PRABHAKAR REDDY BASIREDDY, NALGONDA vs. DCIT., CENTRAL CIRCLE-1(1) , HYDERABAD

Facts

The assessee, a non-filer for AY 2020-21, was subjected to a search and seizure action under Section 132 of the Income Tax Act on 04/01/2023. Subsequently, a notice under Section 148 was issued by the Jurisdictional Assessing Officer (JAO) on 29/11/2023, leading to reassessment orders under Section 147 for AY 2020-21 and AY 2022-23. The assessee challenged the validity of these reassessment proceedings, primarily contending that the Section 148 notice issued by the JAO was invalid as it was not issued under the faceless assessment mechanism.

Held

The Tribunal, following relevant High Court judgments, held that reassessment notices under Section 148, including for 'central charges' cases, must be issued under the faceless mechanism mandated by the Finance Act, 2021 (w.e.f. 01.04.2021) and the e-Assessment Scheme, 2022, not by the Jurisdictional Assessing Officer (JAO). It distinguished the Supreme Court's Kalinga Institute case, clarifying that Section 124(3) on waiver of jurisdiction applies to territorial jurisdiction, not an inherent lack of jurisdiction. Consequently, the impugned notices under Section 148 and the resultant assessment orders under Section 147 for both AYs were quashed, with liberty granted to the Revenue to proceed under the substituted provisions as per the Ashish Agarwal judgment.

Key Issues

The primary legal issue was whether reassessment notices issued under Section 148 of the Income Tax Act by a Jurisdictional Assessing Officer (JAO) for 'central charges' cases were valid, given the mandatory faceless assessment regime introduced by the Finance Act, 2021 and subsequent schemes. A secondary issue was whether the assessee was precluded from challenging this jurisdiction under Section 124(3) of the Act for not raising the objection within 30 days.