The Himachal Pradesh High Court ordered an interim stay on the Income Tax notice issued without following the automated allocation which violated the Central Board of Direct Taxes ( CBDT )’s Faceless Scheme.
Gurmukh Singh Thakur, the petitioner had received a notice under Section 148 of the Income Tax Act, 1961, issued by the the Jurisdictional Officer (first respondent). The petitioner challenged the notice issued by the first respondent before the Himachal Pradesh High Court.
The petitioner’s counsel submitted that the notice was invalid as it did not comply with the automated allocation system mandated by Section 151-A of the Income Tax Act effective 1st November 2020 and the notification issued by the CBDT in 2022, which requires reassessment notices to be handled in a faceless manner through random allocation.
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The bench comprising Justice Vivek Singh Thakur and Justice Ranjan Sharma observed that the impugned notice under Section 148 issued by the first respondent (the Jurisdictional Officer) appeared to be without jurisdiction.
The court noted that the notice was not issued as per the automated allocation system, which is now mandatory under the Scheme formulated by the Central Board of Direct Taxes (CBDT).
The court referred to the Telangana High Court ruling in the case of Kankanala Ravindra Reddy vs. Income Tax Office where it was held that the reassessment notice issued without following the automated allocation process was invalid and without jurisdiction.
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Similarly, the court referenced the Bombay High Court ruling in the case of Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income Tax & Others which held that the Faceless Assessment Scheme, introduced by the CBDT on 29th March 2022, mandates that reassessment cases must be allocated through an automated system that utilizes technologies such as artificial intelligence and machine learning. The court ruled that reassessment notices issued without following this automated process were invalid and bad in law.
In light of the above observation, the Himachal Pradesh High Court ordered an interim stay of all proceedings of the impugned notice issued to the petitioner till the next hearing on 24.10.2024.
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