Validity of reopening of assessment notices: faceless automated mechanism required for reassessment; JAO-issued notices invalidated in challenged cases

Validity of reopening of assessment focuses on whether reassessment notices issued by the jurisdictional assessing officer could be valid after the Finance Act, 2021 mandated automated faceless assessments w.e.f. 01.04.2021. The article explains legal reasoning that post-amendment reassessment proceedings initiated on or after that date must follow the automated faceless mechanism, so notices issued by the JAO for cases assigned to central charges are inconsistent with the statutory faceless scheme and were quashed. It stresses mandatory compliance with the faceless allocation and applicability of the provision requiring prior procedural adherence before initiating reassessment.

---

---

Issues: Whether notices under Section 148 of the Income-tax Act, 1961 issued in cases assigned to "central charges" on or after 01.04.2021 are required to be issued and processed by the faceless mechanism (automated allocation/FAO) under the Finance Act, 2021 and the e-Assessment Scheme/CB D T orders, or whether the Jurisdictional Assessing Officer (JAO) may issue such notices.

Analysis: The Court examined the amendments effected by the Finance Act, 2021 (w.e.f. 01.04.2021) which introduced substituted provisions for reassessment and the faceless assessment framework under Section 144B. The e-Assessment of Income Escaping Assessment Scheme, 2022 (Notification S.O. 1466(E) dated 29.03.2022) prescribes that issuance of notices under Section 148 and assessment/reassessment under Section 147 shall be through automated allocation and in a faceless manner to the extent provided in Section 144B. The CBDT order dated 06.09.2021 identifies limited exceptions for passing assessment orders in cases assigned to central charges and international tax charges, but a plain reading shows that this carve-out relates to passing assessment orders and does not exempt issuance of notices under Section 148 from the faceless procedure. The Court considered prior decisions including the Division Bench decision in Kankanala Ravindra Reddy and Sri Venkataramana Reddy Patloola, and the Supreme Court's guidance in Union of India v. Ashish Agarwal permitting remedial application of substituted provisions and prescribing procedural compliance (including treating certain notices as deemed under Section 148A). The provisions of Section 153A and Section 153D were examined; Section 153D's requirement of prior approval applies to orders under Sections 153A/153B and does not carve out an exception to Section 151A or the faceless issuance requirement. The Court held that absent a specific statutory exception to Section 151A or the Scheme, assessment/reassessment proceedings initiated on or after 01.04.2021, including issuance of Section 148 notices in matters assigned to central charges, must follow the faceless automated allocation mechanism and the substituted procedural safeguards.

Conclusion: The writ petitions are allowed. Notices issued under Section 148 in cases assigned to central charges that were not issued by the faceless automated allocation mechanism are quashed. The question of law is answered in favour of the petitioners (assessee) and against the Revenue.

Ratio Decidendi: For proceedings initiated on or after 01.04.2021, notices under Section 148 and related reassessment proceedings must be issued and conducted via the faceless automated allocation mechanism provided by the Finance Act, 2021 and the e-Assessment Scheme/CB D T orders; exceptions in the CBDT order pertain to passing assessment orders and do not exempt issuance of Section 148 notices for cases assigned to central charges.

---