as may be after the notification is issued, be laid before each House of Parliament.” Inserted by the Finance Act, 2021 with effect from 01.04.2021. _____________ W.P.(MD) No.13626 of 2024 30. Section 144B of the Income Tax Act, 1961 inserted vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.04.2021 and amended vide Finance Act, 2021 with effect from 01.04.2021 was further amended/replaced vide Finance Act, 2022 with effect from 01.04.2022. 31. When Section 144B of the Income Tax Act, 1961 was introduced with effect from 01.04.2021 vide Finance Act, 2021, Faceless Assessment was confined to:- i) “Assessment” under Section 143(3) (Regular Scrutiny Assessment); andAssessment); and ii) under Section 144 of the Income Tax Act, 1961 (Best Judgment Assessment).Assessment). 32. Under Section 144B(2) of the Income Tax Act, 1961 inserted vide Finance Act, 2021 with effect from 01.04.2021, Faceless Assessment was to be made only in respect of such, 1. territorial area; or 2. person; or 3. class of person; or 4. income; or 5. class of incomes; or 6. cases; or _____________ 7. class of cases; as may be specified by the Board. 33. Section 144B(2) of the Income Tax Act, 1961 was confined to the following 4 instances:- a. where the notice under section 143(2) of the Act was / is issued by the (erstwhile) NeAC or by the NaFAC;(erstwhile) NeAC or by the NaFAC; b. where the assessee has furnished her / his return of income under section 139 or in response to a notice issued under section 142(1) or section 148(1); and a notice under section 143(2) of the Act, has been issued by the Assessing Officer or the Prescribed Income-tax Authority, as the case may be;section 139 or in response to a notice issued under section 142(1) or section 148(1); and a notice under section 143(2) of the Act, has been issued by the Assessing Officer or the Prescribed Income-tax Authority, as the case may be; c. where the assessee has not furnished her / his return of income in response to a notice issued under section 142(1) of the Act by the Assessing Officer;response to a notice issued under section 142(1) of the Act by the Assessing Officer; d. where the assessee has not furnished his / her return of income under section 148(1) of the Act and a notice under section 142(1) of the Act has been issued by the Assessing Officer. section 148(1) of the Act and a notice under section 142(1) of the Act has been issued by the Assessing Officer. 34. In the exercise of power conferred under Section 143(3A) of the Income Tax Act, 1961, the Central Government modified the E-Assessment Scheme, 2019 that was in force earlier by Faceless Assessment Scheme, 2019. The E-Assessment Scheme, 2019 was substituted to read as Faceless Assessment by Notification No.2745(E) dated 30.08.2020 with effect from 13.08.2020. _____________ 35. When Section 144B(2) of the Income Tax Act, 1961 was inserted vide Finance Act, 2021 with effect from 01.04.2021, an order under sub-section (2) to Section 144B of the Income Tax Act, 1961 was issued by the Board on 31.03.2021. 36. Text of the above Order dated 31.03.2021 of the Board issued under sub-section (2) of Section 144B of the Income Tax Act, 1961 reads as under:- 34. In the exercise of power conferred under Section 143(3A) of the Income Tax Act, 1961, the Central Government modified the E-Assessment Scheme, 2019 that was in force earlier by Faceless Assessment Scheme, 2019. The E-Assessment Scheme, 2019 was substituted to read as Faceless Assessment by Notification No.2745(E) dated 30.08.2020 with effect from 13.08.2020. _____________ 35. When Section 144B(2) of the Income Tax Act, 1961 was inserted vide Finance Act, 2021 with effect from 01.04.2021, an order under sub-section (2) to Section 144B of the Income Tax Act, 1961 was issued by the Board on 31.03.2021. 36. Text of the above Order dated 31.03.2021 of the Board issued under sub-section (2) of Section 144B of the Income Tax Act, 1961 reads as under:- “In pursuance of sub-section (2) of Section 144B of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), the Central Board of Direct Taxes hereby specifies that all the assessment proceedings pending as on 31.03.2021 and the assessment proceedings pending as on 31.03.2021 and the assessment proceedings initiated on or after 01.04.2021 (other than those in the Central Charges and International Taxation Charges) which fall under the following class of cases shall be completed under section 144B of the Act:- a. where the notice under section 143(2) of the Act was / is issued by the (erstwhile) NeAC or by the NaFAC;(erstwhile) NeAC or by the NaFAC; b. where the assessee has furnished her / his return of income under section 139 or in response to a notice issued under section 142(1) or section 148(1); and a notice under section 143(2) of the Act, has been issued by the Assessing Officer or the Prescribed Income-tax Authority, as the case may be;section 139 or in response to a notice issued under section 142(1) or section 148(1); and a notice under section 143(2) of the Act, has been issued by the Assessing Officer or the Prescribed Income-tax Authority, as the case may be; c. where the assessee has not furnished her / his return of income in response to a notice issued under section 142(1) of the Act by the Assessing Officer;response to a notice issued under section 142(1) of the Act by the Assessing Officer; d. where the assessee has not furnished his / her return of income under section 148(1) of the Act and a notice under section 142(1) of the Act has been issued by the Assessing Officer.section 148(1) of the Act and a notice under section 142(1) of the Act has been issued by the Assessing Officer. 2. This order shall come into force with effect from the 1[st] day of April, _____________ 2021.” 37. Vide Order bearing Ref.F.No.187/3/2020-ITA-I dated 13.08.2021, the Central Board of Direct Taxes, has directed that all the Assessment Orders shall be passed by the National Faceless Assessment Centre (NaFAC) under Section 144B of the Act, except as under:- i. Assessment orders in cases assigned to Central Charges. ii. Assessment orders in cases assigned to International Tax Charges.Charges. 38. In partial modification of the said Order, bearing Ref.F.No.187/3/2020-ITA-I dated 13.08.2021, in addition to exceptions (i) and (ii) provided in Paragraph 2 of the above Order, the Central Board of Direct Taxes in exercise of powers under Section 119 of the Act, added the following exception vide Order/Letter F.No.225/97/2021/ITA-II dated 06.09.2021:- iii. Assessment Orders in cases where pendency could not be created on ITBA because of technical reasons or cases not having a PAN, as the case may be. created on ITBA because of technical reasons or cases not having a PAN, as the case may be. 39. The Board further clarified that assessment in cases transferred by the Principal Chief Commissioner or the Principal Director General in charge of _____________ Page No.15 of 45 W.P.(MD) No.13626 of 2024 National Faceless Assessment Centre (NaFAC) u/s 144B(8) of the Act shall be handled as per the procedure specified in the letter F.No.225/97/2021/ITA-II dated 06.09.2021. iii. Assessment Orders in cases where pendency could not be created on ITBA because of technical reasons or cases not having a PAN, as the case may be. created on ITBA because of technical reasons or cases not having a PAN, as the case may be. 39. The Board further clarified that assessment in cases transferred by the Principal Chief Commissioner or the Principal Director General in charge of _____________ Page No.15 of 45 W.P.(MD) No.13626 of 2024 National Faceless Assessment Centre (NaFAC) u/s 144B(8) of the Act shall be handled as per the procedure specified in the letter F.No.225/97/2021/ITA-II dated 06.09.2021. 40. A reading of Section 151A of the Income Tax Act, 1961 indicates that with a view to impart greater efficiency, transparency and accountability, the Central Government, may make a Scheme by notification, for the purposes of:- 41. The scheme is intended to - a. Eliminate the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;assessee or any other person to the extent technologically feasible; b. Optimize the utilisation of the resources through economies of scale and functional specialisation; and scale and functional specialisation; and c. by introducing a team-based assessment, reassessment, re- _____________ W.P.(MD) No.13626 of 2024 computation or issuance or sanction of notice with dynamic jurisdiction. 42. The expression “or conducting of enquiries or issuance of show- cause notice or passing of order under section 148A” was inserted vide Finance Act, 2021 with effect from 01.04.2021. In other words, Sl.No.3 to 5 were introduced only with effect from 01.04.2021 vide Finance Act, 2021. 43. To implement the statutory mandate of Section 151A of the Income Tax Act, 1961, the Central Board of Direct Taxes has now issued e-Assessment of Income Escaping Assessment Scheme, 2022 vide Notification No.18/2022/F.No.370142/16/2022-TPL (Part 1) dated 29.03.2022. 44. The e-Assessment of Income Escaping Assessment Scheme, 2022 also defines the expression “automated allocation” to mean 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. 45. Text of Notification No.18/2022/F.No.370142/16/2022-TPL (Part-1) dated 29.03.2022 is reproduced as under:- Ministry of Finance (Department of Revenue)(CENTRAL BOARD OF DIRECT TAXES) NOTIFICATIONNew Delhi, the 29[th] March, 2022 S.O. 1466(E).-In exercise of the powers conferred by sub-sections (1) and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:-and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:- 1. Short title and commencement,- (1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022.Escaping Assessment Scheme, 2022. (2) It shall come into force with effectfrom the date of its publication in the Official Gazette.publication in the Official Gazette. 2. Definitions.- (1) In this Scheme, unless the context otherwise requires,- a. “Act” means the Income-tax Act, 1961 (43 of 1961); b. “automated allocation” 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.allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act.in the Act, shall have the meaning respectively assigned to them in the Act. 3. Scope of the Scheme.- For the purpose of this Scheme,- 2. Definitions.- (1) In this Scheme, unless the context otherwise requires,- a. “Act” means the Income-tax Act, 1961 (43 of 1961); b. “automated allocation” 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.allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act.in the Act, shall have the meaning respectively assigned to them in the Act. 3. Scope of the Scheme.- For the purpose of this Scheme,- a. assessment, reassessment or re-computation under section 147 of the Act,section 147 of the Act, b. issuance of notice under section 148 of the Act, shall be through automated allocation, in accordance with 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 _____________ W.P.(MD) No.13626 of 2024 reference to making assessment or reassessment of total income or loss of assessee.[Notification No.18/2022/F.No.370142/16/2022-TPL (Part 1)] SHEFALI SINGH, Under Secy.” 46. A reading of the above e-Assessment of Income Escaping Assessment Scheme, 2022 indicates that although it is intended to implement to the object of Section 151A of the Income Tax Act, 1961, it is not intended to apply either from the stage of the issuance of notice under Section 148A(b) or upto the stage of passing order under Section 148A(d) of the Income Tax Act, 1961. 47. It implies that only after an order under Section 148A(d) of the Income Tax Act, 1961 is passed, the further assessment has to be under the e-Assessment of Income Escaping Assessment Scheme, 2022 and assessment, reassessment or re-computation under Section 147 of the Income Act, 1961 and issuance of notice under Section 148 of the Income Tax Act, 1961 shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Income Tax Act, 1961 for issuance of notice, and in a faceless manner, to the extent provided in _____________Page No.19 of 45 W.P.(MD) No.13626 of 2024 Section 144B of the Income Tax Act, 1961 with reference to making assessment or reassessment of total income or loss of assessee. 48. As per the e-Assessment of Income Escaping Assessment Scheme, 2022, only assessment, reassessment or re-computation under Section 147 of the Income Tax Act, 1961 and issuance of notice under Section 148 of the Income Tax Act, 1961 shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Income Tax Act, 1961 for issuance of notice, and in a faceless manner, to the extent provided in Section 144B of the Income Tax Act, 1961 with reference to making assessment or reassessment of total income or loss of the assessee. 49. Though, Section 151A of the Income Tax Act,1961 has been amended, to include the faceless method for conducting of enquiries or issuance of show-cause notice or passing of order under section 148A” vide Finance Act, 2021 with effect from 01.04.2021, the above Scheme is confined only to the following instances namely:- i.assessment, reassessment or re-computation under section 147 of the Act,section 147 of the Act, ii. issuance of notice under section 148 of the Act. 50. However, no notification has been issued under Section 151A of the Income Tax Act, 1961, to make the proceedings faceless from the stage of notice under Section 148A(d) of the Income Tax Act, 1961 upto the stage of passing of order under Section 148A(d) of the Income Tax Act, 1961. 49. Though, Section 151A of the Income Tax Act,1961 has been amended, to include the faceless method for conducting of enquiries or issuance of show-cause notice or passing of order under section 148A” vide Finance Act, 2021 with effect from 01.04.2021, the above Scheme is confined only to the following instances namely:- i.assessment, reassessment or re-computation under section 147 of the Act,section 147 of the Act, ii. issuance of notice under section 148 of the Act. 50. However, no notification has been issued under Section 151A of the Income Tax Act, 1961, to make the proceedings faceless from the stage of notice under Section 148A(d) of the Income Tax Act, 1961 upto the stage of passing of order under Section 148A(d) of the Income Tax Act, 1961. 51. Section 151A of the Income Tax Act, 1961 contemplates sanction for issuance of notice by the specified authority as mentioned in Section 148 and Section 148A of the Income Tax Act, 1961. I shall refer to the same in the course of this order. 52. Section 144B of the Income Tax Act, 1961 as inserted vide Finance Act, 2021 with effect from 01.04.2021 underwent further changes with effect from 01.04.2022 vide Finance Act, 2022. 53. It now includes proceedings contemplated under Section 147 of the Income Tax Act, 1961 as amended with effect from 01.04.2021 in case income escaping assessment. _____________ W.P.(MD) No.13626 of 202454. Even under the amended Section 144B of the Income Tax Act, 1961 as in force with effect from 01.04.2022, faceless proceedings under Section 148A of the Income Tax Act, 1961 is not contemplated. Only proceedings after passing of order under Section 148A(d) of the Income Tax Act, 1961, with a issuance of Notice under Section 148 of the Income Tax Act, 1961, assessment, reassessment and re-computation of income under Section 147 of the Income Tax Act, 1961 is contemplated. It is subject to Section 148 to Section 153 of the Income Tax Act, 1961. 55. Text of Section 147 of the Income Tax Act, 1961 as it stand now is reproduced below for the sake of clarity:- “147. Income Escaping Assessment. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of Sections 148 to 153, assess or reassess such income or recomputed the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this Section and in Sections 148 to 153 referred to as the relevant assessment year). Provided that where an assessment under sub-section (3) of Section 143 or this Section has been made for the relevant assessment year, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub- _____________ W.P.(MD) No.13626 of 2024 section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.” 56. Text of Section 144B of the Income Tax Act, 1961 was amended vide Finance Act, 2022 with effect from 01.04.2022 reads as under:- “144B. Faceless Assessment. Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.” 56. Text of Section 144B of the Income Tax Act, 1961 was amended vide Finance Act, 2022 with effect from 01.04.2022 reads as under:- “144B. Faceless Assessment. 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 may be, with respect to the cases 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;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;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-National Faceless Assessment Centre, under sub- _____________ Page No.23 of 45 _____________Page No.24 of 45 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; 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;or evidence from the assessee or any other person, as it may specify; b) conducting of enquiry or verification by verification unit;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;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; a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify;or evidence from the assessee or any other person, as it may specify; b) conducting of enquiry or verification by verification unit;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;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;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; 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; orverification 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 W.P.(MD) No.13626 of 2024 by the assess ment unit under sub-clause (c) of clause (iv), the request shall be assigned 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;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) ofsection 142or the terms of notice issued under sub-section (2) ofsection 143, the National Face less Assessment Centre shall intimate such failure to the assessment unit;served under clause (v) or notice issued under sub-section (1) ofsection 142or the terms of notice issued under sub-section (2) ofsection 143, the National Face less Assessment Centre shall intimate such failure to the assessment unit; viii) where the assessee fails to comply with the notice served under clause (v) or notice issued under sub-section (1) ofsection 142or the terms of notice issued under sub-section (2) ofsection 143, the National Face less Assessment Centre shall intimate such failure to the assessment unit;served under clause (v) or notice issued under sub-section (1) ofsection 142or the terms of notice issued under sub-section (2) ofsection 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 Faceless Assessment Centre, under section144, 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;referred to in clause (viii), a notice, through the National Faceless Assessment Centre, under section144, 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;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;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,-the relevant material available on the record, prepare, in writing,- _____________Page No.26 of 45 W.P.(MD) No.13626 of 2024 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; orproposal, 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 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;stating the variations prejudicial to the interest of assessee proposed to be made to the inc