INCOME TAX OFFICER, NON CORPORATE WARD-3(1) COIMBATORE, COIMBATORE vs. KAMARAJ, COIMBATORE

The Revenue raised the following grounds of appeal : “1. Whether on the facts and circumstances of the case, the CIT(A) is justified in quashing the notice issued under Section 148 of the Act by the Jurisdictional Assessing Officer (JAO), given that the Finance Act, 2021 introduced provisions for faceless assessment and the automated allocation of cases, and does not explicitly prohibit the JAO from issuing such notices?

Whether the CIT(A), while quashing the notices issued by the JAO under Section 148, failed to appreciate that the same are consistent with the legislative intent, when the powers to issue the notice u/s 148 remained intact with the JAO ever after bringing the 'Faceless Assessment Scheme?

Whether the CIT(A)'s decision to quash the notices issued by the JAO under Section 148 is in alignment with the provisions of Section 144B which comes into picture only after the process of issuance of notice under Section 148 of the Act has been completed?

Whether on the facts and circumstances of the case, the CIT(A) is justified in quashing the notices issued under Section 148 by the JAO, as per automated allocation and risk management strategies as per provisions of Section 151A read with section 144B of the Income Tax Act?

Whether the CIT(A) is correct in law in holding that the Section 151A of the Income Tax Act, r/w CBDT Notification No.18/2022 dated 29.03.2022 and Notification No. SO 1400(E) dated 28.03.2022 issued u/s 130 of the Act mandate that the proceeding under Section 148A and notices u/s 148 shall only be faceless, whereas the provisions of Sections 148A and 148 of the Act require enquiry and issue of notices by Assessing Officer?

Whether on the facts and circumstances of the case, the CIT(A) has erred in incorrectly interpreting the notification dated 29.03.2022 reads with Section 151A, when the phrase "in a Faceless Manner" refers only to be procedure of assessment, reassessment of re-computation under section 147 of the Act and not to the issuance of Notice u/s 148 of the Act.

Whether the order passed by the CIT(A) quashing the notices issued under Section 148 of the Income Tax Act, 1961, is legally sustainable given that Sections 119 and 120 of the Income Tax Act, 1961 confer concurrent jurisdiction to both the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) / National Faceless Assessment Centre (NFAC), and the faceless assessment scheme does not explicitly prohibit the Jurisdictional Assessing Officer from issuing such notices?

Whether the CIT(A) is right in holding that the scheme notified on 29.03.2022 does not authorize the Jurisdictional Assessing Officer (JAO) to issue notices under Section 148 of the Income Tax Act, 1961, despite the notification dated 29.03.2022 stating that the scheme is applicable only "to the extent" provided in Section 144B of the Income Tax Act, 1961, which does not refer to the issuance of notices under Section 148 of the Income Tax Act, 1961?

Whether the notices issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO), be considered without jurisdiction by placing reliance upon C.B.D.T. Notification No. 18 of 2022 dated 29.03.2022, which only prescribes issuance of notice by automated allocation (as defined therein) in accordance with the Risk Management Strategy formulated by the Board?

Whether the CIT(A) is justified in quashing the notices under Section 148 as well as the orders passed under Section 148A(d) of the Income Tax Act, 1961 by holding that after the notification dated 29.03.2022, the Jurisdictional Assessing Officer (JAO) is precluded from issuing such notices, whereas, this Hon'ble Court in the case of Union of India Vs. Ashish Agarwal|2022] 444 ITR 1 (SC), implicitly recognized the "Assessing Officer" as an authority for reopening cases by directing the "Assessing Officer" to conduct an inquiry and pass orders in relation to the reopening of the cases?

Whether the CIT(A) erred in limiting the authority of the Jurisdictional Assessing Officer (JAO) to the extent provided under Sub-Sections (7) and (8) of Section 144B of the Income Tax Act, 1961, when the scheme notified on 29.03.2022 does not restrict the power to issue notices under Section 148 of the Income Tax Act, 1961 to within the scope of Section 144B of the Income Tax Act, 1961?

Whether the CIT(A) failed to appreciate that the faceless assessment scheme, while aiming to enhance transparency and efficiency, does not explicitly limit the jurisdiction of the Jurisdictional Assessing Officer (JAO) from issuing notices under Section 148, thereby preserving the statutory authority vested in the Assessing Officers?

Whether the CIT(A) erred in interpreting the faceless assessment scheme in isolation without considering the entire legislative intent, which allows for concurrent jurisdiction between the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) /National Faceless Assessment Centre (NFAC)?”

Briefly, the facts of the case are that the respondent- assessee is an Individual. No regular Return of Income under the provisions of section 139 of the Income Tax Act, 1961 was filed by the respondent-assessee for the Assessment Year 2018- 19. However, based on the information that the respondent- assessee made a cash deposits of Rs.28,27,000/- in the bank account maintained with DCB Bank Limited and also made a cash withdrawal of Rs.1,74,27,000/- from the bank account from the same bank. The Jurisdictional Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.142(1) of the Act calling upon the respondent–assessee to file Return of Income issued on 27.10.2022. The respondent-assessee neither complied with notice u/s.142(1), nor the show cause notice issued. In the circumstances, Assessment Unit of the Department(hereinafter called ‘AO’) proceeded with framing best judgment order vide order dated 27.03.2023 passed u/s.147 r.w.s 144 read with section 144B of the Income Tax Act at total income of Rs.7,46,69,445/-. While doing so, the Assessing Officer made addition of cash deposits of Rs.7,46,69,445/- made in DCB Bank Ltd as unexplained of the respondent-assessee.

Being aggrieved, the respondent-assessee preferred appeal before the ld.CIT(A), who vide impugned order held that very initiation of proceedings u/s.147 and consequential proceedings u/s.148 are null and void as the Jurisdictional Assessing Officer have no jurisdiction to issue notice u/s.148 of the Act by virtue of provisions of section 151A of the Act r.w.s notification no.18/2022 issued by CBDT following the law laid down by the Hon’ble Madras High Court in the case of Dadha Pharma LLP v. The Deputy Commissioner of Income Tax (W.P. No. 35385 of 2024).

Being aggrieved by this decision of the Learned CIT(A), the Revenue is in appeal before us in the present appeal.

On the other hand, the Learned AR opposed the submissions made on behalf of the Revenue and placed reliance on the order of the Learned CIT(A).

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the Learned CIT(A) was justified in quashing the re- assessment proceedings by holding that the Jurisdictional Assessing Officer had no jurisdiction to issue notice u/s.148 of the Act following the law laid down by the Hon’ble Madras High Court in the case of Dadha Pharma LLP v. The Deputy Commissioner of Income Tax(supra). There is no dispute that as on the date of passing the impugned order by the Learned CIT(A), the decision of Hon’ble Jurisdictional High Court holds the field. However, the Parliament brought an amendment by Finance Act, 2026 with retrospective effect and also the Hon’ble Supreme Court in bunch of cases involving identical issue in Special Leave Petition (Civil) Diary No(s).57403/2025 vide order dated 03.02.2026 setting aside the orders passed by the Hon’ble Bombay High Court and Hon’ble Telangana High Court for fresh consideration before the Hon’ble High Courts, the matter requires remand to the file of ld.CIT(A)[NFAC] for fresh consideration and disposal in accordance with law after affording opportunity of being heard to the assessee.

In view of the above circumstances, we are of the considered opinion that in order to meet the ends of justice, the matter requires remand to the file of ld.CIT(A)[NFAC] for denovo disposal of appeal keeping in view the amendment brought by the Finance Act 2026. All the contentions raised by the Revenue are left open for consideration before the ld.CIT(Appeals).

Accordingly, the appeal filed by the Revenue stands Partly Allowed for statistical purpose. Order pronounced in the open Court on 24th August, 2026.