In the recent ruling,the Punjab and Haryana High Court, invalidated notices issued under Section 148 of the Income Tax Act,1961 for non-compliance with the faceless assessment procedure.
Fastway Citizen Cable Network Pvt.Ltd,the petitioner-assessee,had its case reviewed, considering the conclusions from previous rulings by this Court and a Coordinate Bench. Both counsels acknowledged that the issues raised were resolved in CWP No. 21509 of 2023, titled Jasjit Singh vs. Union of India and others, and in CWP No. 15745 of 2024, titled Jatinder Singh Bhangu vs. Union of India and others.
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In the earlier rulings, the Court had clarified that the Board’s circulars and instructions could not supersede statutory provisions or make them ineffective. It stressed that legislative enactments with financial implications must be followed strictly.
It also indicated that authorities could not use their powers under Sections 119 and 120 of the Act, 1961, and Section 144B ( 7 & 8 ) to reinterpret legal provisions for their convenience, which could lead to confusion for taxpayers. Such instructions should only be issued to support and implement existing statutory provisions.
Given these precedents, the Court found that the notices issued by the Jurisdictional Assessing Officer ( JAO ) under Section 148 of the Act and the ensuing proceedings were not compliant with the statutory requirements. As a result, the notices and the associated proceedings were deemed to lack jurisdiction.
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Section 148 of the Income Tax Act allows the Assessing Officer to reopen an assessment if there is reason to believe that income has escaped assessment. A notice must be issued, generally within four years from the end of the relevant assessment year, extendable to six years in cases of serious tax evasion.
The officer must provide reasons for reopening based on tangible evidence, and taxpayers have the right to respond and present counter-evidence. The process must adhere to Section 144B, ensuring compliance with faceless assessment procedures to maintain fairness and transparency.
The division bench of Sanjeev Prakash Sharma ( Judge ) and Sanjay Vashisth ( Judge ) ruled in favor of the assessee, applying the principles from the previous cases and setting aside the notices issued under Section 148, along with any related proceedings. All pending applications were also resolved in line with this decision.
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