Reassessment Notice Issued by Wrong Authority – ITAT Quashes Entire 148 Proceedings Following P&H HC

Harmit Kaur Vs ITO (ITAT Chandigarh)

Assessee challenged the very jurisdiction of the reassessment proceedings on the ground that the notice u/s 148 dated 26.03.2024 was issued by the Jurisdictional AO, even though CBDT Notification No.18/2022 dated 29.03.2022 (issued u/s 151A) mandates that ONLY NFAC/NPAC can issue notices u/s 148 & 148A.

CIT(A) dismissed the appeal on limitation without deciding this pure legal ground.

Before the ITAT, Assessee relied on binding judgments of the Punjab & Haryana High Court in:

• Jatinder Singh Bhangu (19.07.2024)
• Jasjit Singh (29.07.2024)
• Satpal Kaur (01.10.2025)

All these decisions categorically held that:

• After 29.03.2022, only NFAC/NPAC has jurisdiction to issue notice u/s 148.
• Notice by Jurisdictional AO is void ab initio.
• Departmental letters/circulars cannot override statutory notification.
• Assessment proceedings commence from the moment the 148 notice is issued, so faceless scheme applies from that stage.

In the present case:

• The notice u/s 148 was issued by the Jurisdictional AO.
• The Department admitted this fact before the Tribunal.
• Thus, the notice & the entire reassessment were without authority of law.

ITAT held:

• The CBDT Notification is mandatory.
• Binding High Court rulings must be followed.
• The notice is invalid, hence the entire reassessment order dated 10.03.2025 is non est.
• The CIT(A) erred in not deciding this legal issue.

Result:

• Notice u/s 148 quashed
• Reassessment order quashed
• Appeal allowed in full

When law requires something to be done in a particular manner, it must be done only in that manner – or not at all.

FULL TEXT OF THE ORDER OF ITAT CHANDIGARH

This appeal by the assessee is directed against the order of the Ld. CIT(A), NFAC, Delhi dated 12.06.2025 arising from assessment order dated 10.03.2025 passed under section 147 r.w.s. 144B of the Income-tax Act, 1961 for A.Y. 2020-21.

2. The assessee has raised, inter alia, a legal ground challenging the very jurisdiction of the Assessing Officer in issuing notice under section 148, contending that the officer who initiated the reassessment proceedings lacked authority in view of CBDT Notification No. 18/2022 dated 29.03.2022 issued under section 151A of the Act, whereby the National Faceless Assessment Centre (NPAC) alone was empowered to issue and process such notices.

3. Briefly the facts of the case are that the Jurisdictional AO, Ward-65(5), issued notice u/s 148 dated 26.03.2024 and completed assessment u/s 147 r.w.s. 44B on 10.03.2025 assessing income of Rs. 12,86,350/-.

4. Against the order of the AO the assessee went in appeal before the Ld. CIT(A). Before the CIT(A), the assessee also urged that the entire reassessment was void ab initio for want of jurisdiction, as the notice ought to have been issued by NFAC. The Ld. CIT(A), however, dismissed the appeal on limitation without adjudicating this legal ground.

5. Against the order of the Ld. CIT(A), the assessee preferred in appeal before the Tribunal.

6. During the course of hearing the Ld. AR submitted that identical issue has been finally settled by the Hon’ble Punjab & Haryana High Court in Satpal Kaur v. Union of India & Ors (CWP 29690 of 2025, decided 01.10.2025) wherein the High Court followed Jatinder Singh Bhangu v. UOI (decided 19.07.2024) and Jasjit Singh v. UOI (decided 29.07.2024) to hold that only the NFAC/NPAC has jurisdiction to issue notices u/s 148 and 148A, and any notice by Jurisdictional AO is without authority of law.

6.1 It was further argued that the principle enunciated by the High Court is binding on all subordinate authorities in the States of Punjab and Haryana, and therefore the reassessment order passed by a non-competent authority deserves to be quashed.

6.2 Reliance was placed on section 151A read with the said notification and on the doctrine that “when a statute requires a thing to be done in a particular manner, it must be done in that manner or not at all.”

7. Per contra, The Ld. DR supported the assessment order and submitted that the AO had acted bona fide on departmental instructions. It was, however, not disputed that the impugned notice u/s 148 had been issued by the Jurisdictional AO and not by the NFAC.

8. We have carefully considered rival contentions and perused the record. The undisputed facts reveal that the impugned notice u/s 148 was issued on 26.03.2024 by the Jurisdictional AO. The CBDT Notification dated 29.03.2022 issued under section 151A clearly provides that the scheme of faceless assessment shall apply “from the stage of issuance of notice under sections 148 and 148A” and that such proceedings shall be carried out through the National Faceless Assessment Centre.

8.1 The Hon’ble Punjab & Haryana High Court in Jatinder Singh Bhangu (supra) and Satpal Kaur (supra) has categorically held that issuance of notice u/s 148 by a Jurisdictional Assessing Officer after the said notification is without jurisdiction, observing –

“15. From the perusal of Section 151A, it is quite evident that scheme of faceless assessment is applicable from the stage of show cause notice under Section 148 as well as 148A. Clause 3(b) of notification dated 29.03.2022 issued under Section 151A clearly provides that scheme would be applicable to notice under Section 148. Even otherwise, it is a settled proposition of law that assessment proceecungs commence from the stage of issuance of show cause notice. The object of introduction of faceless assessment would be defeated if show cause notice under Section 148 is issued by Jurisdictional Assessing Officer. The respondents are heavily placing reliance upon office memorandum and letter issued by departmental authorities. It is axiomatic in tax jurisprudence that circulars, instructions and letters issued by Board or any other authority cannot override statutory provisions. The circulars are binding upon authorities and Courts are not bound by circulars. The mandate of Section 144B, 151A read with notification dated 29.03.2022 issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, office memorandum or any other instruction issued by Board or any other authority cannot be relied upon.”

8.2 Following the above binding precedent, we hold that the notice issued u/s 148 by the Jurisdictional AO is invalid and void ab initio. Consequently, the entire reassessment proceedings and order dated 10.03.2025 are rendered non est in law. As the legal ground goes to the root of jurisdiction, we refrain from adjudicating other grounds on merits. They are rendered academic.

8.3 The notice u/s 148 dated 27.03.2024 and consequential assessment order dated 10.03.2025 are quashed for want of jurisdiction.

9. In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 15/10/2025