Quashing of Reassessment Proceedings Due to Issuance of Section 148 Notice by Jurisdictional Officer Instead of Faceless Assessing Officer
1. The Core Dispute: JAO vs. FAO (The Jurisdiction Battle)
The assessee challenged the entire chain of reassessment proceedings—starting from the preliminary notice under Section 148A(b) to the final assessment order and demand under Section 156. The central argument was that the notice under Section 148 was issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO).
Assessee’s Stand: Following the introduction of Section 151A and the “E-Assessment of Income Escaping Assessment Scheme, 2022,” any notice issued after March 29, 2022, must be handled centrally through the faceless mechanism. A notice by the local JAO is not just a procedural slip but a jurisdictional defect.
Revenue/DRP’s Stand: The Dispute Resolution Panel (DRP) characterized the issuance by the JAO as a “procedural irregularity” curable under the law. They notably refused to follow the binding precedent of the Bombay High Court in the Hexaware Technologies case.
2. Legal Analysis: Mandatory Faceless Mechanism
The court scrutinized the transition from physical/local jurisdiction to the faceless regime established by the Finance Act and subsequent notifications.
I. The Mandate of Section 151A
The court held that the scheme formulated under Section 151A is mandatory. The law requires the issuance of notice for reassessment to be automated and faceless to ensure transparency and eliminate personal interface.
II. Jurisdictional Defect vs. Procedural Irregularity
The court clarified that jurisdiction is the power of an officer to act. If the law prescribes that only Officer ‘A’ (FAO) can issue a notice, a notice issued by Officer ‘B’ (JAO) is void ab initio (invalid from the start). It cannot be “cured” because the JAO lacked the legal authority to trigger the reassessment process after the specified cutoff date.
3. Final Ruling: Proceedings Quashed
The court took a stern view of the DRP’s refusal to follow the binding decision of the Jurisdictional High Court (Hexaware Technologies).
Verdict: The notice under Section 148A(b), the order under Section 148A(d), the notice under Section 148, the DRP directions, and the final reassessment order were all quashed and set aside.
Outcome: The entire tax demand was nullified as the very foundation of the proceedings (the Section 148 notice) was legally defective.
Key Takeaways for Taxpayers
Check the Issuing Authority: Always verify the designation of the officer signing your Section 148 notice. If it was issued after March 29, 2022, and signed by a local JAO instead of the “National Faceless Assessment Centre,” it is likely a jurisdictional error.
Binding Nature of High Court Orders: Authorities like the DRP or the CIT(A) are legally bound to follow the decisions of the High Court in their jurisdiction. Refusal to do so is a ground for seeking relief through a Writ Petition.
The Power of Section 151A: This section is the taxpayer’s primary shield against “manual” or “selective” reopening of assessments by local officers under the new tax regime.
HIGH COURT OF BOMBAY
Vibhavari Bharat Bhatt
v.
Income-tax Officer (International Taxation)*
B. P. COLABAWALLA and FIRDOSH P. POONIWALLA, JJ.
WRIT PETITION (L) NO. 3032 OF 2026
FEBRUARY 9, 2026
Dharan Gandhi, Devendra H. Jain, Shashank A. Mehta and Saukhya Lakade, Advs. for the Petitioner. Prathamesh Bhosle, Adv. for the Respondent.
ORDER
1. Rule. Respondents waive service. With the consent of the parties, Rule is made returnable forthwith and heard finally.
2. The above Writ Petition is filed inter alia challenging the notice dated 29th March 2023 issued under Section 148A(b), the order dated 4th May 2023 passed under Section 148A(d), and the notice dated 4th May 2023 issued under Section 148 of the Income Tax Act, 1961 (for short “IT Act“). Additionally, the order dated 30th December 2025 passed under Section 144C(5), and the reassessment order dated 23rd January 2026 passed by the Assessing Officer under Section 147 read with Section 144C(13), as well as the Notice of Demand issued under Section 156, are also assailed.
3. The short ground on which all these orders are challenged is that the authorities below have refused to follow the judgment of this Court in the case of Hexaware Technologies Ltd. v. Assistant Commissioner of Income-tax ITR 430 (Bombay)].
4. We must note that initially, the Petitioner had approached this Court challenging the order passed under Section 148A(d), as well as the notice issued under Section 148 by filing Writ Petition (L) No. 3219 of 2025. This Writ Petition was disposed of by this Court vide its order dated 7th April 2025. By the said order, this Court held that the Petitioner could challenge the draft assessment order dated 27th March 2025 by approaching the DRP.
5. Pursuant to this direction, the Petitioner herein approached the DRP and filed its objections. However, as contemplated under Section 144C(2)(b)(ii) objections to the draft assessment order were not intimated and/or filed before the Assessing Officer. Since this was not done, the Assessing Officer, under Section 144C(3)(b) read with Section 144C(4), passed the final assessment order on 22nd May 2025. Since the final assessment order was passed by the Assessing Officer, the DRP, by its order dated 30th June 2025, disposed of the objections of the Petitioner [to the draft assessment order], as being non-est.
6. Being aggrieved by this order of the DRP, the Petitioner once again approached this Court by filing Vibhavari Bharat Bhatt v. Income-tax Officer (Intl.) Tax (Bombay)/Writ Petition (L) No. 23576 of 2025. This Court, by its order dated 25th August 2025, and for the reasons more particularly set out therein, set aside the final assessment order dated 22nd May 2025, as well as the demand notice issued under Section 156 and the impugned order passed by the DRP on 30th June 2025. This Court directed that the objections filed by the Petitioner before the DRP against the draft assessment order dated 27th March 2025 shall stand revived, and the DRP shall decide those objections in accordance with law. It was further clarified that the DRP, whilst deciding those objections, shall obviously take into consideration all the contentions of the Petitioner, including the contentions raised in Vibhavari Bharat Bhatt (supra) regarding the applicability of the judgment of this Court in the case of Hexaware Technologies Ltd. (supra).
7. Pursuant to the order passed by this Court in Vibhavari Bharat Bhatt (supra) the DRP heard the objections of the Petitioner and inter alia opined that the ratio of Hexaware Technologies Ltd. (supra) has been deviated from by the jurisdictional High Court of Bombay itself in the case of JD Printers (P.) Ltd. v. ITO (Bombay). The DRP further held that the Applicant therein has made an opportunistic technical objection to the notice and the ratio of Snehdham Trust v. Assistant Commissioner of Income-tax (Gujarat) [17-09-2025] and Talati and Talati LLP v. Asstt. CIT (Gujarat) of the Hon’ble Gujarat High Court was in favour of the Revenue and against the Assessee. Finally, the DRP held that with utmost respect to this Court, the fact that the Section 148A notice was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer is merely a procedural irregularity which does not go to the root of the matter. Accordingly, the DRP directed that the objections of the Applicant do not succeed and the action of the learned Assessing Officer is upheld. It is to challenge this order that the Petitioner is before us in the third Writ Petition [the present Writ Petition].
8. The learned Advocate appearing on behalf of the Revenue submitted that firstly, this Writ Petition is barred by the principles of res judicata, because the two earlier Petitions filed by this very Petitioner inter alia challenged the notice issued under Section 148, and they were not entertained, though it was their specific case that the issue was squarely covered by the decision in Hexaware Technologies Ltd. (supra). Hence, the Petitioner now cannot come for the third time and challenge those very notices.
9. Without prejudice to the aforesaid argument, it was submitted by the Revenue that the final assessment order passed by the Assessing Officer giving effect to the directions given by the DRP (dated 23rd January 2026) is an appealable order before the ITAT. The Revenue contends that this is an equally efficacious alternate remedy available to the Petitioner, and hence, the above Writ Petition ought not to be entertained, and the Petitioner ought to be relegated to avail of the alternate remedy.
10. The last objection taken by the Respondent Revenue is that this Petition ought to be dismissed because of suppression. According to the Revenue, the interim order passed in the first Writ Petition filed by the Petitioner [Writ Petition (L) No. 3219 of 2025] dated 11th March 2025 has been suppressed from this Court. This, according to the Revenue, is a vital order, and hence on this ground also the Writ Petition ought not to be entertained and be dismissed.
11. We have heard Mr. Gandhi, the learned Counsel appearing for the Petitioner, as well as the learned Advocate appearing for the Revenue.
12. The facts narrated by us above are not in dispute. It is not in dispute that the Petitioner had originally approached this Court challenging inter alia the notice issued under Section 148 by filing Writ Petition (L) No. 3219 of 2025. That Writ Petition was disposed of by this Court vide its order dated 7th April 2025. Basically, this Court did not entertain the above Writ Petition on the ground that the Petitioner could challenge the draft assessment order dated 27th March 2025 [passed pursuant to the notice issued under Section 148] by approaching the DRP.
13. Pursuant to the directions given by this Court on 7th April 2025, the Petitioner did approach the DRP and filed its objections. However, since the Petitioner did not intimate the Assessing Officer about filing the aforesaid objections, the Assessing Officer under Section 144C(3)(b) read with Section 144C(4) passed a final assessment order on 22nd May 2025. This was again challenged before this Court by filing Vibhavari Bharat Bhatt (supra). This Court, by its order dated 25th August 2025, set aside the final assessment order (dated 22nd May 2025) and remanded the matter back to the DRP for a de novo consideration. In other words, the objections filed by the Petitioner to the draft assessment order dated 27th March 2025 were to be considered by the DRP on its own merits. What is important to note that in that very order, this Court directed that whilst deciding the objections of the Petitioner, the DRP would take into consideration all the contentions of the Petitioner, including contentions raised in the said Writ Petition regarding the applicability of the judgment of this Court in the case of Hexaware Technologies Ltd. (supra).
14. This is how the DRP once again heard the Petitioner and passed the impugned order dated 30th December 2025. It is pursuant to the DRP’s directions that the final assessment order is once again passed on 23rd January 2026.
15. We find from the record that the DRP has refused to follow the judgment of this Court in Hexaware Technologies Ltd. (supra). In Hexaware Technologies Ltd. (supra) this Court, after examining the scheme formulated under Section 151A, came to the conclusion that notice under Section 148, issued after 29th March 2022, could not be issued by the Jurisdictional Assessing Officer, but had to be issued only by the Faceless Assessing Officer. In Hexaware Technologies Ltd. (supra) it was held that this was a jurisdictional defect and notice issued under Section 148 by the Jurisdictional Assessing Officer could not be sustained. In the facts of the present case, it is not in dispute that the notice issued under Section 148 was by the Jurisdiction Assessing Officer. Hence, the present case would be squarely covered by the decision rendered by this Court in Hexaware Technologies Ltd. (supra).
16. We fail to understand how the DRP has come to the finding that the ratio of Hexaware Technologies Ltd. (supra) has been deviated from by this Court in J. D. Printers Pvt. Ltd. (supra). In fact, on the basis of the Hexaware Technologies Ltd. (supra), the challenge to the notice assailed in the J. D. Printers Pvt. Ltd. (supra) was allowed by this Court. We, therefore, fail to understand how the DRP could have come to the conclusion that the coordinate Bench of this Court in J. D. Printers Pvt. Ltd. (supra) has deviated from the law laid down in Hexaware Technologies Ltd. (supra). This is a complete misunderstanding of the DRP.
17. This apart, we find that the DRP completely misdirected itself when it placed reliance on the decisions of the Hon’ble Gujarat High Court to come to the conclusion that it did. Once there is a decision of the jurisdictional High Court on a particular issue, the DRP cannot ignore that decision, and thereafter rely upon the decisions rendered by any other High Court which is not its jurisdictional High Court. Hence, the reliance placed on the decisions of the Gujarat High Court to deny relief to the Petitioner was wholly misconceived.
18. However, the matter does not stop here. What is even more shocking is that in the operative portion of the impugned order, the DRP holds that the fact that the Jurisdictional Assessing Officer has issued the notice, instead of a Faceless Assessing Officer, is merely a procedural irregularity, not going to the root of the matter. This finding is in direct conflict with the decision rendered in Hexaware Technologies Ltd. (supra). It appears that this particular DRP has absolutely no respect for orders passed by the jurisdictional High Court and has no hesitation in deviating therefrom. Even if the DRP was of the opinion that the order passed by the jurisdictional High Court was incorrect in law, it was bound to follow it.
19. Hence, on this ground alone, we have no hesitation in not only setting aside the notice issued under Section 148 but also the orders and notices particularly set out in prayer clause (a) of the Petition.
20. Before concluding, it would only be fair to deal with the submissions canvassed on behalf of the Respondent Revenue.
21. The 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. (supra) were raised therein. 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 [Writ Petition (L) No. 3219 of 2025] but also in the second Writ Petition [Vibhavari Bharat Bhatt (supra).
22. 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.
23. The next 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 under Section 148. Further, the 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.
24. The last argument is that of suppression. According to the Revenue, the Petitioner has suppressed in the Writ Petition that an interim order was passed by this Court on 11th March 2025 in Writ Petition (L) No. 3219 of 2025. 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.
25. In view of the foregoing discussion, the above Writ Petition succeeds and is allowed in terms of prayer clause (a) which reads thus:-
“(a) that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner’s case and after going into the legality and propriety thereof, to quash and set aside the notice dated 29.03.2023 under section 148A(b) (Exhibit ‘B’); the order dated 04.05.2023 passed under section 148A(d) (Exhibit ‘D1’) and the notice dated 04.05.2023 issued under section 148 of the Act (Exhibit ‘D2’); order dated 30.12.2025 passed under section 144C(5) (Exhibit ‘O’) and reassessment order dated 23.01.2026 passed under section 147 r.w.s. 144C(13) (Exhibit ‘P1’); Notice of Demand dated 23.01.2026 issued under section 156 (Exhibit ‘P2’).”
26. We may caution the authorities, that in the future, whether they like it or not, the orders of the jurisdictional High Court have to be followed. If in the future we find that orders of this Court are not followed by the Income Tax Authorities, we will not hesitate to haul up the concerned officers for contempt, amongst other things.
27. Rule is made absolute in the aforesaid terms, and the Writ Petition is also disposed of in terms thereof. However, there shall be no orders as to costs.
28. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.