Karnataka High Court quashes reassessment initiated by jurisdictional AO after faceless scheme notification

Background and parties involved

The Karnataka High Court, in the matter of Charoen Pokphand Seeds India Private Limited Vs DCIT, examined the validity of reassessment proceedings for Assessment Year 2017–18 that had been initiated and completed by the jurisdictional Assessing Officer (AO) even after the faceless reassessment scheme had come into force under Section 151A of the Income Tax Act 1961.

The assessee approached the High Court under Article 226 seeking to invalidate a complete chain of reassessment actions, all relatable to AY 2017–18, which had culminated in a demand and computation of income.

Impugned actions challenged before the High Court

The assessee questioned the legality of the following proceedings:

  • Show cause notice under Section 148A(b) dated 21.03.2024 (Annexure D)
  • Order under Section 148A(d) dated 30.03.2024 (Annexure E)
  • Notice under Section 148 dated 30.03.2024 (Annexure F) for reopening the assessment
  • Reassessment order under Section 147 read with Section 144 and Section 144B dated 26.03.2025 (Annexure M)
  • Computation sheet dated 26.03.2025 issued under Section 147 read with Section 144 (Annexure M1)
  • Demand notice under Section 156 dated 26.03.2025 (Annexure M2)

The assessee prayed for quashing all these documents and for consequential reliefs, along with any other appropriate directions that the Court considered just in the circumstances.

Status of parallel appellate proceedings

Pending statutory appeal

After the reassessment order was passed under Section 147 read with Section 144 and Section 144B, the assessee’s total income was computed at ₹7,52,26,133 for AY 2017–18.

  • The assessee filed a statutory appeal before the Commissioner of Income Tax (Appeals) / appellate authority (respondent No. 3 against Annexure M).
  • This appeal remained pending adjudication when the writ petition came up before the High Court.

The assessee requested that, in the event the reassessment itself is set aside on jurisdictional grounds, the appeal may be treated as infructuous or academic, with liberty to seek revival if needed in future.

Assessee’s contention on lack of jurisdiction

The crux of the challenge was that, after the Central Government notified the faceless scheme for reassessment under Section 151A, a jurisdictional AO could no longer directly issue notices under Section 148A and Section 148. Instead, such proceedings were required to be undertaken only through the designated faceless system/authority.

The assessee relied heavily on:

  • The decision of the Coordinate Bench of the Karnataka High Court in
    Ramachandra Reddy Ravi Kumar Vs. Deputy Commissioner of Income-tax – W.P.No.17352/2022 and connected matters – dated 28.08.2025, and
  • Section 151A of the Income Tax Act 1961 and the corresponding Notification introducing the e-Assessment of Income Escaping Assessment Scheme.

In Ramachandra Reddy Ravi Kumar, notices and proceedings initiated by the jurisdictional AO under Section 148A and Section 148 after the faceless scheme had been notified were struck down on the ground that such an officer lacked jurisdiction under the new regime.

The assessee argued that:

  1. The facts in the present case were on all fours with the earlier decision.
  2. The notices at Annexures D, E, and F, and the consequent reassessment order, computation and demand, all flowed from proceedings initiated by a jurisdictional AO, contrary to Section 151A and the faceless framework.
  3. Therefore, the entire chain of proceedings was vitiated for want of jurisdiction and must be quashed.

Revenue’s position

The Revenue opposed the writ petition, asserting that:

  • There was no defect in the impugned proceedings.
  • The challenge to the jurisdiction of the AO and to the reassessment process lacked merit.
  • The petition should be dismissed, especially since an appellate remedy had already been invoked by the assessee.