(INDIA) — The Supreme Court of India has not ruled on the merits of who can issue post-April 1, 2021 Section 148 reassessment notices, but it has given the Income Tax Department a fresh opening: permission to ask High Courts to reconsider earlier orders that struck down notices issued by Jurisdictional Assessing Officers (JAOs). That procedural choice keeps the faceless-versus-local jurisdiction fight alive, and it also signals that many disputed notices may return to courtrooms rather than end in the taxpayers’ favor by default.
1) Overview of the Supreme Court ruling
Revenue challenges reached the Supreme Court after multiple High Courts quashed Section 148 notices issued by JAOs on the ground that the faceless regime should have been followed. Those quashing orders treated the defect as jurisdictional, meaning the officer issuing the notice lacked authority.
Instead of deciding whether JAOs or Faceless Assessing Officers are the lawful issuers in the post-April 1, 2021 system, the Supreme Court disposed of the Special Leave Petitions (SLPs). It granted liberty to the Revenue to file applications before the respective High Courts. Those applications are meant to press High Courts to revisit their earlier conclusions in light of a “latest clarification” tied to Finance Act changes said to be effective April 1, 2021.
A narrow procedural order can still carry broad effects. The jurisdiction question remains unsettled across India, and litigants now face renewed High Court rounds before any binding nationwide ruling emerges.
2) Background of the dispute
Finance Act 2021 reshaped reassessment. Section 148 is the statutory gateway, because it is the reassessment notice issued when income is believed to have escaped assessment under Section 147. At the same time, Parliament expanded the machinery for “faceless assessment,” most prominently under Section 144B.
Post-Finance Act 2021, the administrative design was strengthened through Section 151A. That provision empowers the Central Government to frame schemes that route certain functions through the National Faceless Assessment Centre (NFAC) using automated allocation, risk strategy, and anonymised interfaces. The E-Assessment of Income Escaping Assessment Scheme, 2022, is part of that architecture. It seeks to push “income escaping assessment” work into a faceless channel.
Punjab & Haryana and Bombay High Courts took a strict view of that design. Where a local JAO issued a Section 148 notice after April 1, 2021, several benches treated the act as bypassing the NFAC route. The result was quashing, including in a matter involving a notice dated March 24, 2024.
Delhi and Calcutta High Courts read the same statutory mix differently. They treated the faceless scheme as procedural and enabling, not a switch that automatically extinguishes JAO authority. On that approach, JAOs and Faceless Assessing Officers may operate with concurrent jurisdiction, with automated allocation deciding who handles the matter.
3) Supreme Court ruling details
Revenue’s SLPs targeted the High Court quashing orders. The Supreme Court did not endorse either camp’s reading of Section 151A, NFAC allocation, or the 2022 Scheme. It also did not pronounce on whether issuance of Section 148 is itself part of the faceless pipeline, or only the later reassessment proceedings under Section 147.
What the Court did do was procedural but deliberate:
- The SLPs were disposed of without final adjudication on the jurisdiction issue.
- Revenue was granted liberty to file applications before the concerned High Courts.
- Those applications must point to a latest clarification said to operate from April 1, 2021 through Finance Act amendments.
- High Courts must decide those applications on merits after hearing both sides.
- Aggrieved parties can bring later challenges back to the Supreme Court, and all contentions were left open.
That “all contentions remain open” line matters. It means taxpayers can still argue lack of jurisdiction, and Revenue can still argue validation or concurrent power, depending on the High Court where the case sits.
Table 1: Conflicting views on JAO vs FAO jurisdiction
| Court/Authority | Position on JAO vs FAO jurisdiction | Key Case/Reference | Impact for Notices |
|---|---|---|---|
| Punjab & Haryana High Court | Treated JAO-issued post-April 1, 2021 Section 148 notices as lacking jurisdiction if faceless route under Section 151A/NFAC is bypassed | Quashing approach reflected in cases challenging JAO notices | Notices may be quashed as void, forcing Revenue to restart if allowed |
| Bombay High Court | Similar strict approach against JAO issuance post-April 1, 2021 | Hexaware Technologies | Past JAO notices face higher risk of being struck down |
| Delhi High Court | Concurrent jurisdiction view; Section 151A seen as enabling, not eliminating JAO authority | T K S Builders | JAO notices more likely to survive, subject to allocation and procedure |
| Calcutta High Court | Broadly aligned with Delhi on concurrent jurisdiction | Calcutta High Court rulings on concurrency | JAO notices may be upheld if scheme compliance is shown |
| Supreme Court of India | No merits ruling; allowed reconsideration applications in High Courts | Order disposing SLPs and granting liberty | No nationwide precedent yet; disputes return to High Courts |
4) Key implications and context
A central driver is the proposed “retrospective clarification.” Revenue’s position, as presented to courts, is that Finance Act changes are intended to validate or confirm the legality of notices issued by JAOs from April 1, 2021. That matters because thousands of reassessment disputes sit in the system. The figure cited in court context is 1,600+ pending Supreme Court cases connected to these issues.
Taxpayer exposure is practical, not abstract. Where a Section 148 notice was quashed as invalid, a reconsideration application could reopen the fight. If a notice is revived, the downstream consequences may include reassessment demands, interest exposure, and prolonged litigation timelines. Even where a taxpayer “won” earlier, that win may no longer be final if the High Court recalls or modifies its order after hearing Revenue’s new application.
Circuit splits also create uneven outcomes. A taxpayer with the same fact pattern may face opposite results depending on whether the dispute lands in Bombay or Delhi. Until a binding apex decision settles the core question, forum-driven variance will remain part of reassessment risk planning.
Another layer involves system design. If the statutory goal is faceless administration through NFAC allocation, then permitting parallel JAO issuance may weaken uniformity. On the other hand, if the law keeps JAO power alive, then the faceless scheme may function more as a routing and procedure framework, not an exclusive source of jurisdiction.
[warning] ⚠️ Post-April 1, 2021 Section 148 notices issued by JAOs may be revisited; taxpayers should scrutinize validity and seek expert advice if such notices surface
Table 2: Timeline of developments
| Date | Event | Authority/Source | Implication |
|---|---|---|---|
| April 1, 2021 | Finance Act 2021 reassessment framework takes effect | Parliament / Income Tax framework | Triggers disputes over who can issue Section 148 notices |
| 2022 | E-Assessment of Income Escaping Assessment Scheme, 2022 linked to Section 151A and NFAC allocation | Central Government scheme under Section 151A | Strengthens faceless procedures for reassessment work |
| March 24, 2024 | Example of a Section 148 notice issued by a JAO that was challenged | Litigation in High Courts | Becomes a reference point for “bypass” arguments |
| Post-2024 (order phase) | Supreme Court disposes SLPs; grants liberty to seek High Court reconsideration | Supreme Court of India | Reopens High Court battles; no final apex ruling yet |
| Ongoing | 1,600+ pending Supreme Court cases tied to reassessment issues | Court docket context | Adds pressure for legislative or judicial clarification |
5) Practical guidance for stakeholders
Taxpayers and advisors should treat the current moment as a live jurisdiction contest, not a closed chapter. Case posture will often dictate strategy.
First, identify the issuing authority and the routing trail. A post-April 1, 2021 Section 148 notice signed by a JAO may face a different validity analysis than one issued through faceless channels. Record the notice, the issuing office, and any NFAC allocation references.
Second, map the dispute to the controlling High Court approach. Bombay decisions like Hexaware Technologies have supported challenges to JAO issuance. Delhi’s T K S Builders line can support Revenue’s concurrency stance. That split can shape settlement posture, interim relief prospects, and whether a quashing order is likely to be reopened.
Third, anticipate reissuance or validation arguments. If Finance Act amendments are pressed as “clarificatory” from April 1, 2021, Revenue may argue that earlier defects are cured. Taxpayers may still contest whether such curing is lawful in the given fact pattern, especially where rights accrued under a final order.
[action] ✅ Track High Court reconsiderations and any Finance Act clarifications; monitor potential reissuance or validation of previously quashed notices
6) Next steps and ongoing developments
High Courts will now hear reconsideration applications filed under the Supreme Court’s liberty order. Outcomes may differ by bench and by the perceived reach of Section 151A and the E-Assessment Scheme, 2022.
Further Supreme Court involvement is also likely. Once High Courts rule again, losing parties can return to the apex court with a fuller record and sharper statutory questions. A merits ruling would finally set a national rule on whether JAOs, Faceless Assessing Officers, or both can issue Section 148 notices in the post-April 1, 2021 regime.
Meanwhile, administrative practice around NFAC automated allocation and risk strategy will stay under scrutiny. Any divergence between written scheme design and field issuance patterns will continue to generate litigation fuel. For taxpayers, the immediate task is document preservation and informed challenge selection, because jurisdiction defects can be decisive when courts accept them.
Tax and legal developments can affect individuals differently. This article provides general information and should not replace professional advice.
Readers should consult a qualified tax advisor or attorney for guidance on Section 148, 151A, and related proceedings.
