Supreme Court Confirms Mandatory Faceless Protocol for Section 148 Notices, Upholds Telangana High Court Ruling.
The Supreme Court has upheld a ruling of the Telangana High Court that mandates strict adherence to the faceless procedure for issuing reassessment notices under Section 148 of the Income Tax Act, 1961.
The bench of Justice J.B. Pardiwala and Justice R. Mahadevan refused to entertain the Department’s challenge effectively affirms the binding nature of the Telangana High Court’s interpretation.
The core legal principles—ratio decidendi—established by the Telangana High Court in W.P.Nos. 13353, 16141, and 16877 of 2024, and later extended to W.P.No. 23573 of 2024, have now received final judicial affirmation after the apex court dismissed the Special Leave Petition filed by the Income Tax Department. The Supreme Court, while refusing to interfere, remarked that it found “no good reason to interfere with the impugned order passed by the High Court.”
Key Legal Principles Established:
- Mandatory Faceless Procedure for Section 148 Notices:
The High Court held that the issuance of show-cause notices under Section 148 must comply with the e-Assessment of Income Escaping Assessment Scheme, 2022, which mandates a faceless and automated procedure. Any deviation from this process renders the notices legally invalid. - Exemption Limited to Assessment Orders:
The Court clarified that the exemption from the faceless regime under Section 144B(2) and the CBDT’s order dated September 6, 2021, applies strictly to the passing of assessment orders—and not to the issuance of notices under Section 148. - Interpretation of Clause 3(b) of the 2022 Scheme:
The Court ruled that the phrase “to the extent provided in Section 144B” relates only to assessment or reassessment procedures, and cannot be interpreted to include the issuance of notices. Any broader reading, the Court warned, would “do violence to the language employed.” - Equal Treatment for All Taxpayers:
The faceless procedure must be applied uniformly, the Court emphasized, without any distinction between Indian citizens and Non-Resident Indians (NRIs). - Invalidity of Non-Compliant Notices:
Notices issued without following the mandatory faceless procedure are deemed illegal. Consequently, not only the notices but also all proceedings and assessment orders stemming from them are vitiated and set aside.
Supreme Court’s Seal of Approval
The decision sends a strong message reinforcing the importance of procedural compliance and technological transparency in tax administration.
Legal experts believe this ruling could result in the quashing of numerous reassessment notices issued in violation of the prescribed faceless scheme and may significantly influence litigation strategies and departmental practices going forward.
Case Details
Case Title: ADIT (INT TAXN) 2 HYD & ANR. Versus DEEPANJAN ROY
Case No.: SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 33956/2025
Date: 16-07-2025
