Bombay High Court Confirms Faceless Mechanism Under Section 144B And 151A Applies To Central And International Taxation Cases
Bombay High Court Confirms Faceless Mechanism Under Section 144B And 151A Applies To Central And International Taxation Cases
The Bombay High Court has ruled that the faceless assessment mechanism, as outlined in Section 151A of the Income Tax Act, will apply to all cases involving Central Charges and International Taxation. However, the Court clarified that only the assessment proceedings are excluded from this faceless mechanism.
Section 151A grants the Central Government the authority to create schemes for assessment, reassessment, and issuing notices under various sections, including Section 148 for income-escaping assessments, Section 148A for show-cause notices, and Section 151 for sanctioning notices.
The Division Bench, comprising Justices G. S. Kulkarni and Somasekhar Sundaresan, observed that the mandatory faceless procedure for issuing notices under Section 148, as prescribed by the Central Government's notification dated March 29, 2022, does not exclude Central and International Taxation cases from the faceless mechanism mandated by Section 144B and Section 151A.
An individual taxpayer challenged the notices issued under Section 148A(b) and Section 148 by the Jurisdictional Assessing Officer (JAO) in the International Tax Ward. The taxpayer argued that these notices violated the faceless mechanism requirements established under Section 151A and Section 144B.
The Revenue's counsel contended that Section 151A and the March 29, 2022, notification do not apply to cases under international taxation, citing a CBDT order dated September 6, 2021, which excluded such cases from the faceless mechanism.
The Bench noted that the order dated March 31, 2021, does not cover proceedings under Section 148A and Section 148, but only applies to assessment orders. The September 6, 2021, CBDT order reiterated that Central and International Tax Charges are exceptions to the faceless mechanism for assessment orders, but not for other proceedings.
The Court emphasized that the scheme notified under Section 151A does not reference or incorporate the March 31 and September 6 orders. It upheld that the faceless mechanism applies to the issuance of notices and selection of cases but not to the actual assessment or reassessment proceedings.
The High Court, therefore, allowed the taxpayer's petition and invalidated the reassessment order and notice, reinforcing the application of faceless procedures in compliance with Section 151A.
