PAVAN BALAN,NILGIRIS vs. ITO, WARD 1,, OOTY

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ITA 2116/CHNY/2025Status: DisposedITAT Chennai24 October 2025AY 2018-19Bench: Shri M. Balaganesh (Accountant Member), Shri S.S. Viswanethra Ravi (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order passed by the NFAC assessment unit is bad in law, referencing the decision of the Hon'ble High Court of Madras in the case of Mark Studio India (P.) Ltd. V. ITO. The assessment order dated 29.02.2024 was quashed.

What were the facts?

The assessee's appeal was against an order dated 28.05.2025 by the CIT(A), NFAC for AY 2018-19. The Assessing Officer assessed income at ₹.16,83,000/- against NIL income returned, making an addition under section 69A of the Act due to variations in cash deposits, which was confirmed by the CIT(A).

What were the issues?

Whether the assessment order passed by the NFAC is valid when the notice under section 148A(d)/148 was issued by the Jurisdictional Assessing Officer?

Which sections of the Income-tax Act were involved?

Section 147,Section 69A,Section 148A(d),Section 148,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

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Before: Shri M. Balaganesh & Shri S.S. Viswanethra Ravi

Hearing: 22.10.2025Pronounced: 24.10.2025

Year: 2018-19 Pavan Balan, Vs. The Income Tax Officer, 63A Maruti, Mount Pleasant, Coonoor, Ward 1, Ooty. Nilgiris 643 102. [PAN: AIHPP9673P] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri N. Vijayakumar, CA ��थ� की ओर से/Respondent by : Shri C.P. Solomon, JCIT सुनवाई की तारीख/ Date of hearing : 22.10.2025 घोषणा की तारीख /Date of Pronouncement : 24.10.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 28.05.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2018-19.

2.

In the grounds of appeal, besides challenging assumption of jurisdiction under section 147 of the Income Tax Act, 1961 [“Act” in short], on merits, the assessee also challenged confirmation of addition made by the Assessing Officer under section 69A of the Act.

3. We note that the Assessing Officer assessed income of the assessee at ₹.16,83,000/- against NIL income returned, inter alia, making addition under section 69A of the Act towards variation in respect of cash deposits. The ld. CIT(A) confirmed the order of the Assessing Officer.

4.

The ld. AR Shri N. Vijayakumar, CA drew our attention to the order under section 148A(d) of the Act dated 15.04.2022 passed by the jurisdiction Assessing Officer placed on record. He also drew our attention to para 1.1 at page 2 of the assessment order that the notice dated 16.03.2022 issued by the jurisdiction Assessing Officer under section 148A(d) of the Act. 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 Mark Studio India (P.) Ltd. V. ITO in W.A. No. 781 of 2025 dated 24.06.2025 and prayed to quash the assessment order passed by the NFAC without issuing notice under section 148A(d) of the Act.

5.

The ld. DR Shri C.P. Solomon, JCIT supported the order passed the Assessing Officer.

6.

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 Jurisdictional Assessing Officer in pursuance of 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 Mark Studio India (P.) Ltd. V. ITO (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 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 29.02.2024 passed by the assessment unit of NFAC is bad in law and it is quashed. Accordingly, the grounds raised by the assessee on assumption of jurisdiction in ground Nos. 2 to 7 are allowed and other ground Nos. 8 to 14 become academic in view of our decision in ground Nos. 2 to 7.

7.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 24th October, 2025 at Chennai.

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