Non speaking dismissal of the SLP by the SC – JAO Vs. FAO Controversy to continue
The matter pertains to the validity of a reassessment notice issued under Section 148 of the Income Tax Act, 1961, to Deepanjan Roy, a non-resident individual. The notice was issued by the Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad. Roy challenged the notice in W.P. No. 23573 of 2024 before the Telangana High Court on the ground that it was issued in violation of the mandatory faceless procedure prescribed under the E-Assessment of Income Escaping Assessment Scheme, 2022, notified by the CBDT on 29.03.2022 under Section 151A of the Act. The High Court observed that the issue was squarely covered by its earlier decision in W.P. No. 13353 of 2024 and related matters, which had held that such notices must be issued strictly in accordance with the faceless scheme.
In that batch of writ petitions, the High Court held that Section 151A empowers the Central Government to notify a faceless regime covering not only assessments and reassessments under Section 147 but also the issuance of notices under Section 148. The Notification dated 29.03.2022 mandates that such notices must be issued through automated allocation and in a faceless manner. The Revenue relied on a CBDT order dated 06.09.2021, which exempts international tax and central charges from faceless assessment under Section 144B. However, the Court clarified that the exemption applies only to final assessment orders and does not cover the issuance of Section 148 notices. The phrase “to the extent provided in Section 144B” in the notification was held to relate only to assessments and reassessments, not to the initial issuance of notice.
The Court emphasized that the faceless reassessment regime was introduced to ensure efficiency, transparency, and minimize personal interaction. Since the impugned notice was issued by a jurisdictional officer physically, bypassing the faceless protocol, it was deemed procedurally invalid. The Court set aside the notice and all consequential actions, while granting liberty to the Revenue to initiate fresh proceedings in accordance with the law and the faceless scheme.
The Revenue preferred a Special Leave Petition (Diary No. 33956/2025) before the Hon’ble Supreme Court, challenging the High Court’s ruling. The Bench, comprising Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice R. Mahadevan, dismissed the petition on 16.07.2025, observing that there was no good reason to interfere with the High Court’s decision. The dismissal by the Supreme Court affirms the High Court’s view that reassessment notices under Section 148—irrespective of the assessee’s residential status—must adhere to the faceless procedure prescribed under the applicable statutory scheme.
However, this dismissal was not a speaking order, meaning it didn’t provide detailed reasoning. The controversy is expected to be resolved when a batch of 700 cases pending before Justice B.V. Nagarathna’s bench is finally heard and judged. These cases, including the Suryalakshmi Cotton Mills/Hexaware batch, are crucial in determining the outcome of the JAO-FAO controversy. Until then, the issue remains unresolved.
The copy of the order is as under:
