Initiation of reassessment proceedings under Sections 148A and 148 post Faceless Scheme set aside on jurisdictional grounds

The note addresses whether the Jurisdictional Assessing Officer retained authority to initiate proceedings under Sections 148A and 148 after implementation of the Faceless Assessment Scheme, concluding that the post-Scheme initiation by the JAO is invalid. Relying on precedent cited, the impugned notices and the procedures adopted are characterised as illegal and are set aside, with consequential orders under Sections 147 and 148 quashed. The Department is granted liberty to pursue alternative action consistent with the Scheme and law, but the challenged reassessment proceedings initiated by the JAO are nullified on jurisdictional grounds.

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Issues: Whether notices issued under Section 148A and Section 148 of the Income-tax Act, 1961 and consequent assessment orders under Section 147 are vitiated for not being issued and proceeded with in a faceless manner in contravention of amendments effected by Finance Act, 2020 and Finance Act, 2021 and related notifications, thereby constituting a jurisdictional/procedural defect.

Analysis: The Court examined whether the issuance of notices under Sections 148A and 148 and the initiation of proceedings by the jurisdictional Assessing Officer complied with the faceless procedure mandated by the amended statutory scheme (including Section 151A and Notification No.18/2022) and whether non-compliance amounts to a jurisdictional or procedural illegality. The Court relied on this High Court's earlier decision in Kanakala Ravindra Reddy and consistent decisions of several other High Courts which held that initiation of proceedings outside the faceless mechanism contravenes the amended law. The Court considered the need to protect both the interest of the Revenue and the assessee, noted that the Supreme Court has SLPs pending on these issues, and adopted the approach of disposing covered writ petitions in terms of the earlier decision while preserving the Revenue's reserved right to proceed in accordance with law.

Conclusion: The writ petitions are allowed on the jurisdictional ground. The impugned notices under Sections 148A and 148 and consequential orders under Section 147 are set aside/quashed for non-compliance with the faceless procedure and related statutory requirements; the assessee succeeds on the decided issue.

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