High Court of KeralaSingle Judge2024-02-27Writ petition dismissed.

ASAMANNOORSERVICECO-OPERATIVEBANKLTDNO.317, ASAMANNOR, ERNAKULAM, REPRESENTED BY ITS SECRETARY KIRANPASHOK

Case / Petition Number:WP(C) NO.7474 OF 2024

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Dinesh Kumar Singh
Judgment Date: 2024-02-27
Court Decision / Holding: Writ petition dismissed.
Final Disposition: Writ petition dismissed.

Parties to the Case

Appellants / Petitioners

ASAMANNOORSERVICECO-OPERATIVEBANKLTD NO.317, ASAMANNOR, ERNAKULAM, REPRESENTED BY ITS SECRETARY KIRAN PASHOK, PIN-683549

Respondents

THE INCOME TAX OFFICER WARD-2, ALUVA, PIN-683101

Legal Representation & Advocates

Counsels for Petitioners

• Adv Premjit Nagendran

Counsels for Respondents

• Sri. Jose Joseph (Senior Standing Counsel for the Income Tax Department)

Case Synopsis & Summary

The petitioners, ASAMANNOOR Service Co-Operative Bank Ltd., represented by its Secretary Kiran Pashok, challenged Ext.P9, an order under Clause d of Section 148A(a) of the Income Tax Act, 1961, for AY 2019-2020, opening assessment and issuing a notice under Section 148. The challenge centers on the shift to a faceless regime introduced by the Finance Act, 2021 and CBIC Schemes 2022, which contemplate automated allocation and faceless re-assessment, notably under Sections 144B, 151A and 130. The petitioner contends two mandatory conditions are triggered: (i) allocation through an automated allocation system for Section 148, and (ii) reassessment to be conducted in a faceless manner to the extent provided in Section 144B. It is argued that the Section 148A proceedings were initiated by the local jurisdictional officer and not through faceless allocation, rendering Ext.P9 vitiated. Citing jurisprudence in Chandra Kishore Jha v. Mahaveer & Others, Cherukuri Mani v. Chief Secretary, and Opto Circuit India Ltd. v. Axis Bank, the petitioner relies on a well-settled principle that powers must be exercised in the manner prescribed by law. The respondent contends that 144B faceless regime applies prospectively from 01.04.2021 to assessments/reassessments under 143(3)/144/147, and that pre-2021 proceedings under 148A are not invalid. The learned Judge held that, even if the case falls under faceless assessment, interior proceedings of reassessment are not illegal if they are not completed under 144B, and dismissed the petition. The decision reflects a nuanced interpretation of how faceless regimes interact with pre-2021 proceedings, preserving validity of the Ext.P9 process to the extent it precedes formal reassessment under 144B.

Provisions of Law Cited

Section 148A(a) of the Income Tax Act, 1961Section 148A(b) of the Income Tax Act, 1961Section 148 of the Income Tax Act, 1961Section 144B of the Income Tax Act, 1961Section 151A(1) and Section 151A(2) of the IT ActSection 130 of the IT ActSection 130(1) and Section 130(2) of the IT ActSection 24 of the IT ActSection 147 of the IT ActSection 143(3) of the IT ActSection 144 of the IT ActTaxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020Finance Act, 2021CBIC Faceless Jurisdiction of Income Tax Authorities Scheme, 2022E‑Assessment of Income Escaping Assessment Scheme, 2022

Legal Doctrines & Maxims

Power must be exercised in the manner prescribed by statute (well-settled principle cited from Chandra Kishore Jha v. Mahaveer & Others; Cherukuri Mani v. Chief Secretary & Others; Opto Circuit India Ltd v. Axis Bank)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner argues that Ext.P9, issued under Section 148A(a), must be governed by the faceless regime introduced by the Finance Act, 2021 and CBIC Schemes 2022. It contends two mandatory conditions apply: automated allocation under Section 148 and faceless reassessment under Section 144B. Since 148A proceedings were initiated by a local officer and not through faceless allocation, Ext.P9 is vitiated. It relies on the principle that power must be exercised in the manner prescribed by law, citing Jha, Mani, and Opto Circuit. It claims that pre-2021 assessments (AY 2019-2020) fall outside the faceless regime, and interior reassessment steps must also be faceless; hence the impugned order should be struck down.

Contentions of Respondents

The respondents contend that the faceless regime under Section 144B applies to assessment/reassessment under Sections 143(3), 144, or 147 from 01.04.2021 onward and does not invalidate pre-2021 proceedings. They argue that Section 148A(b) pertains to the notice stage, and Section 144B’s requirement of faceless procedures is for assessment/reassessment, not the pre-notice stage. The petitioner’s challenge to the pre-2021 148A process is unfounded since the regime’s statutory operation is prospective. The department maintains there is no illegality in Ext.P9 and that guidelines under 144B do not render the early 148A action invalid; interior proceedings, if not carried out under 144B, remain permissible under the statute.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Chandra Kishore Jha v. Mahaveer & Others	[(1999) 8 SCC 266	Positive	Cited to support the proposition that power must be exercised in the manner prescribed by law.
Cherukuri Mani v. Chief Secretary Government of Andhra Pradesh & Others	(2015) 13 SCC 722	Positive	Cited as authority for the principle that actions must conform to statutory prescriptions.
Opto Circuit India Ltd v. Axis Bank & Others	[(2021) 6 SCC 707	Positive	Cited to reinforce the principle requiring adherence to prescribed procedural modes.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against ASAMANNOORSERVICECO-OPERATIVEBANKLTDNO.317, ASAMANNOR, ERNAKULAM, REPRESENTED BY ITS SECRETARY KIRANPASHOK and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT`** ``` THEHONOURABLEMR.JUSTICEDINESHKUMARSINGH TUESDAY,THE27[TH]DAYOFFEBRUARY2024/8THPHALGUNA,1945 WP(C)NO.7474OF2024 ``` ``` PETITIONER/S: ``` ``` ASAMANNOORSERVICECO-OPERATIVEBANKLTDNO.317, ASAMANNOR,ERNAKULAM,REPRESENTEDBYITSSECRETARY KIRANPASHOK,,PIN-683549 BYADVPREMJITNAGENDRAN ``` ``` RESPONDENT/S: ``` ``` THEINCOMETAXOFFICERWARD-2, ALUVA,PIN-683101 ``` ``` OTHERPRESENT: ``` ``` JOSEJOSEPH-SC ``` ``` THISWRITPETITION(CIVIL)HAVINGCOMEUPFOR ADMISSIONON27.02.2024,THECOURTONTHESAMEDAY DELIVEREDTHEFOLLOWING: ``` ``` WP(C)NO.7474OF2024 ``` ``` 2 ``` ## **JUDGMENT** ## **Dated this the 27[th] day of February, 2024** The present writ petition has been filed impugning Ext.P9 order passed under Clause d of Section 148A(a) of the Income Tax Act, 1961 (‘the IT Act’ for short) for the assessment year 2019-2020 whereby, the assessing officer has decided to open the assessment of the petitioner for the said assessment year and issue notice under Section 148 of the IT Act. The petitioner, the assessee under the provisions of the Income Tax Act, 1961 had not filed any return of income for the assessment year 2019-2020. The information in possession of the assessing officer and those collected from the cooperative department during the course of proceedings and petitioner’s reply to the enquiry notice under Section 148A(a) of the IT Act and show cause notice under Section 148A(b) of the IT Act would suggest that income chargeable to tax attributable to the banking transactions of the assessee for the financial year 2018-2019, relevant to the assessment year 2019-2020 had escaped assessment. Therefore, the assessment officer recorded satisfaction that it was a fit case for issue of notice under Section 148 of the IT Act. 2.Learned counsel for the petitioner has made an attempt to challenge the said order in Ext.P9 on the ground that the Finance Act, 2021 had brought the procedure of faceless regime for the purposes of ``` WP(C)NO.7474OF2024 ``` ``` 3 ``` governing the assessment under the Income Tax Act. The new provisions got introduced in Section 144B, Section 151A and Section 130 of the IT Act. In furtherance to the powers conferred under Section 130(1) and Section 130(2) of the IT Act, the Central Board of Direct Taxes has framed a scheme called “Faceless Jurisdiction of Income Tax Authorities Scheme, 2022. In the said Scheme, automated allocation, is defined under Section 2(b), which reads as ‘ automated allocation’ means an algorithm for randomized allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimize the use of resources;’. 3.Section 3(b) of the said Scheme deals with vesting of the jurisdiction with the Assessing Officer and reads as: "Vesting the jurisdiction with the Assessing officer as referred to in section 24 of the Act, shall be in a faceless manner, through automated allocation, in accordance with and to the extent provided in-” 4.The Central Board of Direct Taxes, in exercise of its power conferred under Section 151A(1) and Section 151A(2) of the IT Act has framed another Scheme called the E-assessment of Income Escaping Assessment Scheme, 2022. Under the said scheme, “automated allocation,' means an algorithm for randomized allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimize the use of resources. " ``` WP(C)NO.7474OF2024 ``` ``` 4 ``` 5.Section 3 of the said scheme provides as "for the purpose of this Scheme,- assessment, reassessment or re computation under section 147 of the Act, issuance of notice under Section 148 of the Act, shall be through automated allocation, in accordance with the risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. 6.On the basis of the aforesaid provisions and the scheme or faceless assessment, the learned counsel for the petitioner has submitted that with respect to the proceedings to be drawn under Section 148A of the IT Act, the same has necessarily to be faceless. Two mandatory conditions are required to be adhered to by the Department; “1) the allocation maybe made through the automated allocation system management strategy formulated by the Board under Section 148 of the IT Act; 2) the re-assessment has to be done in a faceless manner to the extent provided under Section 144B of the Act.” 7.It is further submitted that after introduction of the aforesaid two ``` WP(C)NO.7474OF2024 ``` ``` 5 ``` schemes, it is now mandatory for the Revenue to conduct / initiate proceedings pertaining to reassessment under Section 147, 148 & 148A of the Act in a faceless manner. 8.In the present case, the proceedings under Section 148A of the IT Act, has been commenced by the local jurisdictional officer and not in the prescribed faceless manner. 9.Learned counsel for the petitioner submits that “it is well settled principle of law that where the power is given to do certain things in certain way / manner, the thing has to be done in that way/ manner and not any other manner which is otherwise not provided under the law, as observed in; _**Chandra Kishore Jha vs. Mahaveer & Others [(1999) 8 SCC 266],Cherukuri Mani Vs. Chief Secretary Government of Andhra Pradesh & Others (2015) 13 SCC 722 and Opto circuit India Limited v. Axis Bank and others [(2021) 6 SCC 707].**_ 10.Learned counsel for the petitioner submits that under Section 148A of the IT Act, the proceedings have not been faceless as it mandated under the two schemes formulated by the CBIC, the impugned proceedings have not been done in the manner prescribed and therefore, the order impugned is vitiated and liable to be set aside. 11.Sri. Jose Joseph, the learned Senior Standing counsel for the Income Tax Department has submitted that the faceless assessment ``` WP(C)NO.7474OF2024 ``` ``` 6 ``` procedure as prescribed under Section 144B of the IT Act has been introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.04.2021. Section 144B(1) provides that the assessment, re assessment and re-computation under 143(3) of the IT Act or under Section 144 or 147 of the IT Act, as the case may be, shall be made in a faceless manner. He therefore, submits that what is contemplated or mandated under Section 144 B is the faceless procedure for the assessment, reassessment or re computation under sub-section (3) of Section 143 or under Section 144 or under Section 147 of the IT Act, but not the procedure or the proceedings before the stage of assessment/reassessment…etc. He therefore, submits that there is no substance in the submission made by the learned counsel for the petitioner. He also submits that the reassessment in pursuance to the notice issued under Section 148 of the IT Act, after the impugned order has been passed shall be faceless. There is no illegality in the order passed under Section 148A(b) of the IT Act which is impugned in this writ petition. It is also submitted that the assessment year is 2019-2020 and the faceless procedure for assessment, reassessment or re computation has been introduced with effect from 01.04.2021. Therefore even otherwise, the petitioner cannot urge that the proceedings prior to the ``` WP(C)NO.7474OF2024 ``` ``` 7 ``` reassessment are bad in law as they are not the faceless proceedings. 12.I have considered the submissions advanced. 13.Sub-section (1) of Section 144B which prescribes the faceless procedure for assessment etc., reads thus; “(1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or re-computation under subsection (3) of Section 143 or Section 144 or under Section 147 as the case maybe with respect of the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure,….” 14.Sub-section (2) provides that faceless assessment under Sub-section (1) shall be made in respect of such territorial area, or persons or class of persons or class of incomes or cases or class of cases, as may be specified by the court. 15.Thus, what is provided under sub-section (1) which has a _non obstante clause is that the_ faceless procedure for assessment, re-assessment, re computation and not the proceedings interior to the said assessment, re-assessment, re computation. Further, sub-section (2) provides that the faceless procedure for assessment, re-assessment and re computation shall be in respect of the persons, class of persons, class of cases, as may be, specified by the Central Board of Direct Taxes. The petitioner has not brought on record to submit that his case is covered by ``` WP(C)NO.7474OF2024 ``` ``` 8 ``` the notification issued by the CBIC. Even otherwise, the assessment year is of 2019-2020 and the faceless procedure has been introduced with effect from 01.04.2021. 16.Considering the aforesaid facts, provision of the Act and the submission, I am of the considered view that even if the petitioner’s case is covered to be completed under the faceless assessment procedure, the proceedings interior to the reassessment proceedings are not illegal as those are not completed under the faceless procedure as prescribed under Section 144B of the IT Act and the scheme framed by the CBIC. Hence, I find no substance in this writ petition which is hereby dismissed. **Sd/-** **DINESH KUMAR SINGH** **JUDGE** **SJ** ``` WP(C)NO.7474OF2024 ``` ``` 9 ``` ## **`APPENDIX OF WP(C) 7474/2024`** |**`PETITIONER EXHIBITS`**|| |---|---| |**`Exhibit P-1`**|**`NOTICENO. ITBA/COM/F/17/2022-23/1049148617(1)`**| ||**`DATED 27.01.2023 ISSUED BY THE RESPONDENT.`**| |**`Exhibit P-2`**|**`A`** **`TRUE`** **`COPY`** **`OF`** **`THE`** **`REPLY`** **`OF THE PETITIONER`**| ||**`DATED 01.02.2023`**| |**`Exhibit P-3`**|**`A`** **`TRUE`** **`COPY`** **`OF`** **`NOTICE`** **`NO.`** **`ITBA/AST/F/148A`**| ||**`(SCN)/`** **`2022-23/1050325679`** **`(1)`** **`DATED`**| ||**`02.03.2023 ISSUED BY THE RESPONDENT`**| |**`Exhibit P-4`**|**`A`** **`TRUE`** **`COPY`** **`OF`** **`THE`** **`REPLY`** **`OF THE PETITIONER`**| ||**`DATED 08.03.2023`**| |**`Exhibit P-5`**|**`A TRUE COPY OF THE ORDER UNDER SECTION 148A`**| ||**`(D)`** **`NO.`** **`ITBA/AST/F/148A/2022-23/1051469323`**| ||**`(1) DATED 28.03.2023 ISSUED BY THE RESPONDENT`**| |**`Exhibit P-6`**|**`A TRUE COPY OF THE NOTICE UNDER SECTION 148`**| ||**`NO.`** **`ITBA/AST/S/148/2022-23/1051490565`** **`(1)`**| ||**`DATED 28.03.2023 ISSUED BY THE RESPONDENT`**| |**`Exhibit P-7`**|**`A`** **`PHOTOCOPY`** **`OF`** **`THE`** **`SAID`** **`LETTER`** **`AND`** **`THE`**| ||**`ADDITIONAL OBJECTIONS FILED BY THE PETITIONER`**| ||**`DATED`** **`26.10.2023`** **`DULY`** **`ACKNOWLEDGED`** **`BY`** **`THE`**| ||**`OFFICE OF THE RESPONDENT`**| |**`Exhibit P-8`**|**`A`** **`PHOTOCOPY`** **`OF`** **`THE`** **`SAID`** **`LETTER`** **`AND`** **`THE`**| ||**`ARGUMENT`** **`NOTE`** **`FILED`** **`BY THE PETITIONER DATED`**| ||**`23.11.2023 DULY ACKNOWLEDGED BY THE OFFICE OF`**| ||**`THE RESPONDENT`**| |**`Exhibit P-9`**|**`A COPY OF THE ORDER UNDER SECTION 148A (D) OF`**| ||**`THE ACT DATED 13.02.2024`**| |**`Exhibit P10`**|**`FACELESS`** **`JURISDICTION`** **`OF`** **`INCOME`** **`TAX`**| ||**`AUTHORITIES SCHEME, 2022 DATED 28-03-2022`**| |**`Exhibit P-11`**|**`E-ASSESSMENT`** **`OF`** **`INCOME`** **`ESCAPING`** **`ASSESSMENT`**| ||**`SCHEME 2022 DATED 29-03-2022`**|