Section 148 notices issued by Joint Assessment Officer invalid due to lack of jurisdiction under faceless assessment proceedings

The Bombay HC held that notices issued under Section 148 by Joint Assessment Officer (JAO) instead of Faceless Assessment Officer (FAO) were invalid due to lack of jurisdiction. The court found non-compliance with Section 151A provisions and Central Government notification dated 29 March 2022, which mandated FAO to issue such notices in faceless assessment proceedings. Following the precedent in Hexaware Technologies Ltd., the court declared the impugned notices illegal and invalid, allowing the petition in favor of the assessee.

---

---

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 and reassessment order for the Assessment Year 2018-19.

Analysis:
The Writ Petition was filed to challenge a notice dated 7th April, 2022, issued under Section 148 of the Income Tax Act, 1961, and the underlying prior notice and order under Section 148A(b) and Section 148(A)(d) of the Act. The reassessment initiated for the returns filed by the Petitioner for the Assessment Year 2018-19 resulted in a reassessment order dated 22nd March, 2024, which was also contested in the Writ Petition.

The High Court observed that the notice and order were issued by the Jurisdictional Assessing Officer (JAO) and not by a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. Referring to the Division Bench judgment in Hexaware Technologies Limited case, the Court emphasized that the FAO is the only authority authorized to issue notices under Section 148 of the Act in a faceless manner, as per the Scheme framed by the CBDT. Non-compliance with the Scheme renders the notice invalid, vitiating the proceedings.

Both parties agreed that the proceedings under Section 148 of the Act would not be sustainable due to the judgment in Hexaware. Citing a recent decision in Nainraj Enterprises Pvt. Ltd. case, where similar circumstances led to the petition being allowed, the Court reiterated the importance of complying with Section 151A of the Act.

The Respondent highlighted that the reassessment had been completed before the Writ Petition was filed, but the Petitioner argued that the notice's defectiveness warranted quashing the reassessment proceedings and all consequential actions. Referring to the Vikram Developers Private Limited case, the Court affirmed that any reassessment order based on a defective notice under Section 148 should be quashed, along with any demand or penalty notices.

Consequently, the Court allowed the Writ Petition, quashing the impugned notice, reassessment order, and all consequential recovery or penalty notices due to the lack of jurisdiction by the JAO. The judgment was based on non-compliance with Section 151A of the Act, without expressing opinions on other issues raised in the petition.

---