EDITORIAL NOTE TO v2

This v2 supersedes the v1 of Volume XVI-Expanded Procedure for Assessment. The principal correction concerns the precise ratio of Hexaware Technologies Ltd. v. ACIT (Bombay High Court, 2024). v1 had attributed to Hexaware the proposition of 'information specificity threshold' under s. 148 / s. 148A. On verification, Hexaware actually decided the JAO vs. FAO jurisdictional contest under the Faceless Reassessment Scheme 2022 — holding that ONLY the Faceless Assessing Officer has jurisdiction to issue notice under s. 148 / s. 148A; the Jurisdictional Assessing Officer is denuded of authority under the faceless framework. v2 restates the proposition correctly with full pinned-quotation.

SECTION 280 — INCOME ESCAPING ASSESSMENT | ISSUE OF NOTICE

BLOCK 1 — TEXT OF SECTION 280, INCOME-TAX ACT, 2025

(1)(a) Before making the assessment, reassessment or recomputation under section 279, the Assessing Officer shall, subject to the provisions of section 281, issue a notice to the assessee, along with a copy of the order passed under section 281(3);

(b) the notice referred to in clause (a) shall require the assessee to furnish, within such period as may be specified therein, a return of his income or income of any other person in respect of whom he is assessable under this Act during the relevant tax year; and

(c) the period specified in the notice referred to in clause (a) shall not be less than thirty days from the date of such notice but shall not exceed three months from the end of the month in which such notice is issued.

Section 279(3) [inserted by the Finance Act, 2026, w.e.f. 1-4-2026]: The “Assessing Officer” for the purposes of sections 280 and 281 shall mean to be an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in section 273(3).

BLOCK 2 — 1961 COUNTERPART (Section 148, post FA-2021)

Under the 1961 Act, Notification 18 of 2022, made under s. 151A, brought reassessment notices within the faceless scheme, and the JAO/FAO question was litigated through 2022-2024. The 2025 Act takes the other course. Under s. 279(3), inserted by the Finance Act, 2026 with effect from 1-4-2026, the Assessing Officer for ss. 280 and 281 is an Assessing Officer other than the National Faceless Assessment Centre or an assessment unit referred to in s. 273(3).

BLOCK 3 — COMMENTARY

STATUTORY ARCHITECTURE

Reassessment under the 2025 Act flows through a four-step gateway: (i) information triggering belief (s. 280(6)), (ii) preliminary inquiry where required (s. 285(b)), (iii) show-cause and assessee response (s. 281(1)–(2)), and (iv) order under s. 281(3). Only after the s. 281(3) order can the s. 280 notice be issued. Under s. 279(3), the s. 280 notice and the s. 281 procedure are for an Assessing Officer other than the National Faceless Assessment Centre or an assessment unit.

JUDICIAL EVOLUTION — JAO vs. FAO Jurisdiction

** EDITORIAL CORRECTION FOLDED IN ** — In v1 of this volume, Hexaware Technologies was cited for an 'information specificity threshold' under s. 148. On verification, Hexaware actually addressed the JAO vs. FAO dichotomy under the Faceless Reassessment Scheme.

CORRECT CITATION: Hexaware Technologies Ltd. v. ACIT, (2024) 464 ITR 430 (Bom HC) | W.P. (L) No. 1778 of 2024, dec. 03-05-2024.

FACTS: Notice u/s 148 of the 1961 Act was issued on the assessee by the Jurisdictional Assessing Officer (JAO) post the FA-2021 reassessment regime read with CBDT Notification 18/2022 dated 29-03-2022 which had operationalised the Faceless Reassessment Scheme. The assessee challenged the notice on the ground that under the post-2022 framework the JAO was denuded of jurisdiction; only the Faceless Assessing Officer (FAO) could issue the s. 148 notice.

ISSUE: Whether, after the operation of CBDT Notification 18/2022, a notice u/s 148 issued by the JAO is competent or void for want of jurisdiction.

HELD: The Bombay High Court (Sanjay V. Gangapurwala, C.J. and Sandeep V. Marne, J.) quashed the notice. The Court held that the Faceless Reassessment Scheme operationalised through Notification 18/2022 unambiguously assigned exclusive jurisdiction for issuance of s. 148 / s. 148A notices to the Faceless Assessing Officer. The JAO was held to be without authority of law to issue such notices, and any s. 148 notice issued by the JAO post 29-03-2022 was void ab initio.

"It is unequivocal that the issuance of a notice under Section 148 of the Act shall be by the Faceless Assessing Officer and not by the Jurisdictional Assessing Officer. The very initiation of the reassessment proceedings on the basis of impugned notices issued by the JAO is, therefore, contrary to the provisions of Section 151A of the Act read with the Notification dated 29 March 2022 and is, accordingly, without jurisdiction." (¶ 32)

The Hexaware ratio has been followed by the Bombay High Court in subsequent matters and persuasively cited by Delhi, Gujarat and Telangana High Courts. The Department's SLP in Hexaware was admitted but the operative principle continues to apply pending SC adjudication. The 2025 Act does not carry the Hexaware position forward: s. 279(3) (Finance Act, 2026, w.e.f. 1-4-2026) provides that the Assessing Officer for ss. 280 and 281 is one other than the National Faceless Assessment Centre or an assessment unit.

JUDICIAL EVOLUTION — Information Threshold under s. 280

On the separate question of the threshold of 'information' for triggering reassessment, the leading post-FA 2021 decisions are Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC), and Rajeev Bansal v. UOI, (2024) 469 ITR 46 (SC) (a 5-judge Bench upholding the post-2021 reassessment regime as constitutionally valid). These are the correct anchors for 'information specificity' — not Hexaware.

HELD: In Ashish Agarwal, the Supreme Court (Shah, J.) held that reassessment notices issued between 1-4-2021 and 30-06-2021 under the unamended s. 148 regime would be deemed notices under s. 148A(b) of the new regime, with the Department directed to provide assessee an opportunity to respond before any final s. 148 notice. The Court was careful to balance revenue interest with assessee rights.

JUDICIAL EVOLUTION — Reasons-to-believe Doctrine (Continuing)

The classical Phool Chand Bajrang Lal v. ITO, (1993) 203 ITR 456 (SC), four-element reasons-to-believe doctrine — tangible material, specific information, nexus to escapement, recordable reasons — survives the 2025 codification, now recast in ss. 280(6) and 281 procedural form. The new framework is procedural; the substantive standard remains.

DEPARTMENTAL PRACTICE

Standard Operating Procedure for s. 280 notices under the 2025 Act will require: (a) digital signature of the issuing Assessing Officer, (b) DIN allotment per Circular 19/2019, (c) PAN-based jurisdictional verification before issue, (d) electronic-mode service per s. 501 read with Income-tax Rules, 2026 r. 232. The points examined on a s. 280 notice are (i) whether the issuing officer is an Assessing Officer within s. 279(3), (ii) DIN authenticity, and (iii) jurisdictional assignment.

Practical points

(i) The identity of the issuing officer is a jurisdictional point: under s. 279(3), a s. 280 notice is issued by an Assessing Officer other than the National Faceless Assessment Centre or an assessment unit. (ii) The s. 281(3) order is the antecedent jurisdictional fact — it is to be served before a response to s. 280 is due. (iii) The 50-lakh threshold in s. 282(1)(b) is a jurisdictional fact — the AO's quantification can be tested against the Annual Information Statement (AIS). (iv) Time-limit defences continue under s. 282 (four years and three months ordinary / six years and three months extended for ≥ ₹50L escapement).

LITIGATION DEFENCE

• Ground 1: Notice u/s 280 issued by the National Faceless Assessment Centre or an assessment unit, contrary to s. 279(3) of the 2025 Act. (Hexaware (2024) 464 ITR 430 (Bom HC) concerned the reverse position under the 1961 scheme.)
• Ground 2: Order u/s 281(3) not preceded by show-cause u/s 281(1) — cite Ashish Agarwal (2022) 444 ITR 1 (SC) and the natural-justice-to-revenue principle.
• Ground 3: Information allegedly triggering escapement is non-specific / based on unverified data — cite Phool Chand Bajrang Lal (1993) 203 ITR 456 (SC) on the 'tangible material' requirement.
• Ground 4: Quantum less than ₹50L — challenge jurisdictional fact under s. 282(1)(b) and seek remand for fresh quantification.

SECTION 270 — REGULAR ASSESSMENT | SCRUTINY

BLOCK 1 — TEXT (key sub-sections)

(1) On the day specified in the notice issued under section 270(8) (notice for scrutiny), the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee and determine the sum payable by him or refundable to him on the basis of such assessment.

(2) The assessment under sub-section (1) shall, save as otherwise specified, be made under the Faceless Assessment Scheme notified under section 273(2).

BLOCK 2 — 1961 COUNTERPART (Section 143(3))

Section 270(10) substantially mirrors 1961 s. 143(3). Two visible differences: (i) the Faceless Scheme reference is now statutory (s. 273) instead of via s. 144B; and (ii) the time-limit reference is now in s. 286 (consolidated time-limit chapter) instead of s. 153.

BLOCK 3 — COMMENTARY

STATUTORY ARCHITECTURE

Scrutiny under the 2025 Act remains a three-stage process — (a) selection per CASS / risk-based criteria (s. 166), (b) notice u/s 270(8), (c) assessment u/s 270(10). The Faceless Scheme governs procedural conduct. The substantive law of allowability and disallowability is unchanged from the 1961 jurisprudence.

JUDICIAL EVOLUTION — Faceless Scheme Validity

The Supreme Court in UOI v. Ashish Agarwal, (2022) 444 ITR 1 (SC), and the Delhi HC in Anil Kumar Sharma v. UOI, (2022) 449 ITR 3 (Del HC) upheld the constitutional validity of the Faceless framework. The Bombay HC in Mantra Industries v. NFAC, (2021) 437 ITR 269 (Bom HC) emphasised that personal hearing under s. 144B(7)(vii) cannot be denied where the assessee specifically requests it.

HELD: Where personal hearing is sought by the assessee in writing, the Faceless AO is duty-bound to grant the same through video conference. Denial of opportunity vitiates the assessment. (per Mantra Industries ¶ 18).

DEPARTMENTAL PRACTICE — DIN and Procedural Compliance

CBDT Circular 19/2019 dated 14-08-2019 required a Document Identification Number (DIN) on every Department communication and treated a communication without one as invalid. Under the 2025 Act, s. 522(2) (substituted by the Finance Act, 2026 with effect from 1-4-2026) provides that no assessment is invalid on the ground of any mistake, defect or omission in quoting a computer-generated DIN, if the assessment order is referenced by such number in any manner.

Practical points

(i) A personal hearing may be requested in writing through the e-portal; Mantra Industries supports the right to a video-conference hearing. (ii) Departmental communications carry a DIN (Circular 19/2019); under s. 522(2), a mistake, defect or omission in quoting it does not invalidate an assessment order that is referenced by the DIN in any manner. (iii) Time-limit under s. 286 — 12 months from end of FY succeeding the tax year (regular scrutiny); for transfer-pricing matters, 21 months. (iv) TDS / TCS reconciliation discrepancies flagged in scrutiny are resolved through the Form 26AS / AIS / TIS triangulation.

SECTION 377 — REVISION OF ORDERS PREJUDICIAL TO REVENUE

BLOCK 1 — TEXT (key sub-sections)

(1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

BLOCK 2 — 1961 COUNTERPART (Section 263)

Section 377 is in pari materia with 1961 s. 263. The 'erroneous and prejudicial' twin-condition test from Malabar Industrial survives intact.

BLOCK 3 — COMMENTARY

JUDICIAL EVOLUTION — Twin Conditions

The locus classicus is Malabar Industrial Co. Ltd. v. CIT, (2000) 243 ITR 83 (SC), laying down the twin-condition test — the order must be (a) erroneous AND (b) prejudicial to revenue. Both conditions are conjunctive.

HELD: 'Erroneous' includes orders passed in violation of law or in disregard of authoritative pronouncements; but where the Assessing Officer has taken a view which is one of the legally permissible views, the order is not erroneous and Revision under s. 263 is impermissible. (per Malabar Industrial ¶ 14).

The CIT v. Max India Ltd., (2007) 295 ITR 282 (SC) reiterated that where two views are possible and the AO has adopted one, the Commissioner cannot revise merely because he prefers the other. Recently, PCIT v. Maithan International, (2015) 375 ITR 123 (Cal HC) held that mere lack of inquiry is itself a ground for revision.

EXPLANATION 2 — DEEMED ERRONEOUS

Explanation 2 to 1961 s. 263 (FA 2015) deemed an order erroneous in four cases: (a) without making inquiries which should have been made, (b) allowing relief without inquiring, (c) not in accordance with CBDT order/instruction, (d) not in accordance with binding HC/SC decision. The 2025 Act preserves this Explanation 2 in s. 377(3).

The constitutionality of Explanation 2 was upheld in PCIT v. Shreeji Prints (P.) Ltd., (2021) 130 taxmann.com 294 (SC), and the scope was clarified in PCIT v. Vinodkumar Lalitkumar, (2020) 121 taxmann.com 22 (Guj HC). Every adverse s. 377 order is tested against the Explanation 2 limbs.

Practical points

(i) On a s. 377 SCN, the question is whether the specific legal view adopted by the AO falls within 'one of the permissible views' (Malabar Industrial). (ii) For 'lack of inquiry' grounds, the response and supporting documents tendered before the AO, once on record, defeat the Maithan International ground. (iii) Time limit u/s 377(4) — 2 years from end of FY in which order sought to be revised was passed.

CLOSING NOTE — VOL XVI v2

Volume XVI-Expanded Procedure for Assessment v2 carries corrections folded in for the Hexaware Technologies citation — restated as the JAO/FAO faceless reassessment ratio (NOT the 'information specificity' proposition that v1 had erroneously attributed). The corrected proposition supersedes v1, which is withdrawn.