Reassessment Order Quashed Due to Jurisdictional Error: JAO vs. Faceless AO Post-March 2022 : ITAT

Reassessment Order Quashed Due to Jurisdictional Error: JAO vs. Faceless AO Post-March 2022

The Issue

The primary legal challenge was whether a reassessment notice issued under Section 148 (or preliminary order under Section 148A(d)) is valid if issued by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) after the mandatory faceless regime was notified on March 29, 2022.

The Facts

• Timeline: The Ministry of Finance issued a notification on March 29, 2022, mandating that reassessment proceedings must be conducted in a faceless manner.

• The Violation: In this case, the JAO issued the Section 148A(d) notice/order on March 31, 2023—a full year after the faceless regime became mandatory.

• Legal Standing: The assessee raised this as an additional ground of appeal. The Tribunal admitted this legal plea based on the Supreme Court’s ruling in NTPC Ltd. vs CIT, which allows pure legal questions to be raised at any stage.

• Precedents: The assessee relied on the Jurisdictional High Court (Punjab & Haryana) rulings in Gurprince Singh Mander and Jatinder Singh Bhangu, which established that JAOs lose the authority to issue such notices once the faceless scheme is in effect.

The Decision

The ITAT Chandigarh Bench (Vice President Raj Pal Yadav) quashed the reassessment order, citing the following reasons:

1. Exclusivity of Faceless Regime: Following the notification dated March 29, 2022, the procedure for issuing notices under Section 148 must be automated and faceless. The JAO no longer possesses the jurisdiction to initiate these actions manually.

2. Fatal Jurisdictional Defect: A notice issued by an officer lacking the statutory authority to do so is “bad in the eyes of law.” This is not a curable procedural error but a fundamental flaw that renders the entire subsequent assessment void.

3. Binding High Court Precedents: The Tribunal followed the “Law of the Land” as interpreted by the Punjab & Haryana High Court. Since the High Court had already quashed similar notices issued by JAOs in cases like Jasjit Singh and Jatinder Singh Bhangu, the Tribunal was bound to apply the same rule.

4. Outcome: The reassessment order for AY 2019-20 was quashed and set aside. The appeal was allowed. In favour of assessee.

Key Takeaways for Taxpayers

• Check the Issuing Authority: If you receive a reassessment notice dated after March 29, 2022, verify if it was issued by “National Faceless Assessment Centre” or your local “Ward/Circle.” If it is from the latter, it may be jurisdictionally invalid.

• Pure Legal Grounds: Even if you did not challenge the jurisdiction of the JAO during the initial assessment or before the CIT(Appeals), you can still raise it before the ITAT as an “additional ground” because it impacts the very validity of the tax demand.

• Procedural Sanctity: The courts are increasingly strict about the Department following its own “Faceless” notifications. Shortcuts taken by local offices are being routinely struck down by the judiciary.