Reassessment under faceless regime: s.148A(d) order and s.148 notice issued by JAO held invalid, set aside

The dominant issue was whether reassessment proceedings were valid when the order under s.148A(d) and notice under s.148 were issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) under the faceless regime. Applying the statutory scheme in s.144B read with s.151A and the "e-Assessment of Income Escaping Assessment Scheme, 2022", and following the HC ruling that s.148 notice post-scheme can be issued only by the FAO, the Tribunal held that issuance by the JAO was outside the mandated faceless mechanism and therefore illegal; consequently, the impugned notices/orders and the assessment under s.147 r.w.s. 144B were set aside in favour of the assessee.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the assessee was barred by Section 124(3) from raising, at the appellate stage, an objection that the authority issuing the reassessment initiation orders/notices lacked jurisdiction, when such objection was not raised within the time prescribed after service of notice.

(ii) Whether reassessment initiation and notice issued outside the statutorily mandated faceless mechanism-i.e., orders/notices under Sections 148A and 148 issued by the Jurisdictional Assessing Officer instead of through the faceless mechanism under Section 144B read with Section 151A and the notified scheme-were invalid for want of jurisdiction, thereby vitiating the consequential reassessment order passed by the faceless unit.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Bar under Section 124(3) against raising jurisdictional objection belatedly

Legal framework (as discussed by the Court): The Court examined Section 124 and, in particular, Section 124(3), noting that Section 124 operates in the context of an Assessing Officer's jurisdiction linked to the jurisdictional allocation contemplated under Section 120 (including territorial jurisdiction and other allocation categories).

Interpretation and reasoning: The Court held that the restriction in Section 124(3) is confined to objections to an Assessing Officer's jurisdiction of the kind addressed by Section 124 (i.e., jurisdiction arising from statutory allocation such as territorial jurisdiction). The assessee's objection was not that the officer lacked jurisdiction because of territorial/person/class/case allocation, but that the Jurisdictional Assessing Officer inherently lacked authority, after introduction of the faceless scheme, to initiate proceedings under Section 148A and issue notice under Section 148 at all. The Court treated such objection as going to the root of jurisdiction and therefore not foreclosed by Section 124(3). The Court also distinguished the decision relied on by the Revenue on the footing that it concerned a different kind of jurisdictional objection than the inherent lack of authority alleged here.

Conclusion: Section 124(3) did not preclude the assessee from raising the objection that the reassessment initiation and notice were issued by an authority inherently lacking jurisdiction under the faceless regime.

Issue (ii): Validity of reassessment initiation and notice issued by the Jurisdictional Assessing Officer outside the faceless mechanism; effect on reassessment order

Legal framework (as discussed by the Court): The Court considered the statutory requirement of conducting proceedings through the faceless mechanism under Section 144B read with Section 151A and the notified "E-Assessment Scheme of Income Escaping Assessment Scheme, 2022". It also applied the principle that where the statute requires power to be exercised by a particular authority and in a prescribed manner, non-compliance results in invalidity; an order without jurisdiction is a nullity and there is no waiver of requirements going to the root of jurisdiction.

Interpretation and reasoning: The Court held that, after the notified faceless reassessment scheme, issuance of notice under Section 148 (and the associated initiation process) must be through the faceless mechanism and not by the Jurisdictional Assessing Officer acting outside that mechanism. Since the foundational order under Section 148A(d) and the notice under Section 148 were issued by the Jurisdictional Assessing Officer outside the faceless mechanism, the Court found them "bad and illegal" for lack of jurisdiction. The Court treated the issue as squarely covered by the binding decision of the jurisdictional High Court holding that the Jurisdictional Assessing Officer had no jurisdiction to issue such orders/notices outside the faceless mechanism. As the reassessment order by the faceless unit was founded on these invalid jurisdictional acts, the reassessment itself lacked a valid assumption of jurisdiction and could not stand.

Conclusion: The reassessment initiation order and notice issued outside the faceless mechanism were invalid for want of jurisdiction; consequently, the reassessment order passed by the faceless unit was quashed for want of a valid assumption of jurisdiction. Other grounds (including merits of addition) were expressly left open and not decided.

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