Wp(C)/7474/2024 Of Asamannoor Service Co-Operative Bank Ltd v. The Income Tax Officer Ward-2

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGHTUESDAY, THE 27 DAY OF FEBRUARY 2024 / 8TH PHALGUNA, 1945WP(C) NO. 7474 OF 2024 PETITIONER/S: ASAMANNOOR SERVICE CO-OPERATIVE BANK LTD NO.317,ASAMANNOR, ERNAKULAM, REPRESENTED BY ITS SECRETARYKIRAN P ASHOK,, PIN - 683549BY ADV PREMJIT NAGENDRAN RESPONDENT/S: THE INCOME TAX OFFICER WARD-2 ,ALUVA, PIN - 683101 OTHER PRESENT: JOSE JOSEPH-SC THISWRITPETITION(CIVIL)HAVINGCOMEUPFORADMISSIONON27.02.2024,THECOURTONTHESAMEDAYDELIVERED THE FOLLOWING: JUDGMENT Dated this the 27[th]day of February, 2024 The present writ petitionhas been filed impugning Ext.P9 orderpassed 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, theassessing officer has decided to open the assessment of the petitionerfor the said assessment year and issue notice under Section 148 of theIT Act. The petitioner, the assessee under the provisions of the IncomeTax Act, 1961 had not filed any return of income for the assessmentyear 2019-2020. The information in possession of the assessing officerand those collected from the cooperative department during the courseof proceedings and petitioner’s reply to the enquiry notice under Section148A(a) of the IT Act and show cause notice under Section 148A(b) ofthe IT Act would suggest that income chargeable to tax attributable tothe banking transactions of the assessee for the financial year2018-2019, relevant to the assessment year 2019-2020 had escapedassessment. Therefore, the assessment officer recorded satisfactionthat 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 tochallenge 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 governing the assessment under the Income Tax Act. The newprovisions got introduced in Section 144B, Section 151A and Section130 of the IT Act. In furtherance to the powers conferred under Section130(1) and Section 130(2) of the IT Act, the Central Board of DirectTaxes has framed a scheme called “Faceless Jurisdiction of Income TaxAuthorities Scheme, 2022. In the said Scheme, automated allocation, isdefined under Section 2(b), which reads as ‘ automated allocation’means an algorithm for randomized allocation of cases, by usingsuitable technological tools, including artificial intelligence and machinelearning, with a view to optimize the use of resources;’. 3.Section 3(b) of the said Scheme deals with vesting of thejurisdiction with the Assessing Officer and reads as: "Vesting the jurisdiction with the Assessing officer as referred to insection 24 of the Act, shall be in a faceless manner, through automatedallocation, in accordance with and to the extent provided in-” 4.The Central Board of Direct Taxes, in exercise of its powerconferred under Section 151A(1) and Section 151A(2) of the IT Act hasframed another Scheme called the E-assessment of Income EscapingAssessment Scheme, 2022. Under the said scheme, “automatedallocation,' means an algorithm for randomized allocation of cases, byusing suitable technological tools, including artificial intelligence andmachine learning, with a view to optimize the use of resources. " 5.Section 3 of the said scheme provides as "for the purpose of thisScheme,- assessment, reassessment or re computation under section147 of the Act, issuance of notice under Section 148 of the Act, shallbethroughautomatedallocation,inaccordancewiththeriskmanagement strategy formulated by the Board as referred to in section148 of the Act for issuance of notice and in a faceless manner, to theextent provided in section 144B of the Act with reference to makingassessment or reassessment of total income or loss of assessee. 5.Section 3 of the said scheme provides as "for the purpose of thisScheme,- assessment, reassessment or re computation under section147 of the Act, issuance of notice under Section 148 of the Act, shallbethroughautomatedallocation,inaccordancewiththeriskmanagement strategy formulated by the Board as referred to in section148 of the Act for issuance of notice and in a faceless manner, to theextent provided in section 144B of the Act with reference to makingassessment or reassessment of total income or loss of assessee. 6.On the basis of the aforesaid provisions and the scheme orfaceless assessment, the learned counsel for the petitioner hassubmittedthat with respect to the proceedings to be drawn underSection 148A of the IT Act, the same has necessarily to be faceless.Two mandatory conditions are required to be adhered to by theDepartment; “1)theallocationmaybemadethroughtheautomated allocation system management strategyformulated by the Board under Section 148 of the ITAct; 2) the re-assessment has to be done in a faceless manner to the extent provided under Section 144Bof the Act.” 7.It is further submitted that after introduction of the aforesaid two schemes, it is now mandatory for the Revenue to conduct / initiateproceedings 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 theIT Act, has been commenced by the local jurisdictional officer and not inthe prescribed faceless manner. 9.Learned counsel for the petitioner submits that “it is well settledprinciple of law that where the power is given to do certain things incertain way / manner, the thing has to be done in that way/mannerand not any other manner which is otherwise not provided under thelaw, as observed in; Chandra Kishore Jha vs. Mahaveer & Others [(1999) 8 SCC266],Cherukuri Mani Vs. Chief Secretary Government of AndhraPradesh & Others (2015) 13 SCC 722 and Opto circuit India Limitedv. Axis Bank and others [(2021) 6 SCC 707]. 10.Learned counsel for the petitioner submits that under Section148A of the IT Act, the proceedings have not been faceless as itmandated under the two schemes formulated by the CBIC, theimpugned proceedings have not been done in the manner prescribedand therefore, the order impugned is vitiated and liable to be set aside. 11.Sri. Jose Joseph, the learned Senior Standing counsel for theIncome Tax Department has submitted that the faceless assessment procedure as prescribed under Section 144B of the IT Act has beenintroducedbytheTaxationandOtherLaws(RelaxationandAmendmentofCertainProvisions)Act,2020witheffectfrom01.04.2021.Section144B(1)providesthattheassessment,reassessment and re-computation under 143(3) of the IT Act or underSection 144 or 147 of the IT Act, as the case may be, shall be made ina faceless manner. He therefore, submits that what is contemplated ormandated under Section 144 B is the faceless procedure for theassessment, reassessment or re computation under sub-section (3) ofSection 143 or under Section 144 or under Section 147 of the IT Act,but not the procedure or the proceedings before the stage ofassessment/reassessment…etc. He therefore, submits that there is nosubstance in the submission made by the learned counsel for thepetitioner. He also submits that the reassessment in pursuance to thenotice issued under Section 148 of the IT Act, after the impugned orderhas been passed shall be faceless. There is no illegality in the orderpassed under Section 148A(b) of the IT Act which is impugned in thiswrit petition. It is also submitted that the assessment year is 2019-2020 and thefaceless procedure for assessment, reassessment or re computationhas been introduced with effect from 01.04.2021. Therefore evenotherwise, the petitioner cannot urge that the proceedings prior to the 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 facelessprocedure for assessment etc., reads thus; It is also submitted that the assessment year is 2019-2020 and thefaceless procedure for assessment, reassessment or re computationhas been introduced with effect from 01.04.2021. Therefore evenotherwise, the petitioner cannot urge that the proceedings prior to the 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 facelessprocedure for assessment etc., reads thus; “(1) Notwithstanding anything to the contrary contained in any otherprovision of this Act, the assessment, reassessment or re-computationunder subsection (3) of Section 143 or Section 144 or under Section147 as the case maybe with respect of the cases referred to insub-section (2), shall be made in a faceless manner as per the followingprocedure,….” 14.Sub-section(2)providesthatfacelessassessment underSub-section (1) shall be made in respect of such territorial area, orpersons or class of persons or class of incomes or cases or class ofcases, as may be specified by the court. 15.Thus, what is provided under sub-section (1) which has a nonobstanteclauseisthatthefacelessprocedureforassessment,re-assessment, re computation andnot the proceedings interior to thesaid assessment, re-assessment, re computation. Further, sub-section (2)provides that the faceless procedure for assessment, re-assessment andre computation shall be in respect of the persons, class of persons, classof cases, as may be, specified by the Central Board of Direct Taxes. Thepetitioner has not brought on record to submit that his case is covered by the notification issued by the CBIC. Even otherwise, the assessment yearis of 2019-2020 and the faceless procedure has been introduced witheffect from 01.04.2021. 16.Considering the aforesaid facts, provision of the Act and thesubmission, I am of the considered view that even if the petitioner’s caseis covered to be completed under the faceless assessment procedure, theproceedings interior to the reassessment proceedings are not illegal asthose are not completed under the faceless procedure as prescribedunder Section 144B of the IT Act and the scheme framed by the CBIC. Hence, I find no substance in this writ petition which is herebydismissed. SJ Sd/- DINESH KUMAR SINGH JUDGE APPENDIX OF WP(C) 7474/2024