Income-tax reassessment notices u/s148 amid s.151A faceless regime held invalid when issued by jurisdictional officer; proceedings quashed

The dominant issue was whether reassessment could be reopened by a jurisdictional AO issuing notice under s.148 despite the faceless regime contemplated by s.151A. Applying its earlier ruling, the HC held that once the faceless framework is notified, the jurisdictional AO cannot act outside that scheme; any notice not issued through the faceless authority is contrary to law and without jurisdiction. Consequently, the impugned show-cause/notice under s.148 and all proceedings founded on it were quashed.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the reassessment notices issued under Section 148 by the jurisdictional Assessing Officer, after the coming into force of the faceless scheme under Section 151A and the relevant notification, suffered from lack of jurisdiction, warranting quashing of the notices and all consequential proceedings for the relevant assessment years.

(ii) Whether, upon quashing of the Section 148 notices and consequential reassessment orders/demand/penalty notices on the jurisdictional ground, the pending statutory appeals should be directed to be disposed of as academic/infructuous, with liberty to both sides to seek revival/restoration if required.

(iii) Whether liberty should be reserved to the Revenue to seek revival of the writ petition depending upon the outcome of pending proceedings before the Apex Court, while keeping all rival contentions open.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Jurisdiction of the Assessing Officer to issue notices under Section 148 post Section 151A faceless scheme

Legal framework (as discussed by the Court): The Court proceeded on the basis that Section 151A of the Income Tax Act, 1961 and the notification issued pursuant thereto provided for issuance of notice under Section 148 only by the faceless authority, and not by the jurisdictional Assessing Officer.

Interpretation and reasoning: The Court held that the controversy was covered by a binding decision of a co-ordinate Bench which had quashed show cause notice(s) on the ground that the jurisdictional Assessing Officer did not have jurisdiction to issue notice under Section 148 in light of Section 151A and the notification implementing the faceless scheme. The Court expressly applied that ratio to the present facts, holding that the same jurisdictional defect vitiated the impugned notices and the proceedings taken pursuant to them.

Conclusion: The impugned Section 148 notices for the concerned assessment years were held to be without jurisdiction and were quashed; consequently, all further proceedings and consequential orders/notices arising from such initiation were also quashed.

Issue (ii): Fate of consequential reassessment orders, demand and penalty notices; and effect on pending statutory appeals

Interpretation and reasoning: Having found the initiation itself defective on the jurisdictional ground and having disposed of the petition in terms of the co-ordinate Bench decision, the Court quashed the consequential reassessment orders (including rectification orders), demand notices issued pursuant thereto, and penalty notices for the relevant assessment years as consequences of the invalid initiation.

Conclusion: The Court directed the appellate authority to dispose of the pending appeals for the relevant assessment years as having become academic/infructuous due to the quashing of the foundational notices and consequential proceedings, while expressly reserving liberty to both sides to seek revival/restoration of the appeals if the occasion arises.

Issue (iii): Liberty to revive proceedings depending on the Apex Court's decision; preservation of rival contentions

Interpretation and reasoning: The Court noted that the co-ordinate Bench approach reserved liberty to the Revenue to seek revival contingent upon the outcome of matters pending before the Apex Court. Following the same course, the Court reserved liberty to the Revenue to seek revival of the writ petition after disposal of the pending Apex Court matters, clarifying that all rival contentions were kept open and no opinion was expressed on those issues at this stage.

Conclusion: Liberty was reserved to the Revenue to seek revival after the Apex Court's decision; additionally, if revival occurs, all contentions of both sides were kept open, including the petitioner's contention regarding validity of search, seizure and inspection proceedings, on which the Court expressly refrained from expressing any opinion.

---