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Facts
The assessee, a cooperative credit society, did not file an Income Tax Return for AY 2018-19 but made large cash deposits. The AO reopened the assessment u/s 148 and made additions by disallowing deduction u/s 80P and interest income. The CIT(A) confirmed the 80P disallowance but deleted the interest income disallowance. The assessee challenged the validity of the reopening notice issued by the Jurisdictional AO (JAO) instead of the Faceless AO (FAO).
Held
Following the jurisdictional High Court's decisions (TVS Credit Service Ltd. and Hexaware Technologies Ltd.), the Tribunal held that reassessment notices under Section 148 must be issued by the Faceless Assessing Officer (FAO). Since the notice was issued by the Jurisdictional Assessing Officer (JAO) after March 29, 2022, it was deemed invalid. The Tribunal set aside the impugned notice and consequential assessment orders, allowing for the Revenue to seek revival if the Supreme Court's decision changes.
Key Issues
Whether the reassessment notice issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) after March 29, 2022, is valid under Section 148 read with Section 151A of the Income Tax Act.
Sections Cited
147, 148, 144B, 80P, 80P(2)(a)(i), 151A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2018-19 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 07.07.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 147 r.w.s 144B of the Income-tax Act,1961 (hereinafter “the Act”) dated 07.03.2024.
The assessee is a cooperative credit society and has not filled the return of income. The A.O reopened the assessment by issing notice u/s 148 on 01.04.2022 as the assessee has made huge cash deposits of Rs. 3,77,90,088/-, but has not filed return of income. The assessee filled return of income in response to notice u/s 148 on 14.0.2023. The A.O in the assessment order has made the addition in total income by disallowing claim of deduction u/s. 80P of the Act of Rs. 17,04,390/- and further disallowance of interest income of Rs.
1. 34,95,714/-. On appeal, the Ld. CIT(A) has confirmed the disallowances on the claim of deduction u/s. 80P(2)(a)(i) of the Act, but deleted the addition of Rs. 34,95,713/- as double disallowances.
3. At the outset, the Ld. Authorized Representative (A.R) of the assessee has submitted that the assessment was reopened by issuing notice u/s. 148 of the Act on 01.04.2022 by Jurisdictional Assessing Officer (hereinafter “JAO”) and the assessee has taken a specific ground before the Ld. CIT(A) in Ground No.2 challenging the reopening in violation of Section 151A of the Act, but the Ld. CIT(A)
has not adjudicated. The Ld. AR therefore requested that the matter may be remanded back to the file of Ld. CIT(A) to decided the above ground.
4. On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.
We have heard the rival submissions, and perused the materials available on record. The assessment in this case has been reopened by issuing notice u/s 148 of the Act on 01.04.2022 by the J.A.O. The assessment order has been passed by the Faceless Assessing Officer (hereinafter “FAO”) u/s 147 of the Act on 07.03.2024. The Honorable jurisdictional High Court in the case of TVS Credit Service Ltd vs. DCIT in WP No 22402 of 2024 & WMP No 13336 of 2023 on the issue of reassessment notice issued by the J.A.O after March 29, 2022 has held as under :
“2. Learned Single Judge in order dated 20.12.2024 in WP Nos.25223 of 2024 held that it does not matter if the Jurisdictional Assessing Officer (JAO) issues the notice and it is not mandatory that it should be issued by the Faceless Assessment Officer (FAO). Another learned Single Judge in order dated 21.04.2025 in WP No.22402 of 2024 and batch cases, followed what was held by the Bombay High Court in Hexaware Technologies Ltd vs. Assistant Commissioner of Income Tax'; and opined that it was mandatory for the FAO to issue notice and issuance of notice by JAO would make the notice invalid.
Learned Single Judge thereafter directed the matter to be placed before the Chief Justice for constituting a Division Bench to consider the divergent views. It is, therefore, all these matters were listed before us today.
We follow the law as laid down in Hexaware Technologies Ltd (supra), the said judgment was authored by one of us (Chief Justice), that it is mandatory for the FAO to issue the concerned notices and issuance thereof by the JAO would make the notice invalid.
5. Counsels for assessees are ad idem that the law as laid down in Hexaware Technologies Ltd (supra) will apply. Learned Additional Solicitor-General, however, submits that the Revenue does not accept the law as laid down in Hexaware Technologies Ltd (supra); and that there is a special leave petition filed against the order and judgment in Hexaware Technologies Ltd (supra) and the same is expected to be taken up after the Supreme Court reopens.
6. Admittedly, learned Additional Solicitor-General, in fairness, states that there is no stay. Therefore, the law as laid down by Hexaware Technologies Ltd (supra) applies.
7. It is clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court.
Keeping open all rights and contentions of parties, including liberty to apply to this Court, in case the Revenue succeeds before the Apex Court, for revival of these petitions, the notices issued in these petitions are quashed and set aside.
In these petitions, apart from the issue of notices issued by JAO instead of FAO, all or many of the issues which were considered in Hexauxare Technologies Ltd (supra) are involved.
To the extent the issues raised in Hexaware Technologies Ltd (supra) are not covered, those are kept open to be raised at the appropriate stage.
With the liberty as noted above, all petitions stand disposed of holding in favour of assessees. There will be no order as to costs. Consequently, the interim applications also stand disposed of.”
Therefore, respectfully following the decision of the Hon’ble jurisdictional High Court, supra, we set aside the impugned notice u/s.148 of the Act and consequential orders thereof. However, in the light of the Para No.8 of the judgment of the jurisdictional High Court, we also keep open of rights and contentions of parties including liberty to approach this bench, in case, the Revenue succeeds before the Apex Court for revival of this appeal.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 04th day of December, 2025 at Chennai.