Non-Faceless Income Tax Reassessment Notices u/s 148 are Invalid: ITAT [Read Order]

The bench of the Income Tax Appellate Tribunal, Chennai, ruled that any reassessment notice issued by a Jurisdictional Assessing Officer (AO) after the introduction of the faceless regime is invalid in law. Emphasising on the binding nature of the CBDT’s e-Assessment of Income Scheme, 2022, the Tribunal held that the issuance of notices under Section 148 of the Income Tax Act, 1961, must mandatorily follow the faceless procedure, and any deviation from it renders the reassessment proceedings void.

The appeal was filed by Thangamuthu Balakrishnan, an individual engaged in the business of manufacturing and exporting garments, against the order of the Commissioner of Income Tax (Appeals), [CIT(A)], Delhi, dated 16 January 2025, for the Assessment Year (A.Y.) 2018-19.

The case was reopened through an order passed under Section 148A(d) and a notice issued under Section 148, both dated 31 March 2022, by the jurisdictional Assessing Officer (A.O) Income Tax Officer, Ward 1(1), Tiruppur. The National Faceless Assessment Centre (NFAC) completed the reassessment by making two additions- i. ₹8,28,250 towards business income and ii. ₹87,71,500 as unexplained money under Section 69A of the Income Tax Act, 1961.

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Aggrieved by the order, the assessee preferred an appeal before the CIT(A), which was dismissed, leading to the present appeal before the Tribunal.

Appearing through T.S. Lakshmi Venkataraman, the appellant challenged the jurisdiction of the reopening proceedings, contending that the notice issued under Section 148 by the Jurisdictional Assessing Officer was void ab initio since, after the Central Board of Direct Taxes (CBDT) Notification dated 29 March 2022, all such notices must be issued by the NFAC in accordance with the e-Assessment of Income Scheme, 2022.

Reliance was placed on the judgment of the Madras High Court in TVS Credit Services Ltd. v. DCIT (2025), which held that reassessment notices issued by the JAO post-notification were invalid. The appellant thus prayed for quashing of the reassessment order as being without jurisdiction.

Appearing through C. Sivakumar, the Revenue contended that the issuance of the notice by the Jurisdictional Assessing Officer instead of the NFAC did not affect the legality of the reopening. It was argued that the procedural aspect of whether the notice was issued by the AO or the NFAC was immaterial to the validity of the reassessment, and the appeal therefore deserved to be dismissed.

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The Bench comprising of Judicial Member, S.S. Viswanethra Ravi and Accountant Member, S.R. Raghunatha observed that the CBDT Notification dated 29 March 2022 mandated that reassessment proceedings, including notices under Sections 148A(d) and 148, must be carried out through the faceless mechanism. Since the impugned notice and order, both dated 31 March 2022, were issued by the AO, the Tribunal held that they were contrary to the statutory scheme and hence invalid.

The Bench clarified that the rights of the parties would remain open, with liberty to the Revenue to revive the appeal if the Supreme Court subsequently reverses the Hexaware Technologies Ltd. (2025) decision.

Accordingly, the appeal was allowed in favour of the assessee.

Consequently, ITAT quashed the impugned notice issued under Section 148 and the resultant assessment order.

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