Reassessment Order Quashed Due to Jurisdictional Error: JAO Notice Post-Faceless Regime Notification

Reassessment Order Quashed Due to Jurisdictional Error: JAO Notice Post-Faceless Regime Notification

The Issue

The core legal dispute was whether a reassessment notice issued under Section 148 by a Jurisdictional Assessing Officer (JAO) is valid if issued after March 29, 2022. This was the date the Ministry of Finance notified the Faceless Assessment Scheme, mandating that such notices be issued through the automated, faceless mechanism.

The Facts

• The Notice: The JAO issued the Section 148 notice to the assessee on April 7, 2022, for Assessment Year 2015-16.

• The Conflict: The assessee argued that per the Finance Ministry’s notification dated March 29, 2022, all reassessment notices issued on or after that date must be issued by a Faceless Assessing Officer (FAO).

• Precedents: The assessee relied on the Punjab & Haryana High Court decisions in Jatinder Singh Bhangu and Jasjit Singh, which established that notices issued by a local JAO after the faceless regime’s commencement are jurisdictionally void.

• Revenue’s Stand: The Department Representative (DR) was unable to provide any legal counter-argument or distinguishing facts to contest the application of these precedents.

The Decision

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

1. Exclusivity of Faceless Scheme: Once the government notified the faceless regime under Section 151A, the authority of the JAO to initiate reassessment was effectively superseded by the faceless mechanism.

2. Jurisdictional Nullity: A notice issued by an officer who lacks the specific statutory authority to do so is not merely a procedural error; it is a fatal jurisdictional defect. This makes the entire reassessment process “bad in the eyes of law.”

3. Binding High Court Rulings: The Tribunal strictly followed the law laid down by the Jurisdictional High Court (Punjab & Haryana). In various cases (e.g., Gurprince Singh Mander), the High Court had already quashed notices issued by JAOs post-March 2022.

4. Outcome: The Section 148 notice was found to be without jurisdiction. Consequently, the resulting assessment order was quashed, and the appeal was allowed. In favour of assessee.

Key Takeaways for Taxpayers

• Header Verification: Always check the digital signature and header of your Section 148 notice. If it was issued by a “Ward” or “Circle” (local JAO) after March 29, 2022, instead of the National Faceless Assessment Centre (NaFAC), its validity can be challenged in court.

• Legal Precedence: In the Punjab, Haryana, and Chandigarh regions, the law is currently very clear and in favor of the taxpayer on this specific jurisdictional point.

• Immediate Challenge: Jurisdictional flaws of this nature are often raised via a Writ Petition in the High Court or as a “Legal Ground” at the start of the ITAT proceedings.