In the recent ruling, the High Court of Punjab and Haryana, invalidated tax notices issued to the assessee, emphasizing that circulars and instructions from tax authorities cannot override statutory provisions of the Income Tax Act, 1961.
Anju Arora,the petitioner-assessee,filed a writ petition challenging the issuance of notices and orders by the Jurisdictional Assessing Officer ( JAO ). Both counsels agreed that the issue in question had already been fully examined and concluded by this Court in two recent cases: Jasjit Singh vs. Union of India and others ( CWP No. 21509 of 2023 ) decided on 29.07.2024 and Jatinder Singh Bhangu vs. Union of India and others ( CWP No. 15745 of 2024 ) decided on 19.07.2024.
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The Court in Jasjit Singh ruled that circulars or instructions issued by the Board should not override statutory provisions, nor render them ineffective. It highlighted that financial legislation must be adhered to strictly and mandatorily, and the authorities cannot use their powers in a way that disregards these provisions, as it could cause confusion for taxpayers and impose undue hardship.
Referencing Sections 119, 120, and 144B (7 & 8) of the I Act, noted that the issuance of notices by the JAO without the required faceless assessment under Section 144B was contrary to the Act. Consequently, in Jasjit Singh, the Court had set aside several notices and orders issued without adhering to these provisions. The judgment emphasized that Board instructions and circulars are meant to support and implement statutory provisions, not to supersede them.
Applying the findings from Jasjit Singh to the present case, the Court set aside the notice issued to the petitioner by the JAO under Section 148A(b) dated 21.03.2023, the order under Section 148A(d) dated 07.04.2023, and the notice under Section 148 dated 07.04.2023.
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The Court held that these notices and proceedings were invalid due to non-compliance with the mandatory faceless assessment requirement under Section 144B of the Act.
Furthermore, the Court clarified that the revenue authorities retain the liberty to follow the proper statutory procedures under the Act if deemed necessary. All pending applications were also disposed of in light of the main order.
The Division Bench of Sanjeev Prakash Sharma ( Judge ) and Sanjay Vashisth ( Judge ) applied the observations and conclusions from the Jasjit Singh decision, mutatis mutandis, to the present case, allowing the writ petition in favor of the assessee.
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