Reassessment quashed as jurisdictional officer, not Faceless AO, issued invalid notices under ss.147, 148, 144B

ITAT Chandigarh allowed the assessee's appeal, holding the reassessment proceedings invalid due to a jurisdictional defect in the notice issued u/s 148. The Tribunal found that, pursuant to the 2022 CBDT notification issued under s.144B, all notices relating to ss.147/148 were required to be issued by a Faceless Assessing Officer. In this case, the impugned notices dated 31.03.2023 and 08.04.2023 were issued by the Jurisdictional Assessing Officer, contrary to the prescribed procedure. Consequently, the notice u/s 148 and resultant reassessment proceedings were quashed.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Validity of reassessment proceedings where notice under Section 148 was issued by the Jurisdictional Assessing Officer instead of a Faceless Assessing Officer, in view of the Ministry of Finance notification dated 29.03.2022 and the faceless assessment scheme under Section 144B.

1.2 Consequential sustainability of the reassessment order and appellate proceedings upon a finding that the notice under Section 148 was without jurisdiction.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Validity of notice under Section 148 issued by Jurisdictional Assessing Officer post-notification dated 29.03.2022

Legal framework

2.1.1 The Tribunal noted the Ministry of Finance notification dated 29.03.2022 issued under Section 144B, providing that notices in respect of reassessment proceedings under Sections 147/148 are to be issued by the Faceless Assessing Officer under the faceless assessment scheme.

2.1.2 The Tribunal referred to its own prior decisions and to binding decisions of the jurisdictional High Court holding that, after the said notification, notices under Section 148 issued by the Jurisdictional Assessing Officer, instead of through the faceless mechanism, are without jurisdiction and liable to be quashed.

Interpretation and reasoning

2.1.3 The Tribunal examined the notices dated 31.03.2023 and 08.04.2023 issued under Section 148 by the Jurisdictional Assessing Officer and found that they were issued after the 29.03.2022 notification, which mandated issuance of such notices by a Faceless Assessing Officer.

2.1.4 Relying on its earlier order where, in identical circumstances, a notice under Section 148 issued one year after the notification was held to be without jurisdiction, the Tribunal held that the same reasoning applied to the present year.

2.1.5 The Tribunal reproduced and relied upon the jurisdictional High Court's judgment quashing a notice issued by the Jurisdictional Assessing Officer post-notification, where the High Court, following earlier coordinate Bench decisions, held that such notice could "have been issued only by way of faceless assessment".

2.1.6 The Tribunal noted that, in those High Court decisions, the notices issued by the Jurisdictional Assessing Officer, contrary to the notification requiring faceless issuance, were quashed as being without jurisdiction, with liberty to the Revenue to proceed in accordance with law.

2.1.7 The Tribunal also recorded that there were multiple decisions of the jurisdictional High Court, including in the case of Disha Gupta, supporting the position that non-compliance with the faceless regime in issuing such notices renders the proceedings invalid.

Conclusions

2.1.8 The Tribunal held that, as the notice under Section 148 in the relevant assessment year was issued by the Jurisdictional Assessing Officer after the 29.03.2022 notification, it was bad in law and without jurisdiction.

2.1.9 Following the binding jurisdictional High Court judgments and earlier coordinate Bench decisions, the Tribunal allowed the legal ground raised by the assessee and held that the reassessment proceedings were vitiated for lack of jurisdiction.

2.2 Consequences for reassessment order and appellate proceedings

Interpretation and reasoning

2.2.1 Having held the foundational notice under Section 148 to be without jurisdiction, the Tribunal proceeded on the principle that any reassessment order passed pursuant to an invalid notice is itself void and unsustainable in law.

2.2.2 In line with its earlier decision, where quashing of an invalid Section 148 notice led to the quashing of the reassessment order for the corresponding year, the Tribunal adopted the same approach in the present appeal.

Conclusions

2.2.3 The Tribunal quashed the reassessment order on the ground that it was based on a jurisdictionally defective notice under Section 148.

2.2.4 In view of the jurisdictional defect, the Tribunal did not adjudicate the merits of the additions, including issues relating to agricultural income, cash deposits, applicability of Sections 69A and 115BBE, or the nature of the order of the first appellate authority.

2.2.5 The appeal was allowed by the Tribunal solely on the jurisdictional ground, resulting in the reassessment order being set aside.

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