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Facts
The assessee received significant interest income but did not file a return. The Assessing Officer initiated reassessment proceedings under Section 147 and completed the assessment, disallowing a claim under Section 80P.
Held
The Tribunal held that the assessment order passed by the NFAC assessment unit was bad in law, following the decision of the Hon'ble High Court of Madras in Mark Studio India (P.) Ltd. V. ITO.
Key Issues
Whether the assessment order passed by the Faceless mechanism is valid, and whether the assumption of jurisdiction under Section 147 was justified.
Sections Cited
147, 148, 148A, 144, 80P, 144B
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Before: Shri S.S. Viswanethra Ravi & Shri Ratnesh Nandan Sahay
Year: 2018-19 T.C. 30, Thoothukudi Port Aluvalar Vs. The Income Tax Officer, Co-op. Thrift and Credit Society Ltd., Ward 1, Thoothukudi 628 004. Tuticorin. [PAN:AAGAT3402L] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri N. Arjun Raj, Advocate ��थ� की ओर से/Respondent by : Ms. Sandhya Rani Kure, JCIT सुनवाई की तारीख/ Date of hearing : 18.09.2025 घोषणा की तारीख /Date of Pronouncement : 26.09.2025 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 04.06.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-19.
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 disallowance of deduction claimed under section 80P of the Act.
3. The Assessing Officer noted that the assessee has received interest other than interest on securities totalling to ₹.35,64,967/- in the previous relevant to the AY 2018-19, but, however, did not file return of income. Following due procedure, the order under section 148A(d) of the Act was passed on 26.04.2022 and the case was selected for scrutiny by issue of notice under section 148 of the Act. Since there was no representation from the assessee, the Assessing Officer completed the assessment under section 147 r.w.s. 144 of the Act dated 29.02.2024, the Assessing Officer assessed income of the assessee at ₹.28,14,752/- against NIL income returned, inter alia, making disallowance under section 80P of the Act. The ld. CIT(A) confirmed the order of the Assessing Officer.
The ld. AR Shri N. Arjun Raj, Advocate drew our attention to the order under section 148A(d) of the Act dated 26.04.2022 passed by the jurisdiction Assessing Officer placed at page 1 of the paper. He also drew our attention to the notice dated 26.04.2022 issued by the jurisdiction Assessing Officer under section 148 of the Act placed at page 4 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 placed at page 50 of the paper book and prayed to quash the assessment order passed by the NFAC without issuing notice under section 148A(d) of the Act.
The ld. DR Ms. Sandhya Rani Kure, 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. 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 and also passed 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. The ld. AR prayed to keep open ground No. 4 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 ground raised by the assessee on assumption jurisdiction in ground Nos. 5 & 6 is allowed and ground No. 4 is kept open.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 26th September, 2025 at Chennai.