Notices issued under section 148 by JAO post April 1, 2022, valid & legal; Faceless scheme does not mandate faceless issuance

While adjudicating the validity of notice issued by Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO) arising in more than 400 writ petitions, Gujarat High Court, holds that, while the issue w.r.t. the challenge to the assumption of jurisdiction by the JAO to issue notice under section 148, fails, the notices issued by the JAO under section 148 after 01.04.2022 are 'valid and legal'; Having examined the E-Assessment of Income Escaping Assessment Scheme, 2022 (Scheme, 2022), provisions of Section 144B (inserted vide TOLA, 2020 w.e.f. 01.04.2021), along with various judicial precedents, High Court opines that the provisions of Section 144B are clearly applicable to the faceless assessment and authorizes the NFAC to assign case selected to a specific assessment unit through automated allocation system; High Court outlines that the Scheme, 2022 provides for e-assessment for income escaping assessment in and there is an “automated allocation” of such cases with “automated allocation” being defined under the said Scheme; High Court further emphasizes that with the Scheme being effective from 01.04.2022, the provisions of Section 148 as it existed in the Statute on the said date has to be considered for the purpose of applicability of the Scheme, 2022; On perusal of Section 148, 148A, and 148B, High Court articulates that the provisions of Section 148 are subject to provisions of Section 148A except in certain eventualities; Addressing whether the JAO or Assessing Ofrficer of an assessment unit would be the Assessing Officer, Court observes that the procedure provided under section 144B nowhere provides that notice under section 148 is required to be issued in a faceless manner; High Court asserts that the Scheme is required to be read literally in an unambiguous and plain language with no further interpretation, and adds that if the Scheme is applied to the procedure prescribed u/s 148A then the same will lead to alteration, which was not the Legislative intent; Disagreeing with findings in the Bombay High Court decision in Kankanala Ravindra Reddy v. ITO (2023) 156 taxmann.com 178 (Bom.), and drawing attention to the jurisdictional High Court decision in Talati and Talati LLP, High Court articulates that when the notices issued under section 148 by JAO in search cases have been held to be valid, therefore justifies its view that the notice under section 148 has to be issued by the Assessing Officer that passed the order under section  148A(d); Court further quips that “If the notice is issued by the Faceless Assessing Officer under Section 148 of the Act on the basis of the order which has been passed by the Jurisdictional Assessing Officer under Section 148A(d) of the Act, the same would result into absurdity.”; Accordingly, High Court opines that “…the logical conclusion which can be deduced from reading of the provisions of the Act together with the intention of the legislature and the Scheme, 2022…so far as issuance of notice under Section 148 of the Act is concerned, the contention raised on behalf of the Revenue based upon the Office Memorandum of the Central Board of Direct Taxes dated 20th February, 2023…would be in line of the legislative intent so as to operate the two aspects separately, one by issuance of notice under Section 148…by automated allocation and other by conducting assessment or reassessment proceedings under Section 147…in a faceless manner to the extent as provided under Section 144B…”. [In favour of revenue] – [Snehdham Trust v. ACIT(C), Ahmedabad [TS-1589-HC-2025(GUJ)] – Date of Judgement : 17.09.2025 (Guj.)]

 

NOTE

The Revenue's SLPs against the Bombay High Court decision in Hexaware Technologies Ltd. v. ACIT (2024) 162 taxmann.com 225 (Bom.), Telangana High Court decision in Kankanala Ravindra Reddy v. ITO (2023) 156 taxmann.com 178 (Telangana) and other High Court decisions are still pending before the Supreme Court. In total, a batch of almost 900 cases is now pending a final hearing by the Supreme Court.


Ai generated Precautions for Professionals (Summary)
• Verify whether the Section 148 notice is issued by the same authority that passed the order under Section 148A(d).
• Maintain complete documentation demonstrating client participation during the 148A proceedings.
• Advise clients that faceless issuance of notice is not compulsory under the 2022 Scheme; challenge only where jurisdiction or limitation is defective.
• Track ongoing SLPs before the Supreme Court affecting reassessment litigation strategy.
• Ensure procedural compliance—service of notices, opportunity under section 148A(b), adherence to timelines, and proper representation in faceless reassessment.