2026 (2) TMI 771 - HC - Income Tax

Validity of Section 148 notices: issuance by a jurisdictional AO post-29 March 2022 is a jurisdictional defect; DRP must follow jurisdictional precedent.

Addresses validity of reassessment notices issued after 29 March 2022, applying the principle that notices under Section 148 must be issued by a Faceless ... Reopening Notice issued by non jurisdictional officer - objections to the draft assessment order were not intimated and/or filed before the AO - Section 148A notice was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer - first contention raised by the Respondent Revenue is that the above Writ Petition is barred by the principles of res judicata because the two earlier Petitions were not entertained, though the grounds of Hexaware Technologies Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] were raised therein. HELD THAT:- We find absolutely no merit in the aforesaid contention. In the earlier two Writ Petitions, though the same were not entertained, the Petitioner was permitted to avail of the alternate remedy and raise the issue of Hexaware Technologies Ltd. (supra) before the DRP. This is clear not only from the orders passed in the first Writ Petition [2025 (4) TMI 1699 - BOMBAY HIGH COURT] but also in the second [2025 (9) TMI 1317 - BOMBAY HIGH COURT]. Despite the issue of the Hexaware Technologies Ltd. (supra) being raised before the DRP, the DRP refused to follow the decision rendered by this Court in Hexaware Technologies Ltd. (supra). It is in these circumstances that the Petitioner has been constrained to approach this Court by filing the third Writ Petition [the present Petition]. In these circumstances, we do not believe that the principles of res judicata would bar the filing of this Petition. This contention of the Revenue is therefore rejected. Contention raised by the Revenue is that the Petitioner has an alternate remedy to approach the ITAT to challenge the assessment order dated 23rd January 2026 - It is true that the Petitioner does have an alternate remedy to challenge the said assessment order. However, we find, and it is well settled that when a jurisdictional issue is raised, the Court can entertain a Writ Petition and need not relegate the party concerned to avail of the alternate remedy. In the facts of the present case, clearly a jurisdictional issue is raised, namely, that the Jurisdictional Assessing Officer had no power or jurisdiction to issue the notice u/s 148 - DRP also refused to follow the decision of this Court in Hexaware Technologies Ltd. (supra). Once these are the facts, we are of the clear opinion that there is no question of relegating the Petitioner to avail of the alternate remedy. This argument is therefore also rejected. According to the Revenue, the Petitioner has suppressed in the Writ Petition that an interim order was passed by this Court - We fail to understand as to what is the sequitur to this argument. The interim order dated 11th March 2025 would no longer survive, as the same has merged in the final order disposing of the Writ Petition on 7th April 2025. It is not even the case of the Revenue that the order dated 7th April 2025 has been suppressed from this Court. We, therefore, find the above submission on suppression is clearly an argument of desperation to somehow try and ensure that this Writ Petition is not entertained by us. It is therefore rejected. Notice issued u/s 148A(b) set aside. Assessee appeal allowed. Issues: (i) Whether the notice issued under Section 148 (and related proceedings) by the jurisdictional Assessing Officer after 29 March 2022 was invalid as a jurisdictional defect in view of the decision in Hexaware Technologies Ltd., and whether the DRP was bound to follow that jurisdictional High Court precedent.Analysis: The Court examined the procedural history including prior orders remitting objections to the DRP and the subsequent DRP order which declined to follow the jurisdictional High Court decision in Hexaware Technologies Ltd. The Court analysed Hexaware Technologies Ltd., which held that notices under Section 148 issued after 29 March 2022 must be issued by a Faceless Assessing Officer and that issuance by a jurisdictional Assessing Officer is a jurisdictional defect. The Court further considered the DRP's reasons, including reliance on decisions of the Gujarat High Court and a coordinate Bench decision purportedly deviating from Hexaware, and assessed the binding effect of a decision of the jurisdictional High Court on the DRP.Analysis: The Court found that the DRP misconstrued the law by treating issuance by the jurisdictional Assessing Officer as merely a procedural irregularity and by relying on out-of-jurisdiction High Court decisions rather than following the binding decision of the jurisdictional High Court. The Court concluded that where a jurisdictional High Court has decided the question, the DRP and authorities are bound to follow that decision and cannot ignore it or prefer decisions of other High Courts on the same issue.Conclusion: The notice dated 29.03.2023 under Section 148A(b), the order dated 04.05.2023 under Section 148A(d), the notice dated 04.05.2023 under Section 148, the order dated 30.12.2025 under Section 144C(5), the reassessment order dated 23.01.2026 under Section 147 read with Section 144C(13), and the Notice of Demand dated 23.01.2026 under Section 156 are quashed and set aside. The decision is in favour of the assessee.