SAROJAMMA,RAMANAGAR vs. INCOME TAX OFFICER, WARD-1, , RAMANAGAR

We have carefully considered the submissions and the reasons placed on record. The delay involved is only 8 days. The explanation furnished appears bona fide and reasonable. It is a settled law that while considering applications for condonation of delay, a liberal approach is to be adopted. The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Others (167 ITR 471) has held that substantial justice should prevail over technical considerations and that ordinarily, when sufficient cause is shown, the delay must be condoned.

In the present case, we find that no prejudice will be caused to the Revenue if the delay is condoned, whereas if condonation is refused, the assessee will be deprived of an opportunity to contest the matter on merits, which would result in serious hardship. Since, the cause shown by the assessee constitutes sufficient cause within the meaning of section 253(5) of the Act, we are inclined to condone the delay. Accordingly, the delay of 8 days in filing the appeal is condoned.

The interconnected issues raised by the assessee in the grounds of appeal

The facts in brief are that the assessee is an individual and she has not filed her return of income for the A.Y. 2017-18. As per the information available on ITBA Portal the assessee has made cash deposit of Rs. 10 lakhs during the demonetisation period in the bank account held with Canara Bank. After complying with the provision of section 148A of the Act, where the assessee remained unresponsive, the notice under section 148 of the Act dated 28th July 2022 was issued requiring the assessee to file the return of income. There were multiple notices issued but the assessee has not responded. Hence, the AO in absence of any response from the assessee treated the cash deposit as unexplained money under section 69A of the Act and added to the total income of the assessee. Further, the AO found that the assessee has also received interest on deposits from bank for Rs. 75,212/- which was not offered to tax. Accordingly, the impugned amount was also added to the total income of the assessee. Thus, the AO of the faceless assessment unit finalized the assessment under section 147 r.w.s. 144 of the Act vide order dated 27th March 2023 assessing the income at Rs. 1075212/- only.

The aggrieved assessee preferred an appeal before the learned CIT(A).

The assessee before the learned CIT(A) through the statement of facts claimed that the assessment was reopened vide notice under section 148 dated 28th July 2022. The assessment was transferred to faceless assessment centre in the manner provided under section 144B of the Act. However, the national faceless assessment centre transferred back the case to the Jurisdictional AO under section 144B(8) of the Act. Thereafter, the JAO issued several notices which were duly complied with. The JAO, after examination of the explanation furnished by the assessee, accepted the genuineness of cash deposit and finalized the assessment vide order dated 30th March 2023 without making any addition.

However, the AO of the faceless assessment unit, without going into the detail that the impugned case has been transferred to the JAO, has passed the order dated 27-03-2023 assessing the income at Rs. 10,75,212/- only. The assessee without depositing the demand filed the appeal in form 35. The learned CIT(A) observed that as per the provision of section 249(4)(b) of the Act, no appeal shall be admitted unless an amount equal to advance tax paid by the assessee in a situation where no return was filed by the assessee. Hence, the learned CIT(A) dismissed the appeal.

Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before this Tribunal.

The learned AR before us submitted that the assessment order passed by the faceless jurisdiction is without authority of law. He pointed out that once the case was transferred to the jurisdictional Assessing Officer, the faceless jurisdiction lost its power to pass any assessment order. The jurisdictional AO had in fact issued a hearing notice, examined the reply of the assessee along with supporting documents, and after verifying the bank statement of the assessee’s father and other materials, accepted the explanation of the assessee. This favorable finding was recorded in the order dated 30.03.2023.

The ld. AR argued that despite this, the faceless jurisdiction, which no longer had jurisdiction, proceeded to pass another assessment order dated 27.03.2023. This was wholly illegal as the power to assess had already vested with the jurisdictional AO. Therefore, the appeal filed against the faceless order was proper.

He further submitted that the CIT(A) dismissed the appeal on a technical ground stating that admitted taxes were not paid and hence the appeal was not maintainable. According to the AR, this finding is patently incorrect and unjustified because the main issue was of jurisdiction. Once it is held that the faceless jurisdiction had no authority to pass the order, the entire order and consequential demand automatically becomes invalid.

The learned AR prayed the Tribunal to appreciate the facts that the jurisdictional AO had already accepted the assessee’s explanation in his order dated 30.03.2023 and made no addition. Hence, the order dated 27.03.2023 passed by the faceless jurisdiction is void ab initio and deserves to be quashed. He therefore requested us to set aside the impugned assessment order and grant relief to the assessee in the interest of justice.

On the other hand, the learned DR before us vehemently supported the order of the authorities below.

We have heard the rival contentions of both the parties and perused the materials available on record. The short issue for determination is whether the assessment order dated 27.03.2023 passed by the Faceless Assessment Unit has any validity, when the jurisdiction over the assessee’s case had already been transferred to the Jurisdictional Assessing Officer (JAO) who has also passed an order dated 30.03.2023 accepting the assessee’s explanation and not making any addition.

It is an admitted fact that the Faceless Unit passed its order on 27.03.2023 and, thereafter, the JAO passed his order on 30.03.2023. The assessee has produced on record the order of the JAO showing that the jurisdiction was returned back by the NFAC to JAO by exercising the power under section 144B(8) of the Act. Thereafter JAO had duly issued hearing notices, received submissions, verified the bank statement of the assessee’s father and other documents, and on being satisfied, accepted the assessee’s explanation regarding the source of the cash. Thus, the JAO had exercised jurisdiction and concluded the assessment. In our considered opinion once the NFAC transferred back the case to JAO, the jurisdiction stood vested with the JAO only and the Faceless Unit could not have passed an order.

We also note that during the course of hearing, the learned DR submitted that he would file a report from the AO regarding the fact of two separate assessment orders having been passed. However, despite such submission, no report has been filed on record. Therefore, in absence of any rebuttal from the Revenue side, the facts stated by the assessee remain uncontroverted.

In law, an authority having no jurisdiction cannot pass a valid order. Any such order is a nullity and void ab initio. The Hon’ble Courts, time and again, have held that when there is a question of jurisdiction, technicalities like payment of admitted tax or maintainability of appeal cannot override the basic principle that an order passed without jurisdiction has no legal sanctity. In the present case, once the JAO had already taken over jurisdiction and concluded the proceedings, the Faceless Unit’s order dated 27.03.2023 stands rendered illegal and non-est.

The learned CIT(A) has dismissed the appeal on the ground that advance tax was not paid in terms of section 249(4)(b) of the Act. In our considered view, this approach is misplaced because the issue of jurisdiction goes to the root of the matter. When the order itself is without jurisdiction, the bar of section 249(4)(b) cannot come in the way of granting substantive relief. Justice requires that such an order be quashed. Accordingly, we hold that the assessment order dated 27.03.2023 passed by the Faceless Assessment Unit is without jurisdiction and is liable to be quashed. Consequently, the demand raised pursuant to such order also does not survive. The order dated 30.03.2023 passed by the Jurisdictional AO, accepting the explanation of the assessee, remains valid and binding. Accordingly, the ground of appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26th August, 2025.