Faceless assessment and Section 148 notice jurisdiction: court upholds jurisdictional AO issuing s.148 notices; faceless scheme not displacing AO

Whether a jurisdictional Assessing Officer may issue a notice to reopen assessment under Section 148 when a faceless eassessment scheme exists was contested. The court held the Scheme, 2022 does not incorporate the Section 148A inquiry procedure; reading 148A into the Scheme would alter its text. Therefore issuance of s.148 notices by jurisdictional AOs remains competent and notices issued by jurisdictional AOs after 01.04.2022 are valid. The court rejected the view that faceless issuance alone displaces the jurisdictional AO and disagreed with the contrary Bombay HC interpretation.

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Issues: Whether notices issued after 01.04.2022 under section 148 of the Income-tax Act, 1961 by the Jurisdictional Assessing Officer (JAO), instead of a Faceless/automated faceless Assessing Officer under the E-Assessment Scheme, 2022 (and connected faceless provisions), are without jurisdiction and liable to be quashed.

Analysis: The Court analysed the statutory scheme including Section 151A (power to notify a faceless scheme), the E-Assessment of Income Escaping Assessment Scheme, 2022 (notification dated 29-3-2022), and Section 144B (faceless assessment) as amended effective 01.04.2022. Paragraph 3 of the Scheme separates (a) assessment/reassessment/recomputation under section 147 and (b) issuance of notice under section 148, requiring automated allocation for issuance of notice in accordance with the Board's risk management strategy and qualifying the faceless procedure by the phrase "to the extent provided in Section 144B" with reference to making assessment or reassessment. Section 144B prescribes the faceless procedure for assessments and reassessments and does not itself prescribe the full procedure for issuance of a notice under section 148 or the separate inquiry stages under section 148A. The Court observed that section 148 is subject to the procedural pre-conditions in section 148A (opportunity to be heard, inquiry and order determining fitness to issue notice) and that those inquiry stages are not detailed in the Scheme. Reading the Scheme and statutes together, and construing the comma-separated structure and qualifying phrase literally and purposively, the Court held that the Scheme mandates automated allocation of cases for issuance of notice but does not oust the statutorily prescribed role of the Assessing Officer in conducting the 148A inquiry and issuing notices under section 148; applying the faceless assessment procedure under Section 144B is limited to assessment/reassessment steps "to the extent provided". The Court therefore rejected the view that issuance of section 148 notices must be exclusively in the faceless manner by an FAO to the exclusion of the Jurisdictional AO, and held that notices issued by JAOs after 01.04.2022 are not per se without jurisdiction where the statutory procedure (including section 148A requirements) is followed.

Conclusion: The challenge to the assumption of jurisdiction by the Jurisdictional Assessing Officer to issue notices under section 148 after 01.04.2022 fails. The notices issued by Jurisdictional Assessing Officers under section 148 of the Income-tax Act, 1961 after 01.04.2022 are held valid and legal.

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