Gujarat High Court Rules Faceless Scheme Not Applicable to Section 148 Notices
Jurisdictional Assessing Officers Retain Power to Issue Reopening Notices Post-April 2022
Court Clarifies Scope of Faceless Assessment Scheme in Income Tax Proceedings
By Our Legal Reporter
New Delhi: December 09, 2025:
In a landmark judgment, the Gujarat High Court has clarified that the Faceless Assessment Scheme, 2022 does not extend to the issuance of Section 148 notices under the Income Tax Act, 1961. The ruling came in the case of Snehdham Trust vs. ACIT, where the court addressed challenges to the jurisdiction of local tax officers in issuing reassessment notices after April 1, 2022.
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This decision has far-reaching implications for taxpayers, tax authorities, and ongoing reassessment proceedings across India.
Background of the Case
- Case Name: Snehdham Trust vs. ACIT (Gujarat High Court).
- Issue: Whether notices under Section 148 (reopening of assessment) must be issued under the Faceless Assessment Scheme or whether local Jurisdictional Assessing Officers (JAOs) retain authority.
- Context: The Faceless Jurisdiction Scheme, 2022 and the e-Assessment of Income Escaping Assessment Scheme, 2022 were introduced to reduce physical interface and bring transparency.
- Challenge: More than 400 petitions were filed, questioning the validity of notices issued by JAOs post-April 2022.
Court’s Findings
The Gujarat High Court held that:
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- Faceless Scheme Not Applicable: The faceless regime applies to assessment and reassessment proceedings but not to the issuance of notices under Section 148.
- Jurisdictional Authority: JAOs continue to have jurisdiction to issue reopening notices even after April 1, 2022.
- Legal Basis: Section 151A of the Income Tax Act empowers the Central Government to notify faceless schemes, but the issuance of notices under Section 148 remains outside its scope.
- Impact: Reopening notices issued by JAOs post-April 2022 are valid and enforceable.
Why Section 148 Notices Matter
Section 148 of the Income Tax Act allows tax authorities to reopen assessments if income has escaped taxation. These notices are critical tools for the Income Tax Department to ensure compliance and prevent tax evasion.
- Before April 2022: Notices were issued by local officers.
- After Faceless Scheme: Taxpayers argued that only faceless units could issue such notices.
- Court’s Clarification: Issuance of notices remains with JAOs, while faceless units handle reassessment proceedings.
Implications of the Judgment
The ruling has significant consequences:
- Taxpayers: Cannot challenge reopening notices solely on the ground that they were issued by JAOs.
- Tax Authorities: Local officers retain their powers, ensuring continuity in enforcement.
- Pending Cases: Hundreds of reassessment cases across India will now proceed without jurisdictional challenges.
- Legal Clarity: The judgment resolves confusion created by overlapping schemes and amendments.
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Expert Opinions
Legal and tax experts have welcomed the clarity provided by the Gujarat High Court:
- Tax Lawyers: Say the ruling prevents unnecessary litigation and delays in reassessment proceedings.
- Chartered Accountants: Stress that taxpayers must now focus on the merits of reassessment rather than procedural challenges.
- Policy Analysts: Highlight that the faceless scheme was designed to reduce harassment, but certain functions like issuance of notices still require local jurisdiction.
Broader Context
The Faceless Assessment Scheme was introduced by the Government of India to modernize tax administration. It aimed to:
- Reduce physical interaction between taxpayers and officers.
- Increase transparency and accountability.
- Use technology to streamline processes.
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However, the Gujarat High Court ruling shows that not all functions can be faceless. Certain statutory powers, like issuing notices, remain with local officers to ensure efficiency and practicality.
Conclusion
The Gujarat High Court’s decision in Snehdham Trust vs. ACIT is a landmark ruling that clarifies the scope of the Faceless Assessment Scheme. By holding that Section 148 notices can still be issued by Jurisdictional Assessing Officers, the court has ensured continuity in tax enforcement while maintaining the integrity of faceless reassessment proceedings.
For taxpayers, the message is clear: procedural challenges will not invalidate reopening notices. Compliance and substantive defence in reassessment proceedings will now take centre stage.
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