Bhagwati Ferro Metal Pvt. Ltd. vs Assistant Commissioner of Income Tax

Court/Forum: HC

Bench: B. P. Colabawalla & Firdosh P. Pooniwalla, JJ.

Order Date: 2025-07-16

Outcome: Assessee

Sections: Section 148

Core Ratio

A notice under Section 148 must be issued by the Faceless Assessing Officer, and failure to do so is a fatal defect.

Outcome

The High Court quashed the notice issued under Section 148 of the Income Tax Act, 1961, due to a jurisdictional defect, as it was not issued by the Faceless Assessing Officer as required by law.

Favourability

Assessee

Core Issue

The central legal question was whether a notice under Section 148 issued by the Jurisdictional Assessing Officer, instead of the Faceless Assessing Officer, is valid.

Facts of the Case

Bhagwati Ferro Metal Pvt. Ltd. challenged a notice issued under Section 148 of the Income Tax Act, 1961, arguing it was issued by the wrong authority.

Arguments by Assessee

The assessee argued that the notice was invalid as it was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer, citing the precedent set by Hexaware Technologies Ltd.

Arguments by Revenue

The Revenue acknowledged the precedent but noted that the decision in Hexaware Technologies Ltd. was under challenge before the Supreme Court.

Key Sections & Provisions

Section 148 of the Income-tax Act, 1961 - relevant for the issuance of notice for reassessment.

Ratio Decidendi

The court held that the issuance of a notice under Section 148 by the Jurisdictional Assessing Officer, when it should have been issued by the Faceless Assessing Officer, is a jurisdictional defect that renders the notice invalid. This decision was based on the precedent set by the Division Bench in Hexaware Technologies Ltd.

Court Reasoning & Analysis

• The court noted that the issue was covered by the decision in Hexaware Technologies Ltd.
• The court found that the notice was issued by the wrong authority, constituting a jurisdictional defect.
• The court decided to quash the notice based on the binding precedent.
• The court allowed for the possibility of revival if the Supreme Court overturns the precedent.

Key Observations

• The notice under Section 148 must be issued by the Faceless Assessing Officer.
• The decision in Hexaware Technologies Ltd. is binding unless overturned by the Supreme Court.

Case Laws Cited

• Hexaware Technologies Ltd. vs Assistant Commissioner of Income-tax

Related Issues

• Validity of notices issued by incorrect authorities
• Jurisdictional challenges in tax assessments

Important Passages

• Once it is fully covered by the decision in Hexaware Technologies Ltd (supra) we are bound to follow it.

Not Decided / Remanded

The court left open the possibility of revisiting the case if the Supreme Court overturns the precedent.

Practical Takeaway

Practitioners should ensure that notices under Section 148 are issued by the correct authority, as jurisdictional defects can invalidate the notice.

Supporting Judgments

• T.K.S. Builders Pvt. Ltd. vs Income Tax Officer Ward 25(3) New Delhi (HC) — Notices under Section 148 must be issued through automated allocation and in a faceless manner as per the Faceless Assessment Scheme.
• Manju Somani vs Income Tax Officer Ward-70(1) & Ors. (HC) — A reassessment notice issued post-01 April 2021 must comply with the time limits prescribed by the pre-amendment provisions of Section 149 if the assessment yea
• Manisha Agarwal vs Income Tax Officer, Ward 59(1), Delhi & Ors. (HC) — A reassessment notice issued beyond the surviving time limit under the Income Tax Act read with TOLA is time-barred.
• Hexaware Technologies Limited vs Assistant Commissioner of Income Tax (HC) — Reassessment notices issued after 1st April 2021 must comply with the amended provisions of the Income Tax Act, 1961, and cannot rely on the erstwhile provision
• Chhugamal Rajpal vs S. P. Chaliha & Ors. (SC) — A notice under Section 148 cannot be issued without the Income-tax Officer having prima facie grounds and the Commissioner's satisfaction based on recorded reas
• Twylight Infrastructure Pvt Ltd vs Income Tax Officer Ward 25 3 Delhi and Ors. (HC) — Approval from the specified authority is mandatory for issuing reassessment notices under Section 148.

Contrary Judgments

• Arya Roadways Company Pvt. Ltd. vs I.T.O., Ward-12(1), Kolkata (ITAT) — The case was remanded to ensure a fair opportunity for the assessee to substantiate its claims regarding the expenditure.
• Union of India & Ors. vs Rajeev Bansal (SC) — Reassessment notices issued under the old regime are deemed valid under the new regime due to the application of TOLA and judicial directions.
• Pawan Sachdeva vs Income-Tax Officer, Ward 19(3), Delhi & Anr. (HC) — Issuance of notice within the limitation period is sufficient for jurisdiction, even if the service occurs later or with errors.
• Union of India & Ors. vs Rajeev Bansal (SC) — Reassessment notices issued after 1 April 2021 should be treated as issued under the new regime, with TOLA extending the time limits for compliance.
• GKN Driveshafts (India) Ltd. vs Income Tax Officer and Ors. (SC) — When a notice under Section 148 is issued, the noticee should file a return and may seek reasons, which the assessing officer must provide, allowing the noticee
• Union of India & Ors. vs Ashish Agarwal (SC) — Reassessment notices issued under the unamended Section 148 post-01.04.2021 are deemed valid under Section 148A of the Finance Act, 2021.