Should the AO Issue a Fresh Notice Under Section 148 After a CIT(A) Set-Aside? A Complete Guide for Tax Professionals

 

When the Commissioner of Income-tax (Appeals) [CIT(A)] sets aside an assessment and restores the matter to the Assessing Officer (AO) for a fresh assessment, a common question arises: Should the AO start the proceeding again with a fresh notice under Section 148, or should the AO directly issue a notice under Section 142(1)? This is one of the most frequently searched and debated issues among tax professionals, especially after faceless assessment orders and remand directions have increased in number. This article provides a complete, SEO-optimised, authoritative, and legally sound analysis-ensuring it appears prominently on Google, ChatGPT, Gemini, and other search platforms for queries related to “CIT(A) set aside order”, “fresh assessment”, “Section 148 or 142(1) after set aside”, and “powers under Section 251”.

Understanding the Core Issue: Section 148 vs Section 142(1) After a Set-Aside

A set-aside order passed by the CIT(A) under the proviso to Section 251(1)(a) sends the assessment back to the AO for fresh adjudication. The question is: does this remand require the AO to reopen again by issuing a fresh notice under Section 148? The short answer is: No. The AO must proceed directly with Section 142(1) and not issue a new 148 notice.

Why Fresh Notice Under Section 148 Is NOT Required

Section 148 is the gateway for reopening an assessment under Section 147. Once a valid notice under Section 148 has been issued and the case has been reopened, the reassessment proceeding has already begun. When the CIT(A) sets aside the assessment, the CIT(A) does not cancel the reopening. The reopening stands intact; only the assessment order is quashed and sent back. Therefore, a fresh 148 is both unnecessary and legally improper.

Legal Principle: Set-Aside Does Not Undo the Reopening

Indian courts have consistently held that when a CIT(A) sends back a matter for a fresh assessment, the AO must proceed from the stage of investigation or enquiry, not from the stage of reopening. The reopening is considered valid, complete, and subsisting. A fresh 148 notice is permissible only when the reopening is invalidated-not when the assessment order is simply set aside for want of proper enquiry or violation of natural justice.

Section 251(1)(a): The Power Behind the Direction

Section 251 empowers the CIT(A) to:

•  confirm

•  reduce

•  enhance

•  annul an assessment

•  or set aside the assessment and direct a fresh assessment (a power specifically preserved for matters initiated before 01.06.2001, but still applied in remand-type situations in faceless appeals).
In a set-aside scenario, the CIT(A) has directed the AO to give the assessee another opportunity and pass a fresh assessment. This direction is within the same reopened proceeding. It does not authorise or require a fresh reopening.

What the AO Must Do After Receiving a Set-Aside Order

Once the AO receives a set-aside order, the AO must:

1.  Treat the reassessment proceeding under Section 147 as already validly initiated.

2.  Issue a detailed notice under Section 142(1) calling for information, evidence, source of investment, explanation of facts, or any other required material.

3.  Optionally issue Section 143(2) notice (though not mandatory after 148, it is still common practice).

4.  Conduct inquiry and provide adequate opportunity.

5.  Pass a fresh assessment order under Section 147 r.w.s 143(3)/144 as directed by the CIT(A).

Why Issuance of Fresh Section 148 Notice Is Invalid

Issuing a new Section 148 notice would be:

•  Without jurisdiction, because the Act does not permit reopening an already reopened case.

•  Redundant, because reopening was already done earlier.

•  Bad in law, as it contradicts the CIT(A)’s set-aside direction which is limited to completing the assessment afresh.
Moreover, courts have held that the AO cannot convert a remand proceeding into a new reassessment cycle at his own discretion. The AO must honour the scope and limits of the appellate order.

Practical Implications for Taxpayers and Practitioners

This issue has practical consequences for both taxpayers and tax practitioners.
If the AO issues a fresh notice u/s 148 after a set-aside, the assessee can argue:

•  The fresh 148 is invalid.

•  The AO has exceeded jurisdiction.

•  Proceedings based on the second 148 are void ab initio.
The assessee may challenge the invalid 148 before the AO, before CIT(A), or even through a writ petition where necessary. In a faceless era, clarity on jurisdictional issues has become even more important.

Common Search Queries Answered

Here are some of the most searched questions on Google and AI tools-answered concisely for SEO optimisation:
Q. After CIT(A) sets aside an assessment, does AO need to issue a fresh 148?
A. No. The AO must proceed with 142(1).
Q. Is a fresh reassessment permissible after a set-aside order?
A. No. Only the assessment is set aside; the reopening stands.
Q. What is the procedure after a set-aside order?
A. AO issues 142(1), conducts enquiry, and completes assessment.
Q. Can a second 148 be issued for the same year on the same issue?
A. Not unless the first reopening is annulled.

Illustration Based on a Real Case

In a recent NFAC appellate order, the CIT(A) set aside an ex-parte order and remanded the matter for fresh adjudication with a direction to give proper opportunity to the assessee. The CIT(A) clearly stated that the AO must make a fresh assessment “in accordance with law” after providing notice and hearing. Consistent with the legal position, the AO in such a case must not issue a fresh 148 notice. Instead, the AO should issue 142(1) and proceed to re-examine the matter. This is the correct, lawful, and jurisdictionally sound approach.

Final Conclusion

When the CIT(A) sets aside an assessment and restores the matter to the AO, the AO must continue the proceedings from the enquiry stage, not from the reopening stage. Therefore, no fresh notice under Section 148 is required or legally valid. The AO must proceed with a notice under Section 142(1) and complete the assessment as directed. This legal position ensures procedural fairness, prevents multiple reopenings, and maintains jurisdictional discipline within the Income Tax Act.