Validity of Reassessment Notices under Section 148: Whether Jurisdiction Lies with JAO or FAO?

Delhi High Court Judgment:-Inder Dev Gupta & Others v. ACIT, Central Circle-2, Delhi-Judgment dated 21 November 2025, Delhi High Court

 

1. Background of Dispute:- The petitioners challenged reassessment notices issued under Section 148 of the Income-tax Act, 1961 on the ground that such notices were issued by the Jurisdictional Assessing Officer (JAO), whereas post-notification of the faceless assessment framework, only the Faceless Assessing Officer (FAO), under the National Faceless Assessment Centre (NFAC), was competent to issue such notices.This challenge relied upon the mandate introduced through:

(i)            Section 151A (Inserted vide Finance Act, 2022), and

(ii)           The E-Assessment of Income Escaping Assessment Scheme, 2022, notified under S.O. 1466(E) dated 29.03.2022.

2. Petitioners’ Submissions:- The petitioners contended that reassessment proceedings post-2022 must be conducted exclusively in a faceless manner, and thus the jurisdiction of the physical JAO stands extinguished.To substantiate, reliance was placed upon a series of High Court decisions holding that JAO-issued notices are void:

Bombay High Court

(i)                  Hexaware Technologies Ltd. v. ACIT (2024) 162 taxmann.com 225

(ii)                Prakash Pandurang Patil v. ITO (2024:BHC-AS:32759-DB)

(iii)               Venus Jewel v. ACIT (2024) 164 taxmann.com 414

(iv)               Royal Bitumen (P) Ltd. v. ACIT (2024) 164 taxmann.com 606

Telangana High Court:- Deepanjan Roy v. ADIT (Intl. Taxation) – reassessment notices held invalid when issued by the non-faceless jurisdictional officer.

This decision was reported as affirmed by the Supreme Court since the SLP (Diary No. 33956/2025) was dismissed on 16.07.2025.

Punjab & Haryana, Rajasthan and Madhya Pradesh High Courts have issued similar rulings in comparable fact patterns.

The petitioners further argued that the Supreme Court has granted interim stay of proceedings in similar matters:

(i)                  All India Kataria Education Society v. ACIT – SLP (C) No. 29723/2025

(ii)                Yukti Exports v. ITO – SLP (C) No. 31818/2025

Hence proceedings in the present matter should also be kept in abeyance.

 

3. Revenue’s Position: The Revenue argued that in Delhi jurisdiction, the legal position is already settled in favour of concurrent jurisdiction of JAO and FAO, relying on the following decisions:

Delhi High Court Judgments

(i)                  TKS Builders (P.) Ltd. v. ITO (2024) 167 taxmann.com 759

(ii)                PC Jeweller Ltd. v. ACIT, W.P.(C) 13229/2024

(iii)               Mala Petrochemicals & Polymers v. ITO (2025)

(iv)               Mehak Jagga v. ITO (2025)

It was submitted that TKS Builders (supra) squarely governs the issue and remains binding, as:

(a)    It has not been stayed,

(b)    It has not been overturned by the Supreme Court, and

(c)     Mere dismissal of SLPs in other matters does not constitute law under Article 141.

The Revenue cited the following Supreme Court authorities on this principle:

(i)                  Kunhayammed & Ors. v. State of Kerala (2000) 6 SCC 359

(ii)                Fuljit Kaur v. State of Punjab (2010) 11 SCC 455

(iii)               Khoday Distilleries Ltd. v. Mahadeshwara Sahakara Sakkare (2019) 4 SCC 376

 

4. Findings and Reasoning of the Court: The Delhi High Court applied the doctrine of territorial judicial hierarchy and held:

TKS Builders (P.) Ltd. (Delhi HC) remains binding until disturbed by the Supreme Court.

Decisions of other High Courts, even when upheld by SLP dismissal, are persuasive and not binding in Delhi.

The faceless reassessment regime does not eliminate the statutory competence of the JAO.

Accordingly, the Court held:

“Until the Supreme Court rules upon the issue in the pending proceedings arising out of TKS Builders, both the Jurisdictional Assessing Officer and the Faceless Assessing Officer possess concurrent jurisdiction to issue reassessment notices.”

5. Decision: The writ petitions were dismissed, and notices under Section 148 issued by the Jurisdictional Assessing Officer were held to be jurisdictionally valid, subject to the final outcome before the Supreme Court.

6. Summary

Delhi High Court, the leading decision in TKS Builders (P.) Ltd. v. ITO (2024) 167 taxmann.com 759 laid down that reassessment notices under Section 148 may legitimately be issued either by the Jurisdictional Assessing Officer or the Faceless Assessing Officer. The Court held that no statutory provision expressly divests the jurisdictional AO of authority post-notification of the faceless scheme and that the scheme is procedural rather than jurisdiction-ousting. This position has been consistently reaffirmed in subsequent decisions including PC Jeweller Ltd. v. ACIT (WP(C) 13229/2024), Mala Petrochemicals & Polymers v. ITO (2025), and Mehak Jagga v. ITO (2025), each reiterating that reassessment cannot be invalidated merely on the ground that the notice emanated from a physical jurisdictional AO. The same legal approach was followed in the present matter, Inder Dev Gupta v. ACIT (2025), where the Delhi High Court treated TKS Builders as binding precedent and upheld the validity of notices issued by the jurisdictional AO.

In contrast, the Bombay High Court has taken an entirely different view, holding that reassessment must strictly comply with the faceless regime. In Hexaware Technologies Ltd. v. ACIT (2024) 162 taxmann.com 225, the Court ruled that once the faceless reassessment system is notified, the jurisdiction to issue notices shifts exclusively to the faceless authority, and any notice issued by the jurisdictional AO becomes void. This reasoning was subsequently adopted in a series of decisions including Prakash Pandurang Patil v. ITO (2024:BHC-AS-32759-DB), Venus Jewel v. ACIT (2024) 164 taxmann.com 414, and Royal Bitumen (P) Ltd. v. ACIT (2024) 164 taxmann.com 606, where the Court emphasized that the jurisdictional defect in issuing a notice under Section 148 cannot be cured and renders the proceedings void ab initio.

Also by Punjab and Haryana High Court in Jatinder Singh Bhangu v. Union of India (CWP No. 15745/2024), -held that Section 151A, read harmoniously with the E-Assessment of Income Escaping Assessment Scheme, 2022, mandates that the initiation of reassessment proceedings under Section 147/148 must be undertaken solely through the faceless mechanism.

A similar position was adopted by the Telangana High Court in Deepanjan Roy v. ADIT (Intl. Taxation), holding that reassessment notices issued by the jurisdictional AO post-faceless regime lack legal authority. This view gained additional weight after the Supreme Court dismissed the SLP (Diary No. 33956/2025) on 16.07.2025, though without a speaking order. Parallel challenges are pending before the Supreme Court in All India Kataria Education Society v. ACIT (SLP No. 29723/2025) and Yukti Exports v. ITO (SLP No. 31818/2025), in which interim directions have been issued.

 

Since the Supreme Court has not yet settled the issue — and dismissal of SLPs without speaking order does not constitute binding law under Article 141, as held in Kunhayammed v. State of Kerala (2000) 6 SCC 359, Fuljit Kaur (2010) 11 SCC 455, and Khoday Distilleries (2019) 4 SCC 376 — the legal position remains jurisdiction-dependent.