ITAT Quashes Reassessment for Lack of Proper Section 148 Approval and Non-Faceless Notice; Allows Assessee’s Appeal

In this appeal, the assessee, Shri Vinod Ojha of Hyderabad, challenged the reassessment framed for A.Y. 2016-17. The reassessment had been reopened by the issue of a notice under Section 148 dated 23.04.2021, later treated as a Section 148A notice pursuant to the Supreme Court’s ruling in Ashish Agarwal. A fresh Section 148 notice was ultimately issued on 30.07.2022 by the Jurisdictional Assessing Officer (JAO).

The assessee argued that the entire reassessment was void because it violated mandatory legal requirements; the notice was issued by the JAO instead of the Faceless Assessing Officer, contrary to CBDT Notifications 15/2022 and 18/2022 mandating faceless reassessment; and the approval obtained under Section 151 was taken from the Principal CIT instead of the Principal Chief Commissioner (PCCIT), even though the reassessment was issued beyond three years from the end of the relevant assessment year.

Issue Raised: Whether the reassessment initiated under Section 147/148 was invalid for being issued by a non-faceless Assessing Officer in violation of the Faceless Reassessment Scheme and without approval from the competent authority prescribed under Section 151.

ITAT Held: The Tribunal held that the reassessment could not survive because the notice under Section 148 had been issued by the Jurisdictional Assessing Officer, even though, after 01.04.2021, all reassessment proceedings are mandatorily required to be carried out in a faceless manner under CBDT Notifications 15/2022 and 18/2022. Relying on Kotha Kanthaiah and a series of its own earlier rulings, the Hyderabad Bench reiterated that any Section 148 notice issued by the JAO under the post-2021 regime is invalid. The Bench also noted that similar issues are pending before the Supreme Court, and therefore granted liberty to the parties to seek revival of the appeal depending on the outcome at the apex court.

As the notice was issued beyond three years from the end of the relevant assessment year, the law requires approval from the PCCIT/PDGIT, not from a Principal CIT. As the notice carried approval only from the Principal of CIT, the sanction was defective and fatal to the proceedings. Following the High Court’s ruling in Cipla Pharma & Life Sciences Ltd., the Tribunal quashed the notice and thus annulled the reassessment.

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