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Facts
The assessee, a cooperative society, failed to file a regular income tax return for AY 2019-20. Based on information about cash and non-cash deposits, the Assessing Officer (AO) believed income had escaped assessment and issued a notice under Section 148 after conducting proceedings under Section 148A. The assessee did not comply with notices, leading the AO to pass a best judgment assessment under Section 144.
Held
The Tribunal noted that the jurisdictional Assessing Officer (JAO) lacked the jurisdiction to issue the notice under Section 148, as this power vested with the Faceless Assessing Officer (FAO) as per relevant notifications. Citing High Court decisions, the Tribunal found the notice issued by the JAO to be ultra vires.
Key Issues
Whether the notice issued by the Jurisdictional Assessing Officer under Section 148 was valid, given the shift in jurisdiction to the Faceless Assessing Officer. Whether the assessment proceedings are liable to be quashed due to jurisdictional defect.
Sections Cited
250, 139, 148, 148A, 142(1), 144, 147, 144B, 69A, 80P, 80AC, 151A, 148(b), 148A(d), 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHENNAI BENCHES “C” :: CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI
ORDER
PER INTURI RAMA RAO, AM :
This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], Delhi passed under section 250 of the Income Tax Act, 1961 for the A.Y.2019-20 dated 08.08.2025. The Assesseeraised the following grounds of appeal :
“1. For that the order of the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC) under section 250 of the Income-Tax Act, 1961 (Act) dated 08.08.2025 is erroneous, bad in law, and was passed ignoring the facts and merits of the case. 2.1. For that the Ld. CIT(A) erred in not allowing deduction claimed by the appellant u/s 80P of the Income-Tax Act, 1961. 3.1. For that the Ld. CIT(A) erred in confirming the addition of Rs.98,68,162/-made u/s 69A of the Act. 4.1. For that the Ld. CIT(A) erred in confirming the addition of Rs.70,836/-made under 'income from other sources'. 5.1. Without prejudice to the above grounds of appeal
, for that the Ld. CIT(A) ought to have noted that the issue of notice u/s 148 of the Act by the Jurisdictional Assessing Officer (JAO) after 29.03.2022, are invalid, and consequentially the whole reassessment proceedings are liable to be quashed.
6. For these and other additional grounds that may be adduced before or at the time of hearing, the appellant prays that the appeal be allowed.”
2. Briefly the facts of the case are that the assessee is a cooperative society registered under the provisions of The Tamilnadu Co.operative Societies Act, 1983. It is formed with the objects of providing credit facilities to its members accepting deposits from the members. It is classified as a primary agricultural cooperative society. The appellant 139 of the Act for the A.Y.2019-20. Based on the information available in the Insight Portal of the Department that the assessee cooperative society made a cash deposits of Rs.46,43,229/- and non cash deposits of Rs.52,24,933/- in bank account maintained with Vellore District Central Cooperative Bank totaling of Rs.98,68,162/-, the Assessing Officer(AO) formed an opinion that the income got escaped assessment from tax. Accordingly, a notice u/s.148 of the Act was issued 30.03.2023 after complying with procedure laid down under the provisions of section 148A of the Act.
3. The assessee cooperative society neither complied with the notice issued u/s.148 of the Act, nor the notices issued u/s.142(1) of the Act. In the circumstances, the Assessing Officer proceeded with framing best judgment assessment u/s.144 vide order dated 11.03.2024 passed u/s.147 r.w.s 144 read with section 144B of Income Tax Act, 1961 at a total income of Rs.99,38,998/-. While doing so, the Assessing Officer made addition of cash deposits and credits found in the bank accounts as unexplained money of the assessee u/s.69A of the Act.
Being aggrieved, the appellant preferred appeal before the ld.CIT(A) challenging the additions made by the Assessing Officer. The ld.CIT(A) after condoning the delay dismissed appeal by holding that the appellant was not entitled the deduction u/s.80P of the Act, placing reliance on the provisions of section 80AC of the I.T.Act.
Being aggrieved, the appellant is in appeal before us in the present appeal. The ld.AR contends that the Assessment Order is void ab initio, as the Jurisdictional Assessing Officer(JAO) have no jurisdiction to issue notice u/s.148 of the Act, in view of the provisions of section 151A of the Income Tax Act, 1961.
On the other hand, the ld. Sr. DR had opposed the submissions made on behalf of the appellant and relied on the order of ld.CIT(A).
We shall take up this ground no.5 at first instance as it goes to very root of the matter. In this case, we find that the appellant cooperative society raised jurisdictional issue that the Jurisdictional Assessing Officer(JAO) have no jurisdiction to issue notice u/s.148 of the Act. The Jurisdiction to issue the above notice vests with the Faceless Assessing Officer(FAO) in accordance with the provisions of explanation inserted to Section 151A read with CBDT Notification dated 29.03.2022. The appellant cooperative society relied on the following decisions of Hon’ble Bombay High Court in Hexaware Technologies Ltd. Vs. ACIT [2023] 149 taxmann.com 451, Hon’ble Madras High Court in TVS Credit Services Ltd. vs. DCIT in WP No.14255 of 2023, 22.04.2025 and Hon’ble Telangana High Court in Kings Pride Infra Projects Pvt. Ltd. vs. DCIT [2024] 157 taxmann.com 134, wherein, it was held that the issuing notice u/s.148 by the Jurisdictional Assessing Officer(JAO) is ultra vires the [A] notification no.18 of 2022 of CBDT and the consequently held that the notice issued u/s.148A(b) and 148A(d) and 148 are null and void.
In view of the proposed amendment in the Finance Bill 2026 introduced in the Parliament on 01.02.2026 and also in the light of orders passed by 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 proposed amendments in the Finance Bill 2026.
All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).
Accordingly, the appeal filed by the Assessee stands Partly Allowed for statistical purpose. Order pronounced in the open Court on 13th March, 2026.