Jewel Cantt Vs Union of India & Ors. (Bombay High Court)
The Bombay High Court in Jewel Cantt vs Union of India & Ors. dealt with a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961. The petitioner sought to quash the notice on the primary ground that it was issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO), as mandated under law.
The Court began by noting that Rule was issued and made returnable forthwith, with respondents waiving service. The matter was heard finally with the consent of the parties.
The petitioner argued that the notice under Section 148 suffered from a fatal defect since it was issued by an authority lacking jurisdiction. According to the petitioner, the statutory framework requires that such notices be issued by a Faceless Assessing Officer in accordance with the faceless assessment scheme under the Income Tax Act. Therefore, the notice issued by the Jurisdictional Assessing Officer was without authority and invalid in law.
In support of this contention, the petitioner relied on the decision of a Division Bench of the Bombay High Court in Hexaware Technologies Ltd. v. Assistant Commissioner of Income Tax, Circle 15(1)(2) [(2024) 162 com 225 (Bombay)]. In that case, the Court had held that a notice issued by a Jurisdictional Assessing Officer instead of the Faceless Assessing Officer was contrary to the faceless assessment provisions and hence invalid. The petitioner contended that the facts and legal issues in the present case were identical and that the decision in Hexaware Technologies Ltd. squarely covered the present controversy.
On behalf of the Revenue, the learned counsel did not dispute that the issue was covered by the Hexaware Technologies Ltd. decision. However, the Revenue pointed out that the said judgment had been challenged before the Hon’ble Supreme Court and was likely to be taken up shortly. Nonetheless, the counsel for the Revenue candidly acknowledged that no stay had been granted by the Supreme Court against the operation of the Hexaware Technologies Ltd. judgment.
The High Court observed that, in the absence of any stay on the Hexaware Technologies Ltd. decision, it was bound to follow the same. The Court noted that it would not be appropriate to keep the matter pending indefinitely merely because the Revenue had filed an appeal before the Supreme Court. Since the issue was fully covered by the binding Division Bench decision, the Court found no reason to depart from that precedent.
Accordingly, the High Court set aside the impugned notice issued under Section 148 and all consequential proceedings and orders arising from it. The notice was quashed on the ground that it had been issued by an authority not empowered under law to do so.
At the same time, the Court provided a safeguard for the Revenue in the event of a reversal of the Hexaware Technologies Ltd. judgment by the Supreme Court. It granted liberty to the Revenue to seek revival of the present petition if the Supreme Court were to set aside the Hexaware ruling. The Court clarified that such revival could be sought simply by moving a praecipe, without the need to file a separate interim application.
The High Court further directed that if the petition were revived in such an eventuality, there would automatically be a stay on the operation and implementation of the impugned notice under Section 148 until further orders. However, if the Supreme Court were to dismiss the Special Leave Petition challenging Hexaware Technologies Ltd., there would be no question of revival, and the present order quashing the notice would attain finality.
The Court also clarified that, in case of revival, the petition would have to be decided afresh on its own merits, taking into account all other grounds of challenge raised by the petitioner against the Section 148 notice.
Finally, the Court made the Rule absolute and disposed of the writ petition accordingly. No order as to costs was made. The order was directed to be digitally signed by the Court’s Private Secretary or Personal Assistant, and all concerned authorities were instructed to act upon production of a digitally signed copy transmitted by fax or email.
In essence, the Bombay High Court quashed the reassessment notice issued under Section 148 as invalid due to lack of jurisdiction, reiterating that only a Faceless Assessing Officer can issue such notices in line with the faceless assessment regime. However, it left the door open for revival if the Supreme Court subsequently overturns the Hexaware Technologies Ltd. ruling.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
