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Facts
The assessee challenged an assessment order, raising additional grounds regarding the assumption of jurisdiction under Section 147 and the procedure followed under Section 148A of the Income Tax Act, 1961. The assessee argued that the notices and orders were bad in law due to procedural irregularities in the faceless assessment mechanism.
Held
The Tribunal held that a legal ground challenging jurisdiction can be raised at any stage, including before the Tribunal, as per Supreme Court precedent. It further held that the assessment order passed by the NFAC was bad in law because it was issued without proper adherence to the procedural requirements of Section 148A, quashing the assessment order.
Key Issues
Whether the assessment order passed under the faceless mechanism was bad in law due to procedural defects in issuing notices and affording proper opportunity to the assessee.
Sections Cited
147, 144B, 148A, 148, 151A
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Before: Shri M. Balaganesh & Shri S.S. Viswanethra Ravi
Year: 2018-19 Meenakshi Academy of Higher Vs. The Income Tax Officer, Education & Research [MAHER], Exemptions Ward 3, 12, Vembuli Amman Koil Street, Chennai. West K.K. Nagar, Chennai 600 078. [PAN: AAETM9880C] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri R. Venkata Raman, CA ��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 08.08.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2018-19.
When the appeal was taken up for hearing, the ld. AR Shri R. Venkata Raman, CA drew our attention to the application seeking permission to file additional grounds of appeal dated 23.10.2025 placed on record, submits that the assessee raised additional grounds of appeal challenging assumption of jurisdiction under section 147 of the Income Tax Act, 1961 [“Act” in short] and passing assessment order under section 147 r.w.s. 144B of the Act by the Faceless mechanism [Assessing Officer], which is not in accordance with the provisions of law. The ld. AR submits that it is a legal ground, which goes to the root of the case, raised for the first time before the Tribunal. He argued that the said legal ground can be raised at any stage of the proceedings including this Tribunal and placed reliance on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Reported in 223 ITR 383 (SC). He prayed to admit the said additional ground and proceed to decide the said issue as preliminary ground.
The ld. DR submits that the assessee having participated before the Assessing Officer and the ld. CIT(A) did not raise the same before the said authorities. He argued that it requires examination of the facts and prayed to dismiss the said ground.
Having heard both the parties, we note that the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. (supra) was pleased to hold that the legal ground can be raised at any stage of the proceedings including this Tribunal. The ld. DR did not dispute the decision of the Hon’ble Supreme Court and we find no new facts are required to be examined and therefore, we proceed to admit additional ground.
The assessee raised following additional grounds, which are reproduced herein below:
1. 1. That the notice issued u/s. 148A(b) of the Act dated 15.03.2022, by the Income Tax Officer, Non-corporate Ward 19(6), Chennai (“JAO”), is bad in law, thereby rendering the impugned assessment order dated 29.03.2023 passed u/s. 147 of the Act invalid, inasmuch as the JAO failed to afford the appellant the mandatory minimum period of seven days to submit a response to the said show cause notice, as required under the provisions of the Act.
2. With prejudice to the above ground, that the order passed u/s. 148A(d) of the Act dated 26.03.2022 by the JAO, without due consideration of the submissions made by the appellant in response to the show cause notice issued u/s. 148A(b) of the Act, is bad in law, and therefore, the notice issued u/s. 148 of the Act as well as the consequent assessment order framed u/s 147 of the Act are liable to be quashed and set aside.
3. Without prejudice to the above grounds, that the notice issued u/s. 148 of the Act dated 30.03.2022, by the JAO, is in contravention of the Faceless Assessment Scheme notified by the Central Government on 29.03.2022 pursuant to section 151A of the Act, hence the same is invalid and bad in law. Consequently, the assessment order dated 29.03.2023 passed u/s. 147 of the Act is null and void in the eyes of law.
6. The ld. AR drew our attention to the notice issued by the Jurisdiction Assessing Officer under section 148A(b) of the Act dated 15.03.2022 placed at pages 1 & 2 of the paper book and in compliance to the above notice, the assessee uploaded its response vide e-Proceedings Response Acknowledgement on 26.03.2022. The ld. AR further drew our attention to the order passed by the Jurisdiction Assessing Officer under section 148A(d) of the Act dated 26.03.2022 placed at pages 7 & 8 of the paper book as well as notice issued under section 148 of the Act dated 30.03.2022 placed at page 9 of the paper book. 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 was passed under section 147 r.w.s. 144B of the Act 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. 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 23.03.2023 passed by the assessment unit of NFAC is bad in law and it is quashed. The ld. AR prayed to keep open grounds of appeal filed along with Form 36 for the assessee in case the Hon’ble Supreme Court interferes with the decision of the Hon’ble High Court of Bombay in the case of Hexaware Technologies Ltd. V. ACIT (supra). Accordingly, the grounds raised by the assessee on assumption jurisdiction raised by way of additional grounds 1 to 3 are allowed and grounds raised under Form 36 become academic in view of our decision in the additional grounds raised by the assessee.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 24th October, 2025 at Chennai.