Income Tax Dept’s NFAC has Exclusive Power to issue Notice u/s 148: Punjab & Haryana HC [Read Order]

The Punjab and Haryana High Court has held that only the National Faceless Assessment Centre (NFAC) can issue reassessment notices under Section148 of the Income Tax Act, 1961. The Court ruled that reassessment notices issued by jurisdictional Assessing Officers, bypassing the NFAC mechanism, are legally unsustainable.

Justice Lisa Gill and Meenakshi I. Mehta disposed of the petition filed by Madan lal as per decision of Punjab & Haryana High Court in the case of Jatinder Singh Bhangu.

The petition was filed challenging the validity of a notice dated 29 July 2022 issued under Section 148, with the approval under Section 151.

The petitioner submitted that the notice was issued by an authority without jurisdiction. It was claimed that the same is in violation of the CBDTNotification dated 29 March 2022, which mandates a faceless reassessment scheme.

The counsel for the petitioner, Adv. Armaan Cajla submitted that the CBDT notification clearly authorised exclusive authority in the NFAC to issue notices under Sections 148 and 148A.

Further, the petitioner submitted that the reassessment proceedings starts from the stage of issuing notice under Section 148. Therefore, allowing jurisdictional officers to issue such notices would fail the intention of the faceless scheme.

Also read: No Stay on Income Tax Demand as Assessee itself Proposed InstalmentPayment before AO: Calcutta HC [Read Order]

The High Court to the decision in Jatinder Singh Bhangu case where similar reassessment notices issued by jurisdictional officers were set aside.

In the above-mentioned case, the Court ruled that the notification dated March 29, 2022, together with the statutory provisions under Sections 144B and 151A, clearly provides that the faceless regime's applicability is from the notice stage itself.

In the Jatinder Singh Bhangu case, the court observed that “It is axiomatic in tax jurisprudence that circulars, instructions and letters issued by Board or any other authority cannot override statutory provisions. The circulars are binding upon authorities and Courts are not bound by circulars. The mandate of Section 144B, 151A read with notification dated 29.03.2022 issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, office memorandum or any other instruction issued by Board or any other authority cannot be relied upon.”

The court, referring to the above case and its observations on the issue, disposed of the issue.

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