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Facts
The assessee's case was reopened by the Jurisdictional Assessing Officer (JAO) under Section 147 of the Income Tax Act, 1961, for AY 2018-19 based on information about a cash deposit. A notice under Section 148 was issued on 07.04.2022. The assessee challenged this notice, arguing it was invalid as it was issued by the JAO and not the faceless National Faceless Assessment Centre (NFAC), violating the e-Assessment Scheme notified on 29.03.2022.
Held
The Tribunal held that the notice issued by the JAO was invalid and bad in law, as it contravened the provisions of Section 151A of the Act and the mandatory faceless scheme notified by the CBDT. The assessment order passed pursuant to this invalid notice was consequently held to be null and void.
Key Issues
Whether a notice issued under Section 148 of the Income Tax Act by the Jurisdictional Assessing Officer, after the notification of the e-Assessment Scheme, is valid when it should have been issued by the Faceless Assessment Centre?
Sections Cited
147, 148, 151, 151A, 148A, 144B, 119
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), (hereinafter referred to as ‘Ld.CIT(A)‘), Chennai, dated 28.02.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2018-19.
At the outset, the Ld.AR of the assessee drew our attention to grounds of appeal preferred by it wherein assessee has raised a legal issue challenging the notice issued by the Jurisdictional Assessing Officer (hereinafter referred to as ‘JAO‘) u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act ‘) dated 07.04.2022 as bad in law and hence consequent passing of the assessment order by the Assessing Officer also is null in the eyes of law.
3. According to the Ld.AR, the impugned notice issued u/s.148 dated 07.04.2022, is invalid and bad in law being issued by the Jurisdictional Assessing Officer (herein after ‘JAO’) which is not in accordance with Sec.
151/151A of the Act read with the faceless Scheme notified by CBDT on 29 March 2022 for assessment, reassessment or re-computation u/s.147/issuance of notice u/s.148 of the Act or for conducting of inquiry or issuance of show cause notice or passing of order u/s.148A of the Act or sanction for issuance of notice under section 151 of the Act. Further, according to the Ld AR, in exercise of the powers conferred u/s.151A of the Act, CBDT had issued a notification dated 29.03.2022 [after laying the same before each House of Parliament] and formulated a Scheme called "the e-Assessment of Income Escaping Assessment Scheme, 2022"
(herein after ‘the Scheme’). And that the Scheme provides that (a) the assessment, reassessment or re-computation u/s.147 of the Act and (b) the issuance of notice u/s.148 of the Act shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided in Section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. Therefore, according to Ld AR, since the impugned notice u/s 148 dated 07.04.2022 has been issued by JAO and not by the NFAC, there is per-se contravention of the provisions of the Act, thus violating the principles of Rule of Law, which vitiates the reopening of the assessment; and further pointed out that this legal issue raised by the assessee has been answered in favor of the assessee by the jurisdictional High Court & other Hon’ble High Courts as cited below;-
Sl.No. Date Citation 1 24.06.2025 Mark Studio India (P.) Ltd. v. Income-tax Officer - High Court of Madras [DB] - WA No. 781 OF 2025, order dated 24.06.2025 2 14.09.2023 Kankanala Ravindra Reddy v. Income-tax Officer High Court of Telangana - 156 taxmann.com 178 3 03.05.2024 Hexaware Technologies Ltd. v. Assistant Commissioner of Income- tax High Court of Bombay - 464 ITR 430 4 20.05.2024 Ram Narayan Sah v. Union of India - High Court of Gauhati 163 taxmann.com 478 5 02.07.2024 Sushila Sureshbabu Malge v. Income-tax Officer - High Court of Bombay - 468 ITR 624 6 19.07.2024 Jatinder Singh Bhangu v. Union of India High Court of Punjab & Haryana - 466 ITR 474 7 24.07.2024 Sri Venkataramana Reddy Patloola v. Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad and Others High Court of Telangana - 468 ITR 181 [W.P.No.13353, 16141 & 16877 of 2024] 8 29.07.2024 Jasjit Singh v. Union of India - High Court of Punjab & Haryana - 467 ITR 52 9 05.08.2024 Samp Furniture Pvt. Ltd. v. Income Tax Officer, Ward 3(3)-Thane & Ors High Court of Bombay - 165 taxmann.com 581 10 05.08.2024 Kairos Properties Private Limited v. ACIT, Circle-15(1)(2), Mumbai & Ors - High Court of Bombay-468 ITR 168 11 29.08.2024 W.P.No.23573/2024 in the Case of ADIT(Int Taxn), Hyderabad v. Deepanjan Roy followed the decision in W.P.No.13353 of 2024 dated 24.07.2024 [Sri Venkataramana Reddy Patloola (supra)] 12 05.02.2025 Sappahire Educational & Charitable Trust v. The ITO, Exemptions Ward, Trichy. - Income Tax Appellate Tribunal, Chennai - & 2417/CHNY/2024 13 24.04.2025 Tecumseh Products India (P.) Ltd. v. Deputy Commissioner of Income-tax High Court of Telangana - 174 taxmann.com 1203
4. Per contra, the Ld.DR supported the action of the JAO issuing notice u/s.148 of the Act and submitted that both the NFAC & JAO have got concurrent jurisdiction and therefore, notice is valid and also submitted that there was no prejudice caused to the assessee. Furthermore, he asserted that the present case pertains to the central charges, the same would stand covered by the order dated 31.03.2021, passed u/s.144B(2) r.w.s.119 of the Act and further order dated 06.09.2021, passed u/s. these sections. Consequently, the contention of the Ld.CIT-DR is that this case would fall outside the purview of the scheme made u/s.151A of the Act and therefore, ratio laid by the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd., / the Hon’ble Madras High Court in the case of Mark Studio India (P.) Ltd. will not apply. Therefore, he asserted that the action of the JAO issuing notice is valid and doesn’t want us to interfere with the action of AO and instead, wants us to dismiss the legal issue and cited the decision of the Hon’ble Delhi High Court & Hon’ble Calcutta High Court as well as the Hon’ble Single Bench of Madras High Court in favor of the Revenue and cited the following orders:
• Triton Overseas (P) Ltd. v. Union of India – Calcutta High Court – 156 Taxmann.com 318 • T.K.S. Builders (P) Ltd. v. ITO – Delhi High Court – 469 ITR 657 • Mark Studio India (P.) Ltd. v. Income-tax Officer, High Court of Madras 169 taxmann.com 542, order dated 20.12.2024 5. In his rejoinder, the Ld.AR for assessee submitted that the contention of the Ld.DR, since the present case falls under the jurisdiction of Central Circle, the scheme made u/s.151 of the Act will not apply is no longer re-integra and brought to our notice that the very same contention was raised before the Hon’ble Bombay High Court in the case of BMC Software India Ltd. v. DCIT reported in [2024] 167 taxmann.com 39 (Bom.) wherein the same contention was raised at Para No.6 and the Hon’ble High Court has repelled the same by observing at para 9 infra “………….that the Revenue’s contention that as the present case pertains to the central charges, it would be required to be excluded, cannot be accepted and it would be required to be rejected. The writ petition is accordingly allowed…..” by holding as under:
5. In the present case, it is apparent that the respondent Revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A(2) of the Act. The Scheme has also been tabled in Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. In view of the explicit declaration of the law in Hexaware, the grievance of the petitioner- Assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings.
6. Learned counsel for both the parties agree that the proceedings initiated under Section 148 of the Act would not be sustainable in view of the judgment rendered in Hexaware. Learned counsel for the petitioner-Assessee has also drawn our attention to a recent decision of this Court in Nainraj Enterprises Pvt. Ltd. v. Deputy Commissioner of Income Tax, Circle-4(3) (1), Mumbai & Ors. 1, whereby in similar circumstances, this Court has allowed the petition considering the provisions of Section 151A of the Act. However, learned counsel for the respondents would submit that as the present case pertains to the central charges, the same would stand covered by the order dated March 31, 2021 passed under section 144B(2) read with section 119 of the Act, and the further order dated September 6, 2021, passed under these sections. Consequently, the contention is that this case would fall outside the purview of the scheme made under Section 151A of the Act, which, but for being under the central charge, would otherwise be covered by the decision of this Court in Heraware.
7. Learned counsel for the petitioner has also drawn our attention to the decision of this Court in Kairos Properties Pvt. Ltd. v. Assistant Commissioner of Income-tax and Ors. 2 ("Kairos Properties'), where the Court considered the effect of scheme as notified by the Central Government under the notification dated 29 March, 2022. The Court, considering the relevant provisions, has held that this scheme as notified in paragraph 3 of the notification would take within its ambit steps taken by the Revenue in issuing notice under section 148A(b) as also an order passed under Section 148A(d), so as to be included within the ambit of Section 151A of the Act. In this view of the matter, on both applicability of the law as laid down by this Court in Hexaware as also considering the observations of this Court in Kairos Properties, the petition would be required to be allowed.
In a decision rendered by us in the case of Abhin Anilkumar Shah v. Income Tax Officer, International Tax, Ward Circle 4(2) (1) & Ors. 3 ("Abhn Anilkumar Shah') in the context of the objections as raised on behalf of the revenue that the petitioner's case pertains to the central charges and hence impugned notice issued under Section 148 of the Act would stand excluded from the applicability of the provisions of Section 144B read with Section 151A of the Act and the Scheme as notified by the Central Government under the notification dated 29 March, 2022, we have considered the issue of applicability of the said provisions in respect of these exceptions sought to be urged by the revenue, namely, central charges and international tax charges. The Court in the said case made the following observations:-
"12. Having heard the learned counsel for the petitioner and Mr. Mistry, the learned amicus, it is clear to us that although the objection of Ms. Goel at the first blush appeared to be attractive, when we first heard the matter on earlier occasion, however on a deeper scrutiny, such objection needs to fail. Ms Goel's contention that the category of cases as notified under order(s) dated 31 March, 2021 and 6 September, 2021 issued under section 119 of the Act providing for exclusion of cases assigned to the central and international charges from the applicability of Section 144B of the Act is concerned, certainly cannot be accepted to be the correct position in law.
13. Such contention of Ms Goel needs to fail for more than one reason. Firstly, the order dated 31 March, 2021 issued under sub-section (2) of Section 144B of I.T Act and order dated 6 September, 2021 issued under section 119 of the Act apply only in respect of "assessment orders to be passed, as clearly seen from the content of both such orders, which we have extracted hereinabove; Secondly, the scheme notified under section 151A under notification dated 29 March, 2022 applying the procedure of faceless mechanism to the proceedings under Section 148A and Section 148 is neither subject to the applicability of the prior order dated 31 March, 2021 read with 6 September, 2021 nor is it explicit so as to include the applicability of the said orders to the scheme as notified under section 151A; Thirdly, it would be doing violence to the language of the notification/scheme dated 29 March, 2022 to read into such notification what has not been expressly provided for and/or something which is kept outside the purview of the said notification, namely, the orders dated 31 March, 2021 and 6 September, 2021. It would be uncalled for as also not appropriate for the Court to read into the scheme dated 29 March, 2022, something which is not included. It cannot be said that the Central Government was not aware as to what was provided for in the orders dated 31 March, 2021 and 6 September, 2021 so as to not include the same under the scheme dated 29 March, 2022. It would thus be not correct, that the Court nonetheless reads into the scheme dated 29 March, 2022 the applicability of orders dated 31 March, 2021 and 6 September, 2021. In fact such approach would also be contrary to the mandate of Section 151A and to the scheme framed thereunder.
14. Thus, accepting Ms Goel's contention to read into the scheme as contained in the notification dated 29 March 2022, the applicability of the order dated 31 March, 2021 and 6 September, 2021 would in fact amount to not only rewriting such scheme issued by the Central Government but reading something into the provisions of section 151A which the legislature itself has not provided for Section 151A and the Scheme notified below it stand independent under the notification dated 31 March 2022. Further, as rightly pointed out by Mr. Mistry, Section 151A is not subject to the other provisions of the Act when it empowers that the Central Government to make a scheme in the context of section 147 or for issuance of notice under section 148A and for conducting a prior enquiry by issuance of a show-cause notice or passing order under section 148A of the Act. The provisions is intended with an object of achieving efficiency, transparency and accountability inter alia by eliminating the interface between the income tax authority, optimizing utilization of the resources through economies of scale and functional specialization, and by introducing a team based assessment, reassessment, recomputation or issuance or sanction of notice with dynamic jurisdiction, as set out in clauses (a), (b) and (c) of sub-section 151A of the Act.
Thus, on a bare reading of section 151A as it stands, read with the scheme notified thereunder, we are of the clear opinion that the observations as contained in Paragraphs 10 and 11 of our decision in CapitalG LP do not require any reconsideration
In the above context, Mr. Mistry has also drawn our attention to the decision of the Division Bench of the High Court of Telangana in Sri Venkataramana Reddy Patloola v. Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad & Ors. (2024 SCC OnLine TS 1792) to contend that such decision fortifies the view taken by us in CapitalG LP (supra) to submit that such decision takes a similar view, when an identical issue had fallen for consideration of the Division Bench of the High Court of Telangana, namely, whether the show-cause notice issued under section 148 of the Act in matters relating to international taxation charges are exempted to follow the procedure of faceless proceedings. In an elaborate judgment, their Lordships considering the provisions of section 151A as also the Notification dated 6 September, 2021 and the scheme notified by the Central Government under Notification dated 29 March, 2022 have held that only the actual assessment or reassessment would be laid in a face to face mode while the selection of cases and issue of notices could be in the faceless mode.
The result of the above discussion is to the effect that this Court not only in Hexaware and thereafter in Capital GLP but also the Division Bench of the High Court of Telangana in Sri Venkataramana Reddy Patloola (supra), to have consistently held that in respect of central charges and international taxation charges, the proceedings under Section 148A read with Section 148 of the Act would be required to be held in a faceless manner, applying the provisions of section 144B and as effected under the provisions of section 151A read with scheme notified by the Central Government vide a Notification dated 29 March, 2022. We accordingly reject the contentions as urged by the revenue that the present case would fall outside the applicability of the said provisions and the scheme. "
9. In this view of the matter, learned counsel has urged on behalf of the revenue that as the present case pertains to the central charges, it would be required to be excluded, cannot be accepted and it would be required to be rejected. The writ petition is accordingly allowed in terms of prayer clause (a) which reads thus
"(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under Article 226 and/or Article 227 of the Constitution of India calling for the records of the Petitioner's case and after examining the legality and validity thereof quash and set aside the Impugned Show Cause Notice dated 26 February 2024 (Echibit 'Q') the Impugned Order dated 30 March 2024 (Exhibit "U"), Impugned Notice dated 30 March 2024 (Echibit "V") and the Impugned Approval (Exhibit "W")."
In the light of the judgment of Hon’ble High Court supra, according to Ld AR, nothing turns on the fact that the present case/assessment, pertained to central charge and therefore excluded from the scheme notified by CBDT on 29.03.2022 [supra]. Hence, prayed for allowing the legal issue raised before us against notice issued on 07.04.2022 by JAO u/s 148 of the Act.
We have heard both the parties and perused the material available on record. The assessee is an individual, whose case was reopened by the Jurisdictional Assessing Officer (hereinafter referred to as ‘JAO‘) u/s.147 of the Act on the basis of information that during the relevant AY 2018- 19, the assessee [Shri Jayaraman Rudrasekar] had deposited cash of ₹13,04,000/- in one or more savings bank account. Thereafter, the assessment was reopened by the AO by issuance of notice u/s.148 of the Act dated 07.04.2022. In response of which, the assessee filed RoI for AY 2018-19 on 22.04.2022 declaring total income of ₹13,40,500/- [the original return filed by the assessee on 27.10.2018 declaring total income of ₹13,40,500/-]. And thereafter, the AO is noted to have passed the reassessment order on 29.03.2023 making an addition of ₹9,23,500/-.
Thus, assessed income to the tune of ₹22,64,000/- in place of the returned income of ₹13,40,500/- On appeal, the Ld.CIT(A) was pleased to partly allow the appeal by allowing relief of ₹2 lakhs and the balance addition was confirmed.
8. Aggrieved, the assessee is before us and has raised the legal issue impugning the notice issued by the JAO dated 07.04.2022 passed u/s.148 of the Act as bad in law on the strength of Hon’ble Jurisdictional High Court and other judicial precedents cited supra; and in this regard it is noted that the impugned notice u/s 148 dated 07.04.2022 was issued by JAO/Shri Ajay Kumar Chowdary, Ward-3, Vellore. And thereafter, the AO/DCIT, Central Circle-1(4), Chennai, Shri Satyamurthi Subramanian, is noted to have framed the re-assessment order on 29.03.2023 after making certain additions.
The assessee’s contention is that jurisdictional notice issued by the JAO u/s 148 after 29.03.2022 in order to reopen the assessment is bad in law since he didn’t adhere to the provisions of Section 151 of the Act and the scheme notified by the CBDT [Faceless Scheme notified from 29.03.2022 (supra)] which legal issue, which we will deal first.
We note that on this legal issue there are divergent views expressed by different Hon’ble High Courts. However, it is noted that on this issue the Hon’ble jurisdictional High Court i.e. Madras High Court (Division Bench) in Mark Studio India (P.) Ltd. (supra) has expressed their view in favour of the assessee, by concurring with the Hon’ble Bombay High Court in the case of Hexaware Technologies (supra). And further it is noted that similar view in favour of assessee has been taken by Hon’ble Gujarat High Court, the Hon’ble Telangana High Court and the Hon’ble Punjab & Haryana High Court as cited by Ld AR (supra). Even though, the Ld.DR has brought to our notice that on the legal issue, the Hon’ble Delhi High Court & Hon’ble Calcutta High Court and Hon’ble Single Bench of Madras High Court in Mark Studio India (P.) supra has held in favour of the Revenue; but since the Hon’ble jurisdictional High Court (Division Bench) in Mark Studio India (P.) (supra) has reversed the Hon’ble Single Bench and has taken view in favour of assessee as held in Hexaware Technologies Ltd. (Bom), according to us, the legal issue raised by the assessee is no longer res-integra and we are bound to follow the decision in favour of the assessee on the legal issue raised before us.
The Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd., (supra) is noted to have has even dealt with the decision rendered by the Hon’ble Calcutta High Court in favour of the Revenue, but concurred with the view of the Hon’ble Telangana High Court in the case of Sri Venkataramana Reddy Patloola v. DCIT reported in [2023] 156 taxmann.com 178 (Telangana) and held that in view of the provisions of Sec.151A of the Act read with Faceless Scheme dated 29.03.2022, notices issued by the JAO u/s.148A(d)/148 of the Act was invalid and bad in law. We further note that aforesaid decision of the Hon’ble Telangana High Court has been followed not only by the Hon’ble Bombay High Court, but also by the Hon’ble Gauhati High Court in the case of Ram Narayan Sah v. Union of India reported in 163 taxmann.com 478, and the Hon’ble Punjab & Haryana High Court in the case of Jatinder Singh Bhangu v. Union of India reported in 165 taxmann.com 115 and other cited cases (supra). And as noted (supra) the Hon’ble jurisdictional High Court (Single Bench) order in the case of Mark Studio India (P.) Ltd. v. Income-tax Officer, held in favour of Revenue, was reversed by the Hon’ble Division Bench by order dated 24.06.2025 by holding as under:
This appeal impugns an order passed by the learned Single Judge.
2. The learned Single Judge was pleased to dismiss the petition on the ground that even if the notice has been issued by Jurisdictional Assessment Officer and not Faceless Assessment Officer, the notice issued under Section 148A/148 of the Income Tax Act will be valid.
Ms.Vardhini Karthik submitted that this Court has, in many matters, held, following the judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax', that notice that has to be issued by Faceless Assessment Officer has to be issued Faceless Assessment Office and if issued by Jurisdictional Assessment Officer, the same is not valid.
Ms.Premalatha, who takes notice for the Revenue, states that the law as proposed by Ms.Vardini Karthick is correct and therefore, the Court may quash and set aside the notices, but keep open liberty of the Revenue to re-ignite the notices in case the Apex Court interferes with the order and judgment of the Bombay High Court in Hexaware Technologies (supra).
Keeping open the Revenue's rights and contentions, as noted above, the impugned notices dated 15.04.2024 are quashed and set aside. The appeal is disposed of. There shall be no order as to costs. Consequently, the interim application is closed. 12. In the light of the aforesaid discussion, we find that in the case in hand, the JAO had issued notice u/s.148A(b) of the Act dated 24.03.2022 followed by order u/s.148A(d) of the Act dated 31.03.2022 and followed by notice u/s.148 dated 07.04.2022 which impugned notices have been issued despite faceless scheme was notified by Central Government on 29.03.2022 pursuant to section 151A of the Act, making it mandatory for the issuance of notice u/s.148A(b), 148A(d) as well as 148 of the Act by the Faceless Mechanism, the impugned notices especially issued u/s.148 dated 31.03.2022 is found to be invalid and bad in law, since it has been issued contrary to law and is against the ‘Rule of Law’; which impugned action of the JAO vitiates the reopening of assessment for AY 2018-19 by issuance of impugned notice dated 07.04.2022 u/s.148 of the Act and is therefore held to be illegal and bad in law and therefore, assessment order dated 29.03.2023 is held to be null in eyes of law; and the assessee succeeds, on the legal issue which is held in favour of the assessee and therefore, we are inclined not to go into the merits of the addition made by the NFAC.
Before parting, we note that in this case, the Ld.DR has pointed out that the present case pertains to the central charges and therefore, it would stand covered by the order dated 31.03.2021 passed u/s.144B(2) r.w.s.119 of the Act and further by order dated 06.09.2021 passed under these sections. Consequently, according to the Ld.DR, this case would fall outside the purview of the scheme made u/s.151A of the Act and therefore, it won’t be covered by the decision of the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. However, we note that such a contention was raised by the Revenue before the Hon’ble High Court of Bombay in the case of BMC Software India (P) Ltd.(supra), wherein their Lordship’s after considering the decisions rendered in (i)
Abhin Anilkumar Shah v. ITO, International Tax Ward, Circle-4(2)(1) & Ors., & (ii) Venkataramana Reddy Patloola v. DCIT, Circle-1(1), Hyderabad & Ors. [2024 SCC OnLine TS 1792] was pleased to repel the same by inter alia observing at para 9 “………….that the Revenue’s contention that as the present case pertains to the central charges, it would be required to be excluded, cannot be accepted and it would be required to be rejected. The writ petition is accordingly allowed…..” In the light of the Hon’ble High Court’s decision rendered in the case of BMC Software India (P) Ltd., we don’t find any merit in the contention of the Ld.DR for the Revenue the present case pertains to the central charges, it would be required to be excluded from the scheme notified by CBDT on 29.03.2022 (supra), cannot be accepted and therefore, the same is rejected. Hence, we hold that the impugned action of the JAO issuing notice u/s.148 of the Act on 07.04.2022 as bad in law and invalid,
In the result, appeal filed by the assessee is allowed.
Order pronounced on the 04th day of September, 2025, in Chennai.