Faceless Reassessment After Section 147A: Which Officer Can Issue the Section 148 Notice?

By CA Mithilesh Reddy, Founder and CEO, and CA Rajesh Vaishnav, Partner, Steadfast Business Consulting LLP | Direct Tax Litigation / Controversy

Introduction

For some years, the first question in reassessment was sometimes not whether income had escaped assessment but which officer had issued the notice. The faceless reassessment scheme changed how jurisdiction was allocated, while notices continued to be issued through jurisdictional channels. That mismatch produced litigation across several High Courts. A procedural point which looked straightforward in one jurisdiction could produce a different result in another.

The Finance Act 2026 materially altered that landscape by inserting section 147A in the Income-tax Act, 1961. It would be unsafe either to repeat earlier High Court conclusions without addressing that amendment or to assume that retrospective legislation has disposed of every pending challenge. A challenge now has to identify the exact notice, the statutory year, the purported defect and the effect of the amended text on that defect.

This article deals with the jurisdictional examination of a reassessment file. It does not substitute a generic claim that a notice was issued by the wrong officer for a review of jurisdiction, limitation, approval, service and the material said to disclose escapement. The separate problem of automated return processing is considered in our note on the limits of section 143(1).

1. Where the jurisdiction question came from

Section 151A of the 1961 Act enabled a scheme for reassessment and the issuance of reassessment notices that was intended to reduce direct interaction and allocate functions electronically. The relevant scheme and notifications matter because they give practical effect to the enabling section. Courts were asked whether a notice issued by a jurisdictional Assessing Officer, instead of being assigned through the faceless mechanism, was competent.

That is a question of legal power, not merely the choice of portal used to upload a document. A taxpayer challenging jurisdiction needs the notice itself, the digital signature, the authority named on the document, the applicable notification, and the relevant dates. A label on an e-proceedings screen is not necessarily conclusive evidence of the statutory identity of the issuing authority.

2. Why the Finance Act 2026 cannot be overlooked

The Finance Act 2026 inserted section 147A into the 1961 Act, with retrospective effect from 1 April 2021. As reported, it provides that for sections 148 and 148A the “Assessing Officer” means an officer other than the National Faceless Assessment Centre or an assessment unit under section 144B(3), so that a jurisdictional officer can issue those notices. Its retrospectivity and interaction with the existing schemes are central to the dispute. The precise enacted language and commencement must be quoted rather than paraphrased from a departmental summary.

In Jyoti Sareen v Union of India, decided by a Division Bench of the Punjab and Haryana High Court on 10 September 2026 (CWP No. 15791 of 2024 and connected petitions), the Court held the retrospective operation of section 147A unconstitutional and set aside the reassessment notices before it. On 18 September 2026 the Supreme Court stayed that judgment in Union of India v. Bharat Industrial Enterprises Pvt. Ltd., SLP (C) No. 33196 of 2026, and the final hearing is reported as listed for 3 December 2026. The Supreme Court has therefore not yet decided the validity of section 147A, and the High Court judgment should not be treated as settled law. Read the judgment and procedural history before relying on it in a particular jurisdiction.

3. Start with the date and governing statute

Two reassessments with similar facts can be governed by different legal frameworks. Record the assessment year or tax year, the original return date, the alleged year of escapement, the first information or risk-management input, any section 148A show-cause notice, the order on objections and the section 148 notice. Identify whether an earlier notice was subject to transitional treatment.

For years governed by the 1961 Act, analyse the repeal-and-savings provisions alongside later validating legislation. For periods governed by the Income-tax Act, 2025, use the corresponding operative provisions as enacted. A submission which cites only the 2025 Act for a historical assessment year risks answering the wrong statutory question.

4. Jurisdiction, sanction and limitation are distinct objections

The officer permitted to issue a notice is one issue. Whether the designated authority validly sanctioned that notice is another. Whether the notice is within the outer time limit is a third. A jurisdictional submission should put them in separate grounds because an amendment addressing one defect does not necessarily answer the others.

Limitation also demands a quantified enquiry into the kind and value of income alleged to have escaped assessment where the law uses a higher threshold for an extended period. The file should identify the evidence on which the authority relies. A large figure mentioned in a report is not automatically a finding that the statutory threshold has been satisfied for the year under examination.

5. Distinguish a procedural irregularity from want of authority

Courts distinguish between defects that can be cured and acts performed without statutory competence. It is tempting to label every processing failure a jurisdictional nullity, but the characterisation must follow the section and the relevant amendment. DIN defects, deficient internal approvals, service disputes and the competence of the notice issuer should not be presented as interchangeable.

When legislation purports to validate earlier actions, counsel should test exactly what the provision validates, which periods it covers and whether the asserted defect lies within its terms. A broad constitutional challenge can require a different forum and remedy from a conventional statutory objection made before the Assessing Officer or appellate authority.

6. Develop the merits defence while reserving jurisdiction

A serious dispute strategy has two tracks. One preserves threshold objections without acquiescence. The other answers the alleged escapement with records, transaction history and reconciliations. Procedural litigation may fail, become moot after a legislative change or be decided differently in another jurisdiction. The underlying factual file must still be able to withstand scrutiny.

For example, where the information relates to an alleged unexplained investment, preserve the original bank entries, sources of funds, counterparties and property records. Where the allegation relates to income from a non-resident payer, obtain the agreement, invoices, ledger, withholding certificate and treaty documentation. The legal objection is stronger, not weaker, when the facts have been investigated.

7. Evidence index for a jurisdictional challenge

A useful index has the following order: original assessment and return; all reopening communications; electronically delivered notices and acknowledgements; digital signatures and officer identification; sanction records to the extent supplied; information relied on for reopening; response to section 148A; final notice; statutory limitation working; relevant notifications and judgments.

Put each procedural objection in a matrix showing the provision, factual event, record proving it, Revenue response anticipated and requested relief. Avoid sweeping statements that the entire reassessment is invalid without identifying the event that attracts the objection.

8. Relief, strategy and preservation of rights

The right next step depends on the stage. Before an order, record objections in time and answer fact-specific enquiries. On receipt of an adverse order, preserve appeal periods and consider demand stay. A writ is not a universal substitute for the statutory appeal: its appropriateness depends on the asserted jurisdictional defect and available alternative remedy.

An objection which may ultimately succeed does not by itself suspend collection. Protective applications for stay, penalty abeyance and correction of outstanding demand should be considered separately. The matter is not finished when an appellate order is received: implementation and consequential refunds or demands must be verified.

Which Act governs the notice: the 1961 Act or the 2025 Act?

The CBDT’s FAQs on interplay and transition state that reassessment for tax years beginning before 1 April 2026 continues under the Income-tax Act, 1961, and that sections 279 to 286 of the Income-tax Act, 2025 apply from tax year 2026-27. The mapping given there is: section 147 to 279, section 148 to 280, section 148A to 281, section 149 to 282, section 150 to 283, section 151 to 284, section 152 to 285 and section 153 to 286. Section 147A, being a 1961 Act provision, is the operative text for notices relating to the earlier years that are the subject of most current disputes.

A file should therefore record both numberings from the outset. A submission for a 2020-21 notice that cites section 280 of the 2025 Act answers the wrong statute, and a submission for tax year 2026-27 that cites section 147A may be answering a provision that does not apply to it.

How the JAO-FAO dispute reached section 147A

The revised reassessment procedure under sections 147, 148 and 148A applied from 1 April 2021. The e-Assessment of Income Escaping Assessment Scheme, 2022 and the faceless jurisdiction scheme were notified on 29 March 2022, and the Supreme Court dealt with the transition for old notices in Union of India v. Ashish Agarwal on 4 May 2022. High Courts then divided: the Bombay High Court in Hexaware Technologies (3 May 2024) held that a jurisdictional officer and a faceless officer cannot hold concurrent jurisdiction, and other High Courts took a similar approach, while the Delhi High Court in T.K.S. Builders (28 October 2024) took the contrary view. The Supreme Court dismissed the Revenue’s special leave petition in Deepanjan Roy on 16 July 2025 without a reasoned order.

The Finance Act 2026 then inserted section 147A, with effect from 1 April 2021 and a non-obstante clause. In April and May 2026 the Supreme Court remitted a batch of pending appeals to the High Courts in the light of the new section, leaving its validity open. The Punjab and Haryana High Court decided the lead petition, Jyoti Sareen v. Union of India, on 10 September 2026 together with a large batch of connected petitions, and held the retrospective operation of section 147A unconstitutional. Reported grounds include separation of powers, because Parliament may cure a defect identified by a court but may not simply nullify the judgment, and the fact that the amendment did not address the randomised, automated allocation that the faceless scheme requires. The Supreme Court stayed that judgment on 18 September 2026.

Practical steps while the stay operates

First, do not treat the High Court judgment as an operative authority in your own proceeding while it is stayed; commentary on the stay suggests it cannot be relied on to support a case, but the position in your High Court should be checked. Second, read the Supreme Court’s stay order itself, because reports describe its effect on pending reassessment proceedings differently, and an officer who proceeds when the proceedings are meant to remain stayed creates a separate ground. Third, keep the objection alive in the reply to the section 148A notice and in any writ petition, and record that the reply is given without prejudice to it.

Fourth, diarise the appeal periods and any demand-stay application independently of the constitutional question, as an objection that may eventually succeed does not suspend recovery. Fifth, keep the merits file current. If the final hearing in December 2026 upholds section 147A, the jurisdictional ground in many pending cases will fall away and the case will be decided on the material said to show escapement, the sanction and the limitation position.

Conclusion

The useful question for a reassessment team in 2026 is no longer simply whether a faceless officer issued the notice. It is whether the complete chain of statutory authority remains valid after the latest amendment and the judicial decisions governing the relevant period.

The strongest file preserves threshold objections precisely and prepares the substantive defence independently. A challenge to procedure should never become a reason for leaving the underlying facts unexplained.

Frequently asked questions

1. Are all notices issued by jurisdictional officers invalid?

No. That proposition ignores section 147A inserted by the Finance Act 2026, the Punjab and Haryana High Court judgment of 10 September 2026 and the Supreme Court stay of 18 September 2026. The validity of a particular notice requires a period-specific review.

2. Does a defect in sanction raise the same issue as faceless jurisdiction?

No. They are legally distinct. The notice file must be tested against each applicable requirement.

3. Can a taxpayer rely only on a High Court decision from another State?

Its persuasive value depends on the legal issue, amendments, and subsequent judicial developments. The jurisdictional High Court and binding Supreme Court law must be checked.

4. Should merits be addressed while the jurisdiction objection remains pending?

Usually the safer approach is to preserve the objection expressly while complying with applicable requirements and substantiating the facts.

5. Is a reassessment dispute closed when the appeal is allowed?

Not necessarily. Giving-effect action, interest, refunds, recovery status and linked penalty proceedings require separate verification.

6. Has the Supreme Court decided whether section 147A is valid?

Not yet. The Punjab and Haryana High Court declared the retrospective operation of section 147A unconstitutional on 10 September 2026, and the Supreme Court stayed that judgment on 18 September 2026. The final hearing is reported as listed for 3 December 2026. Until then the validity of the section remains undecided at the apex level.

7. What is section 147A of the Income-tax Act, 1961?

Section 147A was inserted by the Finance Act 2026 with effect from 1 April 2021. In substance it provides that, for sections 148 and 148A, the Assessing Officer means an officer other than the National Faceless Assessment Centre or an assessment unit under section 144B(3), which allows a jurisdictional officer to issue reassessment notices. Read the enacted text before relying on this summary.

8. Which sections of the Income-tax Act, 2025 replace sections 147, 148 and 148A?

According to the CBDT’s FAQs on interplay and transition, section 147 corresponds to section 279, section 148 to section 280 and section 148A to section 281. These sections apply from tax year 2026-27. Reassessment for earlier tax years continues under the 1961 Act under the repeal and savings provisions of section 536.

9. Can a section 148 notice issued by a jurisdictional officer be challenged today?

Yes, but the challenge must address section 147A and the Supreme Court stay. Preserve the officer-identity objection, and also test the sanction, limitation, service and reasons separately. The right forum, whether a writ petition or the statutory appeal route, depends on the stage and on the law in the relevant High Court.

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Disclaimer

This article is general professional commentary and not advice on any particular facts. Treaty eligibility, applicable law, procedural requirements and statutory amendments must be verified for the relevant tax period. It is not a description of an identifiable client engagement.