Reassessment quashed for invalid s.148 notice issued without complying with mandatory faceless procedure under s.144B

ITAT Chandigarh allowed the assessee's cross-objection and dismissed the Revenue's appeal, holding that the notice issued u/s 148 for AY 2019-20 was invalid and without jurisdiction. The Tribunal found that the notice, issued on 29.03.2023, contravened the mandatory faceless reassessment procedure prescribed under s.144B, which had come into force by Notification dated 29.03.2022. Following binding HC precedent on identical facts for another year of the same assessee, ITAT quashed the reassessment order. Consequently, all grounds raised by the Revenue on the merits of the reassessment were treated as academic and were not adjudicated.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether a notice issued under Section 148 of the Income Tax Act by the jurisdictional Assessing Officer on 29.03.2023, after the Ministry of Finance notification dated 29.03.2022 mandating faceless proceedings, is without jurisdiction and invalid.

1.2 Consequentially, whether the reassessment order passed pursuant to such notice is liable to be quashed, rendering the Revenue's grounds on merits academic.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of notice under Section 148 issued by jurisdictional Assessing Officer post notification dated 29.03.2022

Legal framework (as discussed):

2.1 The Court noted the issuance of a notification dated 29.03.2022 by the Ministry of Finance, Government of India, under the scheme of faceless proceedings, read with Section 144B of the Income Tax Act, post which notices under Section 148 were required to be issued through the faceless mechanism.

2.2 The Court referred to and relied upon the judgment of the jurisdictional High Court wherein a similar notice under Section 148 issued by the jurisdictional Assessing Officer on 01.03.2025 was challenged, and where the High Court, following its earlier judgments in the matters of Jatinder Singh Bhangu and Jasjit Singh, had held such a notice to be without jurisdiction and had quashed it with liberty to proceed in accordance with law.

Interpretation and reasoning:

2.3 It was an admitted position on facts that the impugned notice under Section 148 in the present matter was issued on 29.03.2023, i.e., after the notification dated 29.03.2022 mandating faceless proceedings.

2.4 The Court observed that the facts in the present assessment year were squarely covered by the facts in the subsequent year considered by the jurisdictional High Court, where an identical jurisdictional objection had been upheld.

2.5 The Court recorded that the Departmental Representative could not controvert the factual contention that the notice had been issued by the jurisdictional Assessing Officer and that the issue stood covered by the binding decisions of the jurisdictional High Court, though he stated that the Revenue was in appeal before the Supreme Court against such High Court judgments.

2.6 Respectfully following the law laid down by the jurisdictional High Court, the Court held that, in view of the notification dated 29.03.2022 requiring faceless issuance, a notice under Section 148 issued thereafter by the jurisdictional Assessing Officer in the conventional manner was without jurisdiction.

Conclusions:

2.7 The notice issued under Section 148 for assessment year 2019-20 on 29.03.2023 by the jurisdictional Assessing Officer was held to be bad in law and without jurisdiction.

2.8 Ground No. 1 (jurisdictional ground) of the Cross Objection was allowed.

2.9 The reassessment order passed pursuant to the said notice was quashed.

Issue 2: Effect of quashing the reassessment order on the Revenue's grounds on merits

Interpretation and reasoning:

2.10 The Court noted that, since the reassessment order itself had been quashed on jurisdictional grounds, all issues raised by the Revenue in its appeal on the merits of the assessment ceased to survive.

2.11 It was observed that the reassessment order had been quashed on the strength of multiple judgments of the jurisdictional High Court, and that other High Courts had also taken a similar view.

Conclusions:

2.12 The issues raised by the Revenue on merits were held to be merely academic in nature and were not adjudicated.

2.13 The Revenue's appeal was dismissed as a consequence of the quashing of the reassessment order.

2.14 The Cross Objection filed by the assessee was allowed.

---