Power To Issue Notice For Scrutiny Assessment U/S 143(2) Not Limited To Assessing Officer Or Officers Of NaFAC: Delhi HC

 The Delhi High Court has held that the power to issue notice for scrutiny assessment under Section 143(2) of the Income Tax Act, 1961 is not restricted to the Assessing Officer or the officers of National Faceless Assessment Centre (NaFAC) alone.

As per the statute, a notice for scrutiny assessment under Section 143(2) of the Act can be issued by the “Assessing Officer or the prescribed income-tax authority, as the case may be”

In the case at hand, notice under Section 143(2) of the Act was issued by the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation).

Petitioner assailed this notice on the ground of having been issued without jurisdiction. It submitted that the expression “as the case may be” indicates that in case, where the jurisdiction is vested within the Assessing Officer, that officer alone can issue notice under Section 143(2) of the Act.

It was argued that in such cases, it would not be open for the “prescribed income-tax authority” to issue a notice under Section 143(2) of the Act.

Disagreeing, a division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held, “A plain reading of Section 143(2) of the Act clearly indicates that either of the two authorities – either the “Assessing Officer” or “the prescribed income-tax authority” – can issue a notice under Section 143(2) of the Act. The expression “as the case may be” also indicates the same.”

Revenue also pointed to notifications issued by the Central Board of Direct Taxes in exercise of powers under Rule 12E of the Income-Tax Rules, 1962, authorizing the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), to act as the “prescribed income-tax authority” under Section 143(2) of the Act.

The High Court also rejected the contention that other than the Assessing Officer, only the authorized Income Tax Officers of the National Faceless Assessment Centre (NaFAC) can issue a notice under Section 143(2) of the Act.

It held, “This proposition is not supported by the plain language of Section 143(2) of the Act or Rule 12E of the Rules. Rule 12E of the Rules does not confine the power of the CBDT to authorise only the Income Tax Officers of the NaFAC as the prescribed authority for the purposes of Section 142(1) of the Act.”

Accordingly, the petition was dismissed.