Reassessment scheme amendments under the Income-tax Act led the SC to set aside quashing orders and remit the matters.

The reassessment framework under the Income-tax Act was materially altered by the Finance Act, 2021, the e-Assessment of Income Escaping Assessment Scheme, 2022, and later clarificatory amendments including section 147A with retrospective effect from 01.04.2021. In view of these changes, the SC set aside High Court judgments that had quashed reassessment notices on competence grounds and declined to decide the merits of whether notices under sections 148 and orders under section 148A(d) had to be issued only through the faceless mechanism. The validity, scope, effect, retrospectivity and applicability of the amended provisions were left open for fresh consideration by the jurisdictional High Courts.

---

---

Issues: Whether the High Court judgments quashing reassessment notices on the ground that the jurisdictional Assessing Officer lacked competence should be set aside and the matters remitted for fresh consideration in view of the subsequent amendments to the reassessment scheme.

Analysis: The statutory reassessment framework under the Income-tax Act, 1961 had been amended by the Finance Act, 2021, and the Central Board of Direct Taxes had introduced the e-Assessment of Income Escaping Assessment Scheme, 2022 under section 151A. The dispute concerned whether notices under sections 148 and orders under section 148A(d) could be issued by the jurisdictional Assessing Officer or only through the faceless mechanism. During the pendency of the appeals, Parliament introduced clarificatory amendments, including section 147A, with retrospective effect from 01.04.2021. In view of these amendments, the Court declined to decide the merits of the competing submissions and left the validity, scope, effect, retrospectivity and applicability of the amended provisions open for adjudication by the jurisdictional High Courts.

Conclusion: The impugned High Court judgments were set aside on the limited ground of the subsequent legislative amendments and the matters were remitted to the High Courts for fresh consideration.

---