ASIA COKE PVT. LTD.,CHENNAI vs. DCIT, CORPORATE CIRCLE-1(1), CHENNAI

Ground No. 3 is raised challenging the action of the ld. CIT(A) in failing to appreciate the notice under section 148 of the Income Tax Act, 1961 [“Act” in short], was issued by the JAO instead of FAO.

We note that the Assessing Officer reopened the assessment to assess foreign remittance made and consequently, notice under section 148 of the Act dated 30.03.2022 and there was no response from the assessee. In response to the notice under section 148(A)(b) of the Act, the assessee has not filed any reply, since the assessee made foreign remittance of ₹.11,05,70,230/- and no return of income filed, the Assessing Officer passed the order under section 148A(d) of the Act dated 26.03.2022. The Assessing Officer issued notice under section 142(1) of the Act dated 06.10.2022 and in response to which, the submissions filed by the assessee are extracted at page 2 of the assessment order. Thereafter, the Assessing Officer issued show cause notice proposing to treat the foreign remittance as unexplained income of the assessee, against which, the reply furnished by the assessee are extracted at page 3 of the assessment order. The reply of the assessee that as per RBI norms, the parent company gives unsecured loans to its I.T.A. No.1403/Chny/25 3 foreign subsidiaries and during the year its bank account turned NPA, it had remitted foreign loans through the assessee which is 100% subsidiary, but, however, the Assessing Officer did not accept the above submissions of the assessee for the reason that when the parent company and one of its subsidiaries had become NPA then how the other subsidiary i.e., the assessee company is surviving and had capacity to give loans to others in the form of foreign remittance and that too after receiving loans from others, as the assessee is having no business in the year under consideration. Moreover, the Assessing Officer observed that the creditworthiness or capacity of the lenders i.e., SVL Limited and Mr. R. Thiagarajan are not proved and accordingly, issued notice dated 08.03.2023 show causing the assessee as to why an amount of ₹.19,51,29,146/- should not be added to its total income under section 68 of the Act. Further, the genuineness of the transaction made in the form of foreign remittance of ₹.11,05,70,230/- remains unexplained and show- caused as to why the said amount should not be added to its total income on protective basis under section 69C of the Act. The Assessing Officer also proposed for disallowance of claim of expenditure to the tune of ₹.5,98,000/-. Since there was no response from the assessee, the Assessing Officer completed the assessment under section 147 r.w.s 144 r.w.s.144B of the Act dated 22.03.2023 assessing total income of the I.T.A. No.1403/Chny/25 4 assessee at ₹.30,62,97,376/-, inter alia, making various additions as proposed in the show cause notice. The ld. CIT(A), by accepting the submissions of the assessee, allowed the claim of expenditure as well as deleted the addition of ₹.1,05,70,230/- and confirmed the addition of ₹.19,51,29,146/- made under section 68 of the Act.

The ld. AR Ms. S. Sanchita, Advocate drew our attention to page 1, 2 & 5 of the paper book and submits that the notice under section 148A(b) of the Act dated 14.03.2022, order under section 148A(d) of the Act dated 26.03.2022 and notice under section 148 of the Act respectively were issued by the juri ictional Assessing Officer. She also drew our attention to the assessment order dated 22.03.2023 passed under section 147 r.w.s. 144 r.w.s. 144B of the Act by the Faceless Assessing Officer. The ld. AR vehemently argued that the assessment order passed by the Faceless mechanism [Assessing Officer] is bad in law in terms of the decision of the Hon’ble High Court of Madras in the case of TVS Credit Services Ltd. v. DCIT in W.P. No. 22402 of 2024 & WMP No. 13336 of 2023 dated 24.06.2025, which has been duly followed by the Tribunal in its order in ITA No. 719/Chny/2025 dated 22.09.2025 in the case of Thangamuthu Balakrishnan v. ITO & ITA No. 1357/Chny/2025 dated 28.07.2025 in the case of Kumaresan Bhagavathiperumal Pillai v. ITO

The ld. DR Ms. E. Pavuna Sundari, CIT supported the order passed the Assessing Officer.

We have heard both the parties and perused the material available on record. In this case, we note that the assessment order under section 147 r.w.s. 144 r.w.s. 144B of the Act was passed by the assessment unit of NFAC. Further, we note that the notice under section 148 of the Act was issued by the Juri ictional Assessing Officer and also passed order under section 148A(d) of the Act. On perusal of the decision of the Hon’ble High Court of Madras in the case of TVS Credit Services Ltd. v. DCIT (supra), we note that the Hon’ble High Court was pleased to hold that the assessment made by the assessment unit of NFAC is not valid if the order and notice under section 148A(d)/148 of the Act issued by the Juri ictional Assessing Officer, but, however, liberty was given to the Revenue to re-ignite the notice in case the Hon’ble Supreme Court interferes with the order of the Hon’ble High Court of Bombay in the case of Hexaware Technologies Ltd. V. ACIT 464 ITR 430 (Bombay). Accordingly, we hold that the assessment order dated 22.03.2023 passed by the assessment unit of NFAC is bad in law and it is quashed.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 17th December, 2025 at Chennai. (S. PADMAVATHY) ACCOUNTANT MEMBER Chennai, Dated, 17.12.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.