High Court quashes section 148 reassessment notice issued by JAO, holding CBDT internal guideline under section 151A not binding

5-Second Takeaway

The High Court held that the section 148 notice issued on 27 August 2022 by the jurisdictional Assessing Officer was not in accordance with the section 151A scheme, which contemplated issuance through the NFAC. It further held that the CBDT’s 1 August 2022 guideline was only an internal departmental instruction, not issued under section 119, and could not override the Act or the scheme.

The court considered a reassessment notice issued under section 148 after the Faceless Assessment framework had been introduced. The challenge was whether the notice could validly be issued by the jurisdictional Assessing Officer, or whether the statutory scheme required action through the NFAC.

It held that the impugned notice dated 27 August 2022 was issued by respondent No. 1, the JAO, and not by the NFAC. On that footing, the notice did not conform to the scheme framed under section 151A.

The court also found that the CBDT guideline of 1 August 2022 was an internal communication for departmental circulation only. Since it was not issued under section 119, it could not bind the assessee, and in any event could not prevail over the Act or the section 151A scheme.

Rejecting the Revenue’s reliance on the later office memorandum of 20 February 2023, the court held that there was no concurrent jurisdiction between the JAO and the faceless authority for issuing section 148 notices or for making reassessment orders. The notice was therefore invalid.