Faceless Reassessment Mandatory for International Tax Cases: Bombay HC Quashes S.148 Notice Issued by Jurisdictional AO [Read Order]

The Bombay High Court has held that faceless reassessment is mandatory even in international tax cases, ruling that a reassessment notice under Section 148 issued by a Jurisdictional Assessing Officer (JAO) is invalid and quashed Section 148 notice.

Shabana Aijaz Khan, the petitioner, filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961. One of the main grounds raised was that the notice had been issued by the Jurisdictional Assessing Officer even though the law requires such notices to be issued by the Faceless Assessing Officer under the faceless reassessment scheme. The petitioner argued that this defect made the notice invalid.

The petitioner’s counsel argued that the issue was already covered by the Bombay High Court’s earlier decision in Hexaware Technologies Ltd. v. ACIT, where it was held that reassessment notices must follow the faceless procedure and that notices issued by jurisdictional officers are void.

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The Revenue’s counsel submitted that the Hexaware ruling should not apply because the present matter concerns international taxation. They argued that such cases were different and not covered by the faceless reassessment mechanism.

The counsel further pointed out that the Hexaware judgment has been challenged before the Supreme Court, and requested that the present petition be kept pending until the Supreme Court decides the matter.

The Division Bench of Justice B. P. Colabawalla and Justice Amit S. Jamsandekar observed that, in this case, it was undisputed that the Section 148 notice was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer.

The court explained that under the Hexaware decision, such a notice is invalid. The Bench also pointed out that another Division Bench ruling in Abhin Anilkumar Shah v. ITO, International Taxation had already held that the faceless reassessment scheme applies even to central charges and international taxation.

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The Court reproduced paragraph 17 of that judgment, which reads:

“The mandatory faceless procedure for issuance of notice under section 148… would not exclude the Central charges and International taxation charges from the application of the faceless mechanism as notified under section 144B read with section 151A of the Act.”

After examining the record and applying these binding precedents, the court held that the impugned notice was not sustainable. It set aside the Section 148 notice and all proceedings arising from it.

At the same time, the court granted liberty to the Revenue to revive the petition if the Supreme Court later overturns Hexaware. The court added that such revival may be sought by simply filing a praecipe and that, upon revival, the quashed notice would remain stayed until further orders.

The writ petition was accordingly allowed, with no order as to costs.

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