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Facts
The assessee challenged a reassessment order for AY 2018-19, which stemmed from a notice issued by a Jurisdictional Assessing Officer (JAO) under u/s.148 of the Income Tax Act on 25.04.2022. The assessee argued that this notice was invalid as it contravened the e-Assessment of Income Escaping Assessment Scheme, 2022, which mandates issuance by a Faceless Mechanism. The Ld.CIT(A) had confirmed the action of the AO/NFAC.
Held
The Tribunal, relying on multiple High Court judgments including the jurisdictional Madras High Court, held that the notice issued by the JAO u/s.148 dated 25.04.2022 was invalid and bad in law. This was because the notice should have been issued by a Faceless Mechanism as per Section 151A read with the Faceless Scheme. Consequently, the reassessment order dated 19.12.2023 was declared null and void.
Key Issues
Whether a reassessment notice issued by a Jurisdictional Assessing Officer (JAO) under Section 148 after the notification of the faceless assessment scheme is legally valid, or if it must be issued by the Faceless Assessing Mechanism.
Sections Cited
148, 151, 151A, 147, 148A, 144B
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 20.02.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2018-19.
At the outset, the Ld.AR of the assessee brought to our notice that the appeal has been filed belatedly by ‘152’ days and for condoning the delay, the assessee has filed an affidavit explaining the cause for the delay. Having gone through the contents of the same, we find that cause for delay was reasonable, so we excuse the same and proceed to hear the assessee’s appeal.
3. The Ld.AR of the assessee drew our attention to grounds of appeal preferred by it wherein assessee has raised a legal issue challenging the notice issued by the Jurisdictional Assessing Officer (hereinafter referred to as ‘JAO‘) u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act ‘) dated 25.04.2022 as bad in law and hence according to him, consequent passing of the assessment order by the Assessing Officer also is null in the eyes of law.
1.
4. According to the Ld.AR, the impugned notice issued u/s.148 dated 25.04.2022, is invalid and bad in law being issued by the Jurisdictional Assessing Officer which is not in accordance with Sec. 151/151A of the Act read with the faceless Scheme notified by CBDT on 29th March 2022 for assessment, reassessment or re-computation u/s.147/issuance of notice u/s.148 of the Act or for conducting of inquiry or issuance of show cause notice or passing of order u/s.148A of the Act or sanction for issuance of notice under section 151 of the Act. Further, according to the Ld AR, in exercise of the powers conferred u/s.151A of the Act, CBDT had issued a notification dated 29.03.2022 [after laying the same before each House of Parliament] and formulated a Scheme called "the e-Assessment of Income Escaping Assessment Scheme, 2022" (herein after ‘the Scheme’). And that the Scheme provides that (a) the assessment, reassessment or re-computation u/s.147 of the Act and (b) the issuance of notice u/s.148 of the Act shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided in Section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. Therefore, according to Ld AR, since the impugned notice u/s.148 dated 25.04.2022 has been issued by JAO and not by the NFAC, there is per-se contravention of the provisions of the Act, thus violating the principles of Rule of Law, which vitiates the reopening of the assessment; and further pointed out that this legal issue raised by the assessee has been answered in favor of the assessee by the jurisdictional High Court & other Hon’ble High Courts;-
Sl.No. Date Citation 1 24.06.2025 Mark Studio India (P.) Ltd. v. Income-tax Officer - High Court of Madras [DB] - WA No. 781 OF 2025, order dated 24.06.2025 2 14.09.2023 Kankanala Ravindra Reddy v. Income-tax Officer High Court of Telangana - 156 taxmann.com 178 3 03.05.2024 Hexaware Technologies Ltd. v. Assistant Commissioner of Income- tax High Court of Bombay - 464 ITR 430 4 20.05.2024 Ram Narayan Sah v. Union of India - High Court of Gauhati 163 taxmann.com 478 5 02.07.2024 Sushila Sureshbabu Malge v. Income-tax Officer - High Court of Bombay - 468 ITR 624 6 19.07.2024 Jatinder Singh Bhangu v. Union of India High Court of Punjab & Haryana - 466 ITR 474 7 24.07.2024 Sri Venkataramana Reddy Patloola v. Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad and Others High Court of Telangana - 468 ITR 181 [W.P.No.13353, 16141 & 16877 of 2024] 8 29.07.2024 Jasjit Singh v. Union of India - High Court of Punjab & Haryana - 467 ITR 52
9 05.08.2024 Samp Furniture Pvt. Ltd. v. Income Tax Officer, Ward 3(3)-Thane & Ors High Court of Bombay - 165 taxmann.com 581 10 05.08.2024 Kairos Properties Private Limited v. ACIT, Circle-15(1)(2), Mumbai & Ors - High Court of Bombay-468 ITR 168 11 29.08.2024 W.P.No.23573/2024 in the Case of ADIT(Int Taxn), Hyderabad v. Deepanjan Roy followed the decision in W.P.No.13353 of 2024 dated 24.07.2024 [Sri Venkataramana Reddy Patloola (supra)] 12 05.02.2025 Sappahire Educational & Charitable Trust v. The ITO, Exemptions Ward, Trichy. - Income Tax Appellate Tribunal, Chennai - & 2417/CHNY/2024 13 24.04.2025 Tecumseh Products India (P.) Ltd. v. Deputy Commissioner of Income-tax High Court of Telangana - 174 taxmann.com 1203
Per contra, the Ld.DR supported the action of the JAO issuing notice u/s.148 of the Act and submitted that both the NFAC & JAO have got concurrent jurisdiction and therefore, notice is valid and also submitted that there was no prejudice caused to the assessee. Therefore, he asserted that the action of the JAO issuing notice is valid and doesn’t want us to interfere with the action of AO and instead, wants us to dismiss the legal issue and he cited the decision of the Hon’ble Delhi High Court & Hon’ble Calcutta High Court as well as the Hon’ble Single Bench of Madras High Court in favor of the Revenue and cited the following orders:
• Triton Overseas (P) Ltd. v. Union of India – Calcutta High Court – 156 Taxmann.com 318 • T.K.S. Builders (P) Ltd. v. ITO – Delhi High Court – 469 ITR 657 • Mark Studio India (P.) Ltd. v. Income-tax Officer, High Court of Madras 169 taxmann.com 542, order dated 20.12.2024
We have heard both the parties and perused the material available on record. We on the legal issue raised by the assessee note that the JAO Shri Gurusamy Vasuki, Ward 1(1) Salem, had issued notice u/s.148 of the Act on 25.04.2022 [a copy of which has been placed before us], and pursuant to it, reopened the assessment for AY 2018-19 u/s.147 of the Act and thereafter, the Assessment Unit Income Tax Department passed the assessment order on 19.12.2023 making certain additions. The action of JAO issuing impugned notice dated 25.04.2022 is assailed before us as bad in law on the strength of Hon’ble Jurisdictional High Court and other judicial precedents cited supra and in this regard notes that the impugned notice was issued by JAO/Shri Gurusamy Vasuki, Ward 1(1)
Salem, thereafter, the Assessment Unit Income Tax Department is noted to have framed the re-assessment order on 19.12.2023 making certain additions.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to confirm the action of the AO/NFAC, against which, assessee has preferred before this Tribunal.
Since the assessee has raised legal issue against the impugned action of the JAO issuing notice u/s.148 of the Act dated 25.04.2022 we will decide it first.
We note that on this legal issue there are divergent views expressed by different Hon’ble High Courts. However, it is noted that on this issue the Hon’ble jurisdictional High Court i.e. Madras High Court (Division Bench) in Mark Studio India (P.) Ltd. (supra) has expressed its view in favour of the assessee, and has concurred with the view on this issue as held by the Hon’ble Bombay High Court in the case of Hexaware Technologies (supra). And it is noted that similar view in favour of assessee has been taken by Hon’ble Gujarat High Court, the Hon’ble Telangana High Court and the Hon’ble Punjab & Haryana High Court as cited by Ld AR (supra). Even though, the Ld.DR has brought to our notice that on the legal issue, the Hon’ble Delhi High Court & Hon’ble Calcutta High Court and Hon’ble Single Bench of Madras High Court in Mark Studio India (P.) supra has held in favour of the Revenue; but since the Hon’ble jurisdictional High Court (Division Bench) in Mark Studio India (P.) (supra) has reversed the Hon’ble Single Bench and has taken view in favour of assessee as held in Hexaware Technologies Ltd. (Bom), according to us, the legal issue raised by the assessee is no longer res-integra and we are bound to follow the decision in favour of the assessee on the legal issue raised before us.
The Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd., (supra) is noted to have has even dealt with the decision rendered by the Hon’ble Calcutta High Court in favour of the Revenue, but concurred with the view of the Hon’ble Telangana High Court in the case of Sri Venkataramana Reddy Patloola v. DCIT reported in [2023] 156 taxmann.com 178 (Telangana) and held that in view of the provisions of Sec.151A of the Act read with Faceless Scheme dated 29.03.2022, notices issued by the JAO u/s.148A(d)/148 of the Act was invalid and bad in law. We further note that aforesaid decision of the Hon’ble Telangana High Court has been followed not only by the Hon’ble Bombay High Court, but also by the Hon’ble Gauhati High Court in the case of Ram Narayan Sah v. Union of India reported in 163 taxmann.com 478, and the Hon’ble Punjab & Haryana High Court in the case of Jatinder Singh Bhangu v. Union of India reported in 165 taxmann.com 115 and other cited cases (supra). And as noted (supra) the Hon’ble jurisdictional High Court (Single Bench) order in the case of Mark Studio India (P.) Ltd. v. Income-tax Officer, held in favour of Revenue, was reversed by the Hon’ble Division Bench by order dated 24.06.2025 by holding as under:
This appeal impugns an order passed by the learned Single Judge.
2. The learned Single Judge was pleased to dismiss the petition on the ground that even if the notice has been issued by Jurisdictional Assessment Officer and not Faceless Assessment Officer, the notice issued under Section 148A/148 of the Income Tax Act will be valid.
Ms.Vardhini Karthik submitted that this Court has, in many matters, held, following the judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax', that notice that has to be issued by Faceless Assessment Officer has to be issued Faceless Assessment Office and if issued by Jurisdictional Assessment Officer, the same is not valid.
Ms.Premalatha, who takes notice for the Revenue, states that the law as proposed by Ms.Vardini Karthick is correct and therefore, the Court may quash and set aside the notices, but keep open liberty of the Revenue to re-ignite the notices in case the Apex Court interferes with the order and judgment of the Bombay High Court in Hexaware Technologies (supra).
5. Keeping open the Revenue's rights and contentions, as noted above, the impugned notices dated 15.04.2024 are quashed and set aside. The appeal is disposed of. There shall be no order as to costs. Consequently, the interim application is closed.
In the light of the aforesaid discussion, we find that in the case in hand, the JAO had issued notice u/s.148 dated 25.04.2022 which impugned notice has been issued despite faceless scheme was notified by Central Government on 29.03.2022 pursuant to section 151A of the Act, making it mandatory for the issuance of notice u/s.148A(b), 148A(d) as well as 148 of the Act by the Faceless Mechanism, the impugned notices especially issued u/s.148 dated 25.04.2022 is found to be invalid and bad in law, since it has been issued contrary to law and is against the ‘Rule of Law’; which impugned action of the JAO vitiates the reopening of assessment for AY 2018-19 by issuance of impugned notice dated 25.04.2022 u/s.148 of the Act and is therefore held to be illegal and bad in law and therefore, assessment order dated 19.12.2023 is held to be null in eyes of law; and the assessee succeeds, on the legal issue which is held in favour of the assessee and therefore, we are inclined not to go into the merits of the addition made by the NFAC.
In the result, appeal filed by the assessee is allowed.