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Facts
The assessee, an individual, did not file a return of income for AY 2019-20. Based on information about cash deposits and withdrawals, the AO formed an opinion that income had escaped assessment and issued a notice u/s 148 after complying with section 148A. The assessee did not comply, leading to a best judgment assessment under section 147 r.w.s 144. The appeal was preferred before the CIT(A) challenging the jurisdiction of the AO to issue the notice.
Held
The CIT(A) held that the notices issued by the Jurisdictional Assessing Officer (JAO) were without jurisdiction and thus null and void, relying on various High Court decisions. The Tribunal noted a proposed amendment to the Finance Bill and a Supreme Court order restoring matters to High Courts. Therefore, the Tribunal remanded the case to the CIT(A) for fresh consideration.
Key Issues
Whether the Jurisdictional Assessing Officer has the jurisdiction to issue notice u/s 148 when the powers are vested with the Faceless Assessing Officer as per the relevant provisions and notifications, and whether the CIT(A) was correct in quashing the said notice.
Sections Cited
250, 1961, 22.10.2025, 148, 148A, 143(2), 142(1), 144B, 116, 144B(116), 147, 144B(1)(ii), 144, 144B, 151A, 18, 148A(b), 148A(d), 139, 28.03.2023, 21.12.2023, 148A(d), 28.02.2023, 27.03.2023, 29.03.2022, 124(5), 120, 124(3)(a), 139(1), 120(1)
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Income Tax Appellate Tribunal, CHENNAI BENCHES “D” :: CHENNAI
Before: SHRI GEORGE GEORGE K, VICE- & SHRI INTURI RAMA RAO
ORDER
PER INTURI RAMA RAO, AM :
This appeal filed by the Revenue directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], Delhi 250 of the Income Tax Act, 1961 for the A.Y.2019-20 dated 22.10.2025. The Revenue raised the following grounds of appeal : “(i). Whether on the facts and in the circumstances of the case, the Ld CIT(A) is right, following the decision of the Hon'ble Bombay High Court in the case of M/s Hexaware Technologies Limited (W.P No.1778 of 2023 dated 01-05-202-4) in quashong/setting aside the notice u/s 148 issued by the Jurisdirtimal Assessing Officer as not valid, when the fact remains that the JAD, in compliance to the Finance Act, 2021 wef 01-04-2021, after following the due procedure u/s 148A, issued notice u/s 148 in the instant case? (ii)Whether on the facts and in the circumstances of the case the Ld. CIT(A) is right in quashing the impugned notice u/s 148 as not valid as it was not issued by the Faceless Assessing Officer, when the fact remains that as per the provisions of Sec. 1448 of the Act, the Faceless Assessing Officer has only powers with respect to msue of notice u/s143(2)/142(1), and not for issue of notice u/s 148, which power has been vested with only Jurisdictional Assessing Officer to conduct enquiry, provide opportunity to assessee before issue of notice us 148 by him? (iii) Whether on the facts and in the circumstances of the case, the Ld CIT(A) is right in quashing the notice u/s 148, when the fact remains that as per Sec. 1448(116) of the Act, the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit through an automated allocation system indicating that the National Faceless Assessment Centre (NFAC) comes into play only when a case is "selected" and that the power of issue of notice u/s 148 is not within the ambit of the provisions and rests with the non- NFAC officer viz. the JAO?
(iv) Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is right in quashing the notice u/s 148, when the fact remains that as per Sec. 1448(1)(ii) of the Act, the assessee shall be served notice u/s 143(2)/142(1) by the Faceless Assessment Centre (FAO), and in this FAO has not been given any power to issue notice u/s 148, which power has been given only to JAO, as per Sec. 148 of the Act, as substituted by Finance Act, 2021 wef 01-04-2021, whereby the Assessing Officer (JAO) shall serve on the assesses notice u/s 148, subject to the provisions of Sec. 148A of the Act, before making any assessment of conducting inquiry, providing opportunity before issue of notice u/s [subject to provisos (a) to (d) of Sec. 148A) and issuing notice u/s 148 in fit cases, whereas FAO will have role from the stage of issuing notice u/s 143(2)/142(1) and making reassessment u/s 147 of the Act. (vi) Whether on the facts and in the circumstances of the case, the Ld CIT(A) is right in quashing the notice u/s 148 when the fact remains that as per the provisions of Sec. 148 of the Act, before making the assessment or re-assessment or re-computation u/s 147 of the Act, the Assessing Officer is required to issue notice u/s 148 of the Act, after satisfying himself as per the provisions of Sec 148A of the Act, that there is 'information' in his possession which suggests that the income chargeable to tax has escaped assessment and that such 'information to enable the Assessing Officer to ascertain that the income has escaped assessment, is available with the JAO only and not with the FAO? (vii) Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is right in quashing the notice u/s 148 holding that JAO has no jurisdiction to issue notice u/s 148, against the provisions of Sec 124(5), whereby the AO (Jurisdictional Assessing Officer) has been vested with powers of jurisdiction over assessees concerned in respect of income accruing or arising or received within the area of such assessees concerned, by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120 of the Act?
(viii) Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is right in quashing the notice u/s 148 issued by the JAO, when such challenge on jurisdiction was not raised by the assessee within the time allowed u/s Sec. 124(3)(a) or 124(3)(b), as the case may be (return filed u/s 139(1) or no return filed cases, respectively), but it was challenged only after completion of reassessment or issue of notice u/s 148, as the case may be? (ix) Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is right in quashing the notice u/s 148 issued by the JAO as without jurisdiction and not valid, when the fact remains that as per the provisions of Sec. 120(1) of the Act, the JAO has been conferred such powers and to perform such functions, and especially such jurisdiction has not been conferred or assigned to NFaC?”
Briefly the facts of the case are that the respondent assessee is an Individual. No regular Return of Income under the provisions of section 139 of the Act was filed for the A.Y.2019- 20. Based on the information that the respondent assessee undertook the financial transactions in the nature of cash deposit in the bank account and cash withdrawals in the current account from bank account, the Jurisdictional Assessing Officer(JAO) formed an opinion that the income got escaped assessment from tax. Accordingly, a notice u/s.148 was issued on 28.03.2023 after duly complying with the procedure laid down u/s.148A of the Act. The respondent assessee 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 21.12.2023 passed u/s.147 r.w.s 144 read with section 144B of the Income Tax Act, 1961 at a total income of Rs.56,02,242/-. While doing so, the Assessing Officer made addition of cash deposits in the account maintained with Bank of Baroda of Rs.56,02,242/- as unexplained money of the respondent assessee.
Being aggrieved by the above assessment order, an appeal was preferred before ld.CIT(A)[NFAC] contending inter-alia the Jurisdictional Assessing Officer i.e. ITO, Non Corporate, Ward-1, Kanchipuram ought not to have issued notice u/s.148A(d) dated 28.02.2023 and the consequential order u/s.148… dated 27.03.2023 and the notice u/s.148 dated 28.03.2023, as the jurisdiction to issue the aforesaid 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 ld.CIT(A)NFAC 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 held that the issuing notice u/s.148 by the Jurisdictional Assessing Officer(JAO) is ultra vires the 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.
Being aggrieved by the order of ld.CIT(A)[NFAC], the Revenue is in appeal before this Tribunal in the present appeal by challenging the correctness of the decision of the [D] ld.CIT(A)[NFAC]. It is submitted before us that 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 Supreme Court in bunch of cases in Special Leave Petition (Civil) Diar 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, therefore the matter may be remanded 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.
On the other hand, none appeared on behalf of the Assessee despite the issued service of notice of hearing.
We have heard ld.Senior Departmental Representative and perused the material available on record. The ld.CIT(A)[NFAC] JAO to issue notice u/s.148A(b), 148A(d) and 148 is illegal and null and void following the decisions of Hon’ble Bombay High Court and Hon’ble Telangana High Court and Hon’ble Madras High Court. However, an Amendment was proposed in the Finance Bill 2026 which was introduced in the Parliament on 01.02.2026 proposing to nullify the decision of Hon’ble High Courts cited(supra). Further, we also note that the Hon’ble Apex Court in batch of appeals preferred by the Revenue restored the matters to the Hon’ble High Courts for fresh consideration in the light of proposed Amendment in the Finance Bill with retrospective effect 01.04.2025. Therefore, 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.