PRINCIPAL COMMISSIONER OF INCOME TAX 1 LUDHIANA vs. SHARMANJI YARNS PVT LTD VILLAGE LAKHOWAL ROAD KOHARA JANDIALI LUDHIANA PAN AAHCS6629R)

ITA/261/2026HC Punjab & HaryanaPHHC01090865202616 September 2026Author: MR. JUSTICE SUNISH BINDLISH,MR. JUSTICE DEEPAK SIBAL6 pages
AI SummaryDismissed

What were the facts?

These appeals were filed by the Principal Commissioner of Income Tax-1, Ludhiana (the revenue) against the respondent assessee, Sharmanji Yarns Pvt. Ltd. The appeals challenged orders passed by the Income Tax Appellate Tribunal (ITAT) which had quashed notices issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO). The core of the dispute revolved around the interpretation and application of the 'Faceless Assessment' and 'E-Assessment of Income Escaping Assessment Scheme, 2022' in relation to the issuance of Section 148 notices. The revenue contended that the ITAT had misinterpreted these schemes and relevant legal precedents. The procedural history indicates that the ITAT had ruled against the revenue, leading to the present appeals before the High Court.

What did the High Court hold?

The High Court held that all the substantial questions of law raised by the revenue had already been answered against the revenue in a recent judgment of the same court dated 10.09.2026 in CWP No.15791 of 2024, titled Jyoti Sareen Vs. Union of India and others. In light of this prior decision, the present appeals were dismissed. The reasoning of the High Court is based on the principle of precedent, where a higher court's decision on identical issues binds lower courts and subsequent benches. The ratio decidendi is that if the jurisdictional High Court has already ruled on the interpretation of 'Faceless Manner' and the powers of the JAO versus FAO in issuing Section 148 notices under the E-Assessment Scheme, then subsequent appeals raising the same questions must follow that ruling. The operative direction was to dismiss the appeals.

What were the issues?

The Tribunal had to decide whether the issuance of Section 148 notices by the Jurisdictional Assessing Officer (JAO) was valid under the E-Assessment of Income Escaping Assessment Scheme, 2022, and the 'Faceless Manner' provisions. The revenue argued that the ITAT misinterpreted the term 'Faceless Manner' and the legislative intent behind the E-Assessment Scheme, particularly concerning the application of Section 144B and the issuance of Section 148 notices by a Faceless Assessing Officer (FAO). The revenue also contended that the ITAT wrongly applied decisions of the jurisdictional High Court and other High Courts, such as Kankanala Ravindra Reddy, Hexaware Technology Ltd., and Ram Narayan Sah, in cases where information was shared by the Investigation Wing. They argued that the JAO retained jurisdiction for issuing such notices, especially considering automated allocation and risk strategies under Section 151A read with Section 144B. The revenue further argued that the ITAT's interpretation of 'Assessing Officer' was too restrictive and inconsistent with Supreme Court pronouncements in UOI Vs. Ashish Agarwal, and that retrospective amendments, including Section 147A, clarified the JAO's role. The assessee's arguments are not explicitly detailed but are implied to be in support of the ITAT's decision to quash the notices.

Which sections of the Income-tax Act were involved?

Section 148,Section 144B,Section 151A,Section 147A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Sr. No.241 (

4 cases

) ITA-261-2026 (O&M) PRINCIPAL COMMISSIONER OF INCOME TAX-1, LUDHIANA ..... Petitioner Versus SHARMANJI YARNS PVT. LTD. ..... Respondent ITA-274-2026 (O&M) PRINCIPAL COMMISSIONER OF INCOME TAX-1, LUDHIANA ..... Petitioner Versus SHARMANJI YARNS PVT. LTD. ..... Respondent ITA-259-2026 (O&M) PRINCIPAL COMMISSIONER OF INCOME TAX-1, LUDHIANA ..... Petitioner Versus SHARMANJI YARNS PVT. LTD. ..... Respondent ITA-249-2026 (O&M) PRINCIPAL COMMISSIONER OF INCOME TAX-1, LUDHIANA ..... Petitioner Versus SHARMANJI YARNS PVT. LTD. ..... Respondent Date of decision: 16.09.2026 CORAM : HON'BLE MR. JUSTICE DEEPAK SIBAL

HON'BLE MR. JUSTICE SUNISH BINDLISH JYOTI SHARMA 2026.09.17 12:19 I attest to the accuracy and authenticity of this document

ITA-261-2026 (O&M) and other connected cases -2- Present : Mr. Amanpreet (A.P.) Singh, Advocate for the petitioner(s). * * * DEEPAK SIBAL, J.

1.

Through these appeals, the revenue raises the following substantial questions of law:- “(i) Whether the Ld. Income Tax Appellate Tribunal has misinterpreted the term 'Faceless Manner' in E- Assessment of I

The order continues below.

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