The Andhra Pradesh High Court has quashed a batch of income-tax reassessment notices and orders, holding that jurisdictional assessing officers lacked jurisdiction to issue the impugned proceedings outside the mandatory faceless mechanism.
The Division Bench of Justice Battu Devanand and Justice A. Hari Haranadha Sarma set aside the challenged proceedings under Sections 148A(b), 148A(d) and 148 of the Income Tax Act, 1961. Consequential orders, if any, were also set aside.
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The petitioners approached the High Court under Article 226 of the Constitution, challenging show-cause notices, orders permitting reopening and consequential reassessment notices issued by the Income Tax Department.
Their principal objection concerned the authority initiating the proceedings. They contended that, following the introduction of the scheme notified on March 29, 2022, the department was required to follow the prescribed faceless mechanism.
According to the petitioners, the challenged notices and orders had instead been issued by jurisdictional assessing officers. They argued that this departure from the statutory framework rendered the proceedings invalid for want of jurisdiction.
The Bench traced the development of the faceless assessment framework, explaining that it was intended to improve efficiency, transparency and accountability in income-tax administration.
The framework sought to reduce direct interaction between taxpayers and assessing officers, optimise the use of resources and introduce team-based assessment with dynamic jurisdiction.
The court discussed Section 144B, which incorporates the faceless assessment procedure into the Act, and Section 151A, which enables a scheme covering reassessment-related functions, including issuance of notices under Section 148.
It also examined the scheme notified by the Central Government on March 29, 2022, providing for automated allocation and the faceless conduct of the specified proceedings.
The petitioners submitted that compliance with the notified scheme was mandatory. Consequently, jurisdictional assessing officers could not independently initiate the challenged proceedings outside that mechanism.
They argued that allowing the Revenue to bypass the prescribed process would defeat the purpose of the reassessment reforms and subject taxpayers to proceedings initiated without lawful authority.
The petitioners relied on the Bombay High Court’s decision in Prakash Pandurang Patil v. Income Tax Officer, Ward 5, Panvel & Others, which followed Hexaware Technologies Limited v. Assistant Commissioner of Income Tax.
They also referred to the Supreme Court’s order dated August 18, 2025, in SLP (Civil) Diary No. 39689 of 2025.
The department argued that Notification S.O. 1466(E), dated March 29, 2022, did not expressly specify whether a notice under Section 148 had to be issued by the National Faceless Assessment Centre or the jurisdictional assessing officer.
It maintained that the notification prescribed automated allocation in accordance with the risk management strategy, while requiring faceless assessment only to the extent provided under Section 144B.
Since Section 144B did not itself provide for issuance of notices under Section 148, the Revenue contended that jurisdictional assessing officers continued to possess that authority.
Accordingly, it argued that the challenged proceedings could not be declared without jurisdiction merely because they had been issued by jurisdictional officers.
The High Court relied on the reasoning adopted by the Bombay High Court in Prakash Pandurang Patil, including the principles laid down in Hexaware Technologies.
That reasoning rejected concurrent jurisdiction between jurisdictional and faceless assessing officers for issuance of Section 148 notices under the notified scheme.
Where jurisdiction is assigned through the prescribed mechanism, the department cannot treat an alternative route as equally available. Otherwise, the purpose of the faceless framework would be undermined.
The Bench reproduced the explanation that automated allocation is mandatory and does not leave the department free to choose whether to follow it.
The cited reasoning also rejected the contention that the scheme applies only after a reassessment notice has been issued. Section 151A contemplates both reassessment under Section 147 and issuance of notices under Section 148. Excluding the notice stage would undermine the scheme’s express provisions.
The judgment also reproduced the Bombay High Court’s reasoning that an assessee need not establish additional prejudice when an authority acts contrary to the procedure prescribed by law.
The principle is that taxpayers are entitled to proceedings conducted by a competent authority in accordance with the statutory framework. Failure to follow that framework itself causes prejudice.
The Bench further referred to other High Court decisions, including the Telangana High Court’s ruling in Kanakanala Ravindra Reddy v. Income Tax Officer, which had granted relief against reassessment proceedings initiated in violation of Section 151A read with the March 29, 2022 notification.
The Bench recorded that the Supreme Court had upheld the Bombay High Court’s decision in Prakash Pandurang Patil. In light of the decisions discussed, it considered the issue settled.
Applying those principles, the High Court held that the impugned notices and orders issued by jurisdictional assessing officers, or outside the prescribed faceless mechanism, were bad and illegal.
The court expressly clarified that the jurisdictional assessing officers had no jurisdiction to issue the challenged notices and orders.
Allowing the writ petitions, the High Court set aside the impugned proceedings under Sections 148A(b), 148A(d) and 148 of the Income Tax Act.
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