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Facts
The assessee challenged the assumption of jurisdiction by the Assessing Officer under Section 147 of the Income Tax Act and the denial of exemption under Section 54F. The Assessing Officer had made additions to the returned NIL income, which were confirmed by the CIT(A).
Held
The Tribunal held that the assessment order passed by the Faceless mechanism (NFAC) was bad in law. This was based on the decision of the Madras High Court in the case of Mark Studio India (P.) Ltd. v. ITO, as the notice under Section 148A(d)/148 was issued by the Jurisdictional Assessing Officer.
Key Issues
Whether the assessment order passed by the NFAC is valid when the notice under Section 148A(d)/148 was issued by the Jurisdictional AO, and whether assumption of jurisdiction under Section 147 was justified.
Sections Cited
147, 148, 143(3), 54F, 54, 148A(d), 144, 144B
AI-generated summary — verify with the full judgment below
Before: Shri M. Balaganesh & Shri S.S. Viswanethra Ravi
Year: 2016-17 Subramaniam Avinashilingam, Vs. The Income Tax Officer, 17, Valipalayam Lane, Valipalayam, Ward 1(2), Tirupur 641 601. Tirupur. [PAN: AEXPA2463E] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri S. Bhupendran, Advocate ��थ� की ओर से/Respondent by : Shri C.P. Solomon, JCIT सुनवाई की तारीख/ Date of hearing : 23.10.2025 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 08.07.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17.
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 denial of exemption under section 54F of the Act.
3. We note that the Assessing Officer assessed income of the assessee at ₹.21,39,085/- against NIL income returned, inter alia, making addition towards variation in respect to capital gains by denying the exemption claimed under section 54 of the Act. The ld. CIT(A) confirmed the order of the Assessing Officer.
The ld. AR Shri S. Bhupendran, Advocate drew our attention to the order under section 148A(d) of the Act dated 29.03.2023 passed by the jurisdiction Assessing Officer placed page 23 of the paper book. He also drew our attention to para 1.1 at page 2 of the assessment order that the notice dated 29.03.2023 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.
The ld. DR Shri C.P. Solomon, JCIT 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. 144 r.w.s. 144B of the Act dated 31.01.2024 was passed by the assessment unit of NFAC. Further, we note that the notice under section 148 of the Act dated 29.03.2025 was issued by the Jurisdictional Assessing Officer in pursuance of order under section 148A(d) of the Act dated 29.03.2023. 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 ground raised by the assessee on assumption of jurisdiction in ground No. 3 is allowed, ground No. 4 is not pressed and other ground Nos. 5 to 7 become academic in view of our decision in ground No. 2.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 24th October, 2025 at Chennai.