RAMA GARG,KOLKATA vs. ITO, WARD 36(1),, KOLKATA

ITA 384/KOL/2026Status: DisposedITAT Kolkata01 October 2026AY 2013-201410 pages
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What were the facts?

The assessee, Rama Garg, filed an appeal against the order dated 31.12.2025 of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2013-14. The case was reopened under Section 147 of the Income-Tax Act, 1961, based on information from the Directorate of Investigation, Kolkata, regarding claimed exemption under Section 10(38) for long-term capital gains from penny stock shares of M/s Cressanda Solutions Ltd. The Investigation Wing reported systematic rigging of share prices for accommodation entries. The Assessing Officer, relying on the Investigation Wing's findings and the pattern of price movements, concluded the transactions were not genuine and added Rs.61,80,183 to the assessee's income, determining total income at Rs.65,52,200. The CIT(A) dismissed the assessee's appeal. The assessee is now before the ITAT.

What did the Tribunal hold?

The Tribunal held that the assessment order passed by the NFAC on 21.03.2022 was bad in law and consequently quashed. The reasoning was that the notification by which the National Faceless Assessment Centre was made effective was dated 29.03.2022. The Tribunal relied on the decision of a coordinate bench in the case of Md. Mahimud SK (ITA Nos. 223082229/Kol/2024) and another decision in Nand Kumar Chowdhury, where it was held that assessment proceedings taken by the NFAC prior to the notification making the faceless scheme effective were without jurisdiction. The Tribunal noted that one of its members was a party to the Md. Mahimud SK order. Therefore, the technical issue regarding jurisdiction was decided against the revenue. The appeal of the assessee was allowed on this technical ground. The Tribunal did not decide the other issues raised by the assessee (legality of notice u/s 148 and borrowed satisfaction) as the appeal was allowed on the jurisdictional point.

What were the issues?

1. Whether the National Faceless Assessment Centre (NFAC) erred in assuming jurisdiction under Section 151A read with Section 144B of the Income-Tax Act, 1961, from 12.01.2022, when it was allegedly not empowered by any notification for faceless assessment prior to 29.03.2022. (Question of law). 2. Whether the notice under Section 148 dated 31.03.2021 is illegal, having been issued without the approval of the specified authority under Section 151, as the approval was neither manually nor digitally signed. (Question of law). 3. Whether the reopening of the assessment is bad in law, as the 'reason to believe' was borrowed from the Investigation Wing and not the Assessing Officer's own satisfaction. (Question of mixed law and fact). Assessee's Contentions: 1. The assessment order was passed by the NFAC on 21.03.2022, prior to the notification making the faceless scheme effective from 29.03.2022, rendering the order liable to be quashed. Reliance was placed on decisions of coordinate benches in ITA No. 420/CTK/2025 and ITA No. 111 & 12/KOL/2026. 2. The notice under Section 148 is illegal due to the absence of a valid approval. 3. The 'reason to believe' was borrowed satisfaction. Revenue's Contentions: 1. The issue regarding the NFAC's jurisdiction was not raised before the lower authorities. 2. The Assessing Officer and CIT(A)'s orders are supported, and the appeal may be heard on merits as there are no other decisions on the technical issue.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 147,Section 144B,Section 148,Section 151,Section 151A,Section 142(1),Section 143(2)

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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the assessee is directed against the order dated 31.12.2025 of the Office Of the National Faceless Appeal Centre (NFAC), Delhi passed under Section 147r.w.s144 of the Assessment Year 2013-14 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”).

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