Section 148 Notice Issued by Jurisdictional AO After March 29, 2022, is Void for Lack of Jurisdiction

Section 148 Notice Issued by Jurisdictional AO After March 29, 2022, is Void for Lack of Jurisdiction

The Issue

The primary legal challenge was whether a reassessment notice issued under Section 148 of the Income Tax Act, 1961, is valid if it was issued by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) after the notification of the faceless regime on March 29, 2022.

The Facts

• The Notification: On March 29, 2022, the Ministry of Finance issued a notification mandating that all reassessment procedures, including the issuance of notices under Section 148, must be conducted in a faceless manner through the National Faceless Assessment Centre (NaFAC).

• The Lapse: In this case, the JAO issued the Section 148 notice on March 30, 2022 (one day after the notification) for Assessment Year 2017-18.

• Precedents: The assessee relied on the Punjab & Haryana High Court rulings in Jatinder Singh Bhangu and Jasjit Singh, which established that once the faceless scheme is notified, local jurisdictional officers lose the authority to issue such notices manually.

The Decision

The ITAT Chandigarh Bench (represented by Vice President Raj Pal Yadav) quashed the reassessment order based on the following legal grounds:

1. Mandatory Faceless Procedure: The Tribunal held that the notification dated March 29, 2022, is not optional. Any notice issued under Section 148 after this date must strictly follow the faceless assessment protocol to ensure transparency and eliminate physical interface.

2. Jurisdictional Nullity: A notice issued by an officer who lacks the statutory mandate to do so (the JAO) is “bad in the eyes of law.” It is a fundamental jurisdictional defect that cannot be cured under Section 292B of the Act.

3. Binding Nature of High Court Orders: The Tribunal followed the law as interpreted by the Jurisdictional High Court (Punjab & Haryana). The High Court has consistently held that the JAO’s action in such cases is without jurisdiction.

4. Outcome: Because the foundational notice was invalid, the resulting reassessment order was quashed and set aside. The appeal of the assessee was allowed. In favour of assessee.

Key Takeaways for Taxpayers

• Check the Issuing Authority: If you receive a reassessment notice dated on or after March 29, 2022, check the signature block. If it is from your local Income Tax Office (JAO) instead of “NaFAC,” the notice may be legally unsustainable.

• Jurisdictional Objections: These types of flaws are “jurisdictional” and can be raised at any stage of the litigation—before the CIT(Appeals), the ITAT, or even via a Writ Petition in the High Court.

• Exclusivity: The courts are increasingly reinforcing that the Department must stick to the Faceless Regime it has built. Shortcuts or manual interventions by local offices are being routinely struck down.