C-2016 ITCHIPUTHUR PACCS,VELLORE vs. ITO, WARD-1,, VELLORE

The ld. DR Ms. Babitha, JCIT submits that the assessee having participated before the Assessing Officer and the ld. CIT(A) did not raise the same before the said authorities. She argued that it requires examination of the facts and prayed to dismiss the said ground.

Having heard both the parties, we note that the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. (supra) was pleased to hold that the legal ground can be raised at any stage of the proceedings including this Tribunal. The ld. DR did not dispute the decision of the Hon’ble Supreme Court and we find no new facts are required to be examined and therefore, we proceed to admit additional ground.

The assessee raised following additional ground, and the same is reproduced herein below: G. For that the ld. CIT(A)ought to have noted that the issue of notices u/s 148A(b) and 148 of the Act and passing of order u/s. 148A(d) of the Act, all by the Jurisdictional Assessing Officer (JAO) after 29.03.2022, are invalid, and consequently the whole reassessment proceedings are liable to be quashed.

The Assessing Officer noted that the assessee has made cash deposits of ₹.22.4 lakhs in its bank account during the FY 2018-19 relevant to AY 2019-20 and the assessee has not filed its return of income. The Jurisdictional Assessing Officer (JAO) issued notice under section 148A(b) of the Act, but, however, there was no reply from the assessee. Consequently, the case of the assessee was reopened by issuing statutory notice under section 148 of the Act dated 29.03.2023 and in response, the assessee filed return of income declaring total income at ₹.23,74,370/-. In response to the notice under section 142(1) of the Act, the reply furnished by the assessee are reproduced at para 3.1 of the assessment order. The Assessing Officer noted that the assessee has claimed deduction under section 80P(2)(a)(i) of the Act of ₹.23,74,370/- for banking/credit facilities to its members. Since the assessee has not filed original ITR under section 139(1) of the Act, which was filed the same for the first time in response to the notice under section 148 of the Act, the Assessing Officer disallowed the claim of deduction under section 80P(2)(a)(i) of the Act and assessed the same as income of the assessee. The ld. CIT(A) confirmed the addition made by the Assessing Officer.

The ld. AR drew our attention to page 5, 8 & 10 of the paper book and submits that the notice under section 148A(b) of the Act dated 24.01.2023, order under section 148A(d) of the Act dated 29.03.2023 and notice under section 148 of the Act respectively are issued by the jurisdictional Assessing Officer. He also drew our attention to the assessment order dated 13.02.2024 under section 147 r.w.s. 144B of the Act passed 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 [2025] (8) TMI 217 dated 24.06.2025 and prayed to quash the assessment order passed by the Assessment Unit of NFAC.

The ld. DR 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. 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 Jurisdictional 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 Jurisdictional Assessing Officer, but, however, liberty was given to the Revenue to re-ignite the case if the Hon’ble Supreme Court interferes with the decision 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. Accordingly, the additional legal ground in “G” raised by the assessee on assumption jurisdiction is allowed and in view of our decision in the additional ground No. G, other grounds become academic requiring no adjudication.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 17th December, 2025 at Chennai.