High Court Quashes Reassessment for Being Issued by Jurisdictional AO Instead of Faceless AO

The petitioner challenged a notice dated 27 March 2024 issued under Section 148 and the reassessment order dated 23 March 2025 passed under Section 147 of the Income Tax Act.

The main dispute was that the reassessment was initiated not by the designated Faceless Assessing Officer (FAO) under the 2022 Faceless Regime but by the Jurisdictional Assessing Officer (JAO), which was argued to be contrary to the statutory scheme.

Issue Raised: Whether a reassessment notice issued by a JAO rather than an FAO is invalid under the faceless scheme notified on 29 March 2022.

HC Decided: The Rajasthan High Court held that the Gujarat High Court’s judgment in Talati and Talati LLP turned on a different legal setting, specifically search/seizure cases invoking Explanation 2 to Section 148, and therefore could not govern the present matter. The Bombay High Court’s interpretation in Hexaware Technologies and Abhin Anilkumar Shah correctly analysed the faceless regime in conjunction with CBDT’s orders.

The faceless scheme does not carve out exceptions permitting a JAO to issue Section 148 notices in cases like the present one. Therefore, the notice issued under Section 148 and the reassessment order under Section 147 were invalid and stood quashed, along with all later proceedings. The Court accepted the petitioner’s undertaking to withdraw the pending appeal within two weeks. At the Revenue’s request, liberty was granted to revive the notice in the event the Supreme Court later overturns Hexaware, Shree Cement, or Sharda Devi Chhajer.

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