INCOME TAX OFFICER, WARD 1(2), TIRUPUR, TIRUPUR vs. SATHYAMANGALAM OZIRKHAN SALEEMKHAN, TIRUPUR

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ITA 4/CHNY/2026Status: DisposedITAT Chennai06 August 2026AY 2016-174 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the Supreme Court had set aside the High Court judgments relied upon by the CIT(A) and allowed taxpayers to challenge retrospective amendments. Consequently, the Tribunal set aside the CIT(A)'s order and restored the appeals to the CIT(A) to await the Supreme Court's decision on the validity of the notice.

What were the facts?

The Revenue appealed against the CIT(A)'s order quashing a Section 148 notice and deleting a penalty. The CIT(A) had relied on High Court decisions holding that such notices could not be issued by the Jurisdictional Assessing Officer after the introduction of faceless assessment.

What were the issues?

The primary issue was the validity of a Section 148 notice issued by the Jurisdictional Assessing Officer after March 29, 2022, in light of faceless assessment provisions and subsequent Supreme Court pronouncements.

Which sections of the Income-tax Act were involved?

Section 148,Section 271(1)(c),Section 151A,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 09.06.2026Pronounced: 06.08.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This appeal (ITA No.04/Chny/2026) preferred by the Revenue against the order of the Ld. CIT(A), Chennai-16 dated 31.10.2025 for the Assessment Year 2016-17. The main grievance of the Revenue is against the order of the Ld. CIT(A) quashing the notice issued under Section 148 by the Jurisdictional Assessing Officer (JAO) as not valid. ITA No.05/Chny/2026 is preferred by the Revenue against the action of the Ld. CIT(A) deleting the penalty levied u/s.271(1)(C) since, the quantum assessment has been quashed (supra).

ITA Nos.04 & 05 /Chny/2026 (AY 2016-17) Sathyamangalam Ozirkhan Saleemkhan. :: 2 :: 2. In this regard, it is noted that the Ld. CIT(A) has taken note that the JAO has issued notice of reopening under Section 148 of the Income- tax Act (herein after ‘the Act’) on 29.03.2024, which, according to the CIT(A), ought to have been issued by the Faceless Assessment Unit from 29.03.2022, by relying on the decisions of various High Courts including the Telangana High Court in Venkataramana Reddy Patloola vs. DCIT 468 ITR 181 and Jurisdictional High Court in WP No.35385 of 2024 in the case of Dadha Pharma vs. DCIT ; a Division Bench of the Bombay High Court in Hexaware Technology Ltd. vs. Assistant Commissioner of Income Tax, (2024) 464 ITR 430 (Bombay); and several other Tribunal orders cited by the Ld. CIT(A) at Para 6.5 of his order, wherein it has been held that notice under Section 148 of the Act cannot be issued by the Jurisdictional Assessing Officer after introduction of the concept of faceless assessment under Section 151A read with Section 144B of the 1961 Act with effect from 29.03.2022.

3.

However, we note that the Revenue had preferred appeals before the Hon’ble Apex Court [against the various High Courts’ decisions (supra) quashing the notices issued under Section 148 by the JAO on or after 29.03.2022 as invalid], and the Hon’ble Apex Court is noted to have taken note of the amendment brought in retrospectively by the Finance Act, 2026, validating the issue of notice by JAO, and vide order dated 10.04.2026, set aside the above cited High Court judgments (supra) holding that the JAO could not have issued notice under Section 148 on or after 29.03.2022, basis which the Ld CIT(A) has allowed the legal issue

ITA Nos.04 & 05 /Chny/2026 (AY 2016-17) Sathyamangalam Ozirkhan Saleemkhan. :: 3 :: raised by the assessee in the present case. Further, the Hon’ble Supreme Court has allowed the taxpayers to file writ petitions in their respective High Courts to challenge the validity of the retrospective amendments made by the Finance Act, 2026. The Hon’ble Supreme Court is noted to have directed the Hon’ble High Courts to decide the petitions filed before July 31, 2026, and was pleased to stay the assessments.

4.

In the light of the aforesaid developments, it is noted that the impugned action of the Ld. CIT(A), based on various High Court decisions referred (supra), cannot survive, since they have been set aside by Hon’ble Supreme Court. Meaning thereby that when the foundation on the basis of which the Ld. CIT(A) allowed the appeal of the assessee has been removed, we have to set it aside.

5.

Hence, we set aside the impugned order of the Ld. CIT(A) and note that the Ld CIT(A) didn’t decide the other grounds raised by the assessee on merits. Hence we restore the appeal back to the file of the Ld. CIT(A) with a direction to await the decision of the Hon’ble Supreme Court / Hon’ble Jurisdictional High Court on the legal issue in the light of the retrospective amendment brought in by the Finance Act, 2026, whether the notice issued by the JAO under Section 148 on or after 29.03.2022 is valid, and thereafter to decide the legal issue raised in this regard by the assessee. And in the event assessee choose not to press this legal issue, the Ld CIT(A) is at liberty to decide other grounds on its own merits after hearing the assessee in accordance to law.

ITA Nos.04 & 05 /Chny/2026 (AY 2016-17) Sathyamangalam Ozirkhan Saleemkhan. :: 4 :: 6. Coming to the appeal preferred by the Revenue against the impugned action of the Ld. CIT(A) deleting the penalty levied u/s.271(1)(C), we note that the Ld. CIT(A) has deleted the penalty on the ground that re-assessment was void since the notice for reopening itself was invalid. Since, we have restored the quantum appeal back to the file of Ld. CIT(A) (supra), the penalty appeal is also set aside back to the file of Ld. CIT(A) for fresh adjudication after the order is passed in the quantum appeal (supra).

7.

In the result, appeals of the Revenue are allowed for statistical purposes.

Order pronounced on the 06th August, 2026, in Chennai.

Sd/- Sd/- (गगन गोयल) (एबी टी. वक�) (GAGAN GOYAL) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 06th August, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.08.12 18:16:46 +05'30'

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