Madras HC Quashes Section 148 Notices as They Were Issued by Jurisdictional AO

Mark Studio India Private Limited Vs ITO (Madras High Court)

The Madras High Court considered an appeal challenging an order of the learned Single Judge, who had dismissed the writ petition on the ground that notices issued under Sections 148A and 148 of the Income Tax Act would remain valid even if issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO). The appellant argued that the Madras High Court had, in several cases, followed the Bombay High Court judgment in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax and held that notices required to be issued by the FAO would be invalid if issued by the JAO. Counsel appearing for the Revenue accepted that the legal position advanced by the appellant was correct. The Revenue, however, requested that liberty be kept open to revive the notices if the Supreme Court interferes with the Bombay High Court judgment in Hexaware Technologies. Keeping the Revenue’s rights and contentions open, the Madras High Court quashed and set aside the impugned notices dated 15 April 2024. The appeal was disposed of without any order as to costs, and the interim application was closed.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This appeal impugns an order passed by the learned Single Judge.

2. The learned Single Judge was pleased to dismiss the petition on the ground that even if the notice has been issued by Jurisdictional Assessment Officer and not Faceless Assessment Officer, the notice issued under Section 148A/148 of the Income Tax Act will be valid.

3. Vardhini Karthik submitted that this Court has, in many matters, held, following the judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax¹, that notice that has to be issued by Faceless Assessment Officer has to be issued by Faceless Assessment Officer and if issued by Jurisdictional Assessment Officer, the same is not valid.

4. Ms.Premalatha, who takes notice for the Revenue, states that the law as proposed by Ms.Vardini Karthick is correct and therefore, the Court may quash and set aside the notices, but keep open liberty of the Revenue to re-ignite the notices in case the Apex Court interferes with the order and judgment of the Bombay High Court in Hexaware Technologies (supra).

5. Keeping open the Revenue’s rights and contentions, as noted above, the impugned notices dated 15.04.2024 are quashed and set aside. The appeal is disposed of. There shall be no order as to costs. Consequently, the interim application is closed.

Notes:

1 [2024] 162 taxmann.com 225 (Bom.); 464 ITR 430 (Bom.)