High Court quashes reassessment notice issued by jurisdictional AO, holding CBDT’s internal guidance cannot override section 151A scheme

5-Second Takeaway

The High Court quashed the section 148 reassessment notice because it was issued by the jurisdictional Assessing Officer, not in accordance with the section 151A scheme requiring action through the designated mechanism. It also held that the CBDT’s 1 August 2022 guidance was only an internal departmental instruction, not binding on the assessee or on the officer where it conflicted with the Act and the section 151A scheme.

The petition challenged a reassessment notice issued on 27 August 2022. The core issue was whether the notice had been issued in the manner contemplated by section 151A and the CBDT scheme framed under that provision.

The court held that the notice was issued by respondent no. 1, the jurisdictional Assessing Officer, rather than through the NFAC as required under the applicable scheme. On that basis, the notice did not conform to the statutory procedure governing reassessment notices.

The court also rejected reliance on the CBDT’s 1 August 2022 guidelines. It noted that the document was marked for confidential departmental circulation and was an internal guideline rather than a binding instruction under section 119.

Because the guideline was inconsistent with the Act and the scheme under section 151A, it could not validate the impugned notice. The Revenue’s reliance on the Office Memorandum dated 20 February 2023 was likewise found contrary to the statutory framework. The reassessment notice was therefore set aside.