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of <h1>Reassessment Notices Must Be Issued by FAO per CBDT Notification 29.03.2022; JAO Notices Invalid Under Section Rules</h1> The ITAT Chennai held that reassessment notices must be issued by the FAO as per the CBDT Notification dated 29.03.2022, following the Bombay HC ruling in ... Validity of reassessment proceedings - jurisdiction of Jurisdictional Assessing Officer (‘JAO’) in the light of the CBDT Notification dated 29.03.2022 - HELD THAT:- We follow the law as laid down in Hexaware Technologies Ltd [2024 (5) TMI 302 - BOMBAY HIGH COURT] as held it is mandatory for the FAO to issue the concerned notices and issuance thereof by the JAO would make the notice invalid. As submitted that the Revenue does not accept the law as laid down in Hexaware Technologies Ltd (supra); and that there is a special leave petition filed against the order and judgment in Hexaware Technologies Ltd (supra) and the same is expected to be taken up after the Supreme Court reopens. As clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court. Assessee appeal allowed. ISSUES: Whether the notice issued under Section 148 of the Income Tax Act, 1961 by the Jurisdictional Assessing Officer (JAO) complies with the mandatory faceless assessment procedure prescribed by the CBDT Notification dated 29.03.2022.Whether the CBDT Notification dated 29.03.2022, formulating the 'e-assessment of income assessment scheme, 2022,' is applicable to assessment proceedings initiated after the notification date.Whether issuance of notice under Section 148 by JAO instead of the Faceless Assessment Officer (FAO) renders the notice and consequent proceedings invalid.What is the legal effect and applicability of the doctrine of merger in the context of dismissal of Special Leave Petitions (SLPs) by the Supreme Court at the admission stage.Whether the judgments of various High Courts and the Supreme Court's refusal to interfere with such judgments bind the parties under Article 141 of the Constitution. RULINGS / HOLDINGS: The notice under Section 148 issued by the JAO (DCIT, Corporate Circle, Madurai) is not in accordance with the mandatory faceless assessment procedure prescribed by the CBDT Notification dated 29.03.2022, which requires issuance through automated allocation and faceless manner by the FAO. Hence, the notice and subsequent proceedings are invalid.The CBDT Notification dated 29.03.2022 is directly applicable to assessment/re-assessment proceedings initiated after its issuance, including the present case where the notice and order under Section 148 and Section 148A were issued post-notification.Issuance of notice under Section 148 by the JAO instead of the FAO is mandatory under the scheme and non-compliance results in the vitiation of the entire proceeding and assessment orders, as held by the Hon'ble Telangana High Court and Hon'ble Bombay High Court.The doctrine of merger, as summarized by the Supreme Court, does not apply to orders refusing Special Leave Petition at the admission stage; such refusal orders do not substitute or merge the order under challenge and do not carry binding effect under Article 141 of the Constitution.Dismissal of Special Leave Petition at admission stage without detailed reasons does not amount to a declaration of law binding under Article 141; only appellate orders after grant of leave invoke the doctrine of merger and binding precedent effect. RATIONALE: The Court applied the statutory provisions of the Income Tax Act, 1961, specifically Sections 147, 148, 148A, and 144B, and the CBDT Notification dated 29.03.2022 which mandates faceless assessment procedures to ensure transparency and uniformity in reassessment proceedings.Precedents from the Hon'ble Telangana High Court and Hon'ble Bombay High Court were relied upon, which held that issuance of notice by JAO instead of FAO violates the mandatory faceless procedure and renders the notices and consequent proceedings invalid.The Court considered the Supreme Court's jurisprudence on the doctrine of merger, particularly the distinction between discretionary jurisdiction exercised in refusing SLPs and appellate jurisdiction upon grant of leave, clarifying that merger applies only in the latter scenario.The Court noted the pending Special Leave Petition against the Bombay High Court judgment, preserving the rights of parties to approach for revival if the Supreme Court reverses the current legal position.The Court followed the binding decision of the jurisdictional High Court that issuance of notice by JAO instead of FAO is invalid, while keeping open the rights of parties for future legal developments.
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