THINGAL OLI MANIMEKALAI,THANJAVUR vs. ITO, WARD-1,, THANJAVUR

Assessment Years: 2015-16 Thingal Oli Manimekalai, The Income Tax Officer, No.2/520, Keela Vannipattu, Okkanadu Ward-1, Keelaiyur, P.O Orathanadu, Thanjavur, Thanjavur. Tamil Nadu-614 625 [PAN: CSFPM9258R] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Shri P.M.Kathir, Advocate प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 09.06.2025 घोषणा की तारीख /Date of Pronouncement : 08.08.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :

This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1069164839(1) dated 27.09.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment year 2015-16. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time. 2.0 The assessee has assailed the assessment order u/s 147 r.w.s. 144B dated 19.02.2024 both on legal grounds as well as on the merits of the addition. As the legal grounds aims to strike at the very foundation of the assessment order, we proceed to consider the same, first. 3.0 Brief factual matrix of the case is that the assessee has not filed Return of Income for AY2015-16. Based on the information that Assessee has made Cash Deposits with SBI of Rs.68 Lakhs during the year, notice u/s 148A(b) of the Act was issued by the Revenue on 25/03/2022. Thereafter, Notice u/s 148 was also issued on 18/04/2022 by the Ld. AO being ITO ward-1, Thanjavur. The impugned notice had DIN No.ITBA / AST / S / 148_1 / 2022 – 23 / 1042753512(1). The Ld. AO passed order of assessment u/s 147 on 19/02/2024 making an addition of Cash Deposits and other credits amounting to Rs,1,19,28,315 for want of details and supporting documentary evidences. Before CIT(A) amongst various grounds raised. Assessee contended that notice u/s148 were barred by jurisdiction as the same was issued by Jurisdictional Assessing Officer (JAO) and not Faceless Assessing Officer(FAO) mandated in the scheme of act. The Ld.CIT(A) dismissed the arguments on legal grounds and sustained the addition of Ld.AO on merits. The assessee is in appeal assailing the impugned order of the Ld.CIT(A). During the course of present proceedings, the assessee has also raised additional legal ground qua challenging legality of notice u/s 148 on the premise that no reopening was permissible as the value of the asset was less than Rs.50 lakhs. Page - 2 - of 10 4.0 Per contra, the Ld.DR relied upon the order of lower authorities. The Ld.DR has vehemently argued including through her written submissions that there is no infirmity in the opening of the assessment and that the same is protected by statutory provisions covering the subject. 5.0 We have heard rival submissions in the light of material available on records. It is an undisputed fact on records that the notice u/s. 148 dated 18.04.2022 was issued by the Ld.AO being ITO ward-1, Thanjavur who is a Jurisdictional Assessing Officer(JAO) and not Faceless Assessing Officer(FAO) mandated in the scheme of Act. We have also noted that the assessee had raised the legal challenge to issuance of notice by JAO before the Ld.CIT(A) and who has recorded the same in para 6.1.2 on page 7 of his order stating “…..The preliminary objection raised by the petitioner which is being considered as the foremost issue is “ whether the impugned order u/s 148A (d) as well as the notice u/s 148 of the Act could be issued by the local jurisdictional officer rather than the faceless assessment” The in another words was” whether was it not mandatory for the authorities concerned to initiate proceedings pertaining to reassessment u/s 148A and 148 of the Act in a faceless manner (rather than being proceeded by the local jurisdictional officer), as is envisaged u/s 144B of the Act….”. We have noted that in the following para the Ld.CIT(A) has also discussed the CBDT notification dated Page - 3 - of 10 29.03.2022 and has also unequivocally recorded that the notice in this case was issued by JAO and not FAO. Interestingly, there appears to be a mix up of facts and reliance upon unrelated judicial precedents. For reasons known to him the Ld.CIT(A) has proceeded to rely upon the decision of Hon’ble Apex Court in the case of Ashish Agarwal while dismissing the challenged legal grounds. It is noticed that the apparently controversy of issue of notice u/s 148 by the JAO or FAO was not before the Hon’ble Apex Court in the case of Ashish Agarwal supra. No reliance therefore can be placed upon the conclusion drawn by Ld.CIT(A). 6.0 The Ld.Counsel for the assessee has also brought to our notice the judgement of Hon’ble Bombay High Court in the case of Hexaware Technologies as well as the decision of the Hon’ble Madras High Court in the case of Sridhar Lokesh Vs ITO and others in WP No.16526 of 2022. We have noted also noted that on the issue of legality of the issuance of notice u/s 148 by JAO / FAO post CBDT notification dated 29.03.2022, a coordinate bench of this tribunal in the case of Neelam Devi Gupta in for Assessment Years: 2018-19 vide order dated 18.07.2025 have held that post CBDT notification dated 29.03.2022 notice u/s 148 can be issued by JAO / FAO only. Relevant part of the order are reproduced

Page - 4 - of 10 as under:- “…….3.0 Thus, through ground of appeal No.6 the assessee has challenged the insufficiency of jurisdiction with the Ld.Jurisdictional Assessing Officer to have issued the notice u/s 148 which forms the basis for the reassessment order u/s. 147 r.w.s. 144 dated 27.03.2023. It is the case of the Ld.Counsel for the assessee that as per section 151A of the Act r.w. notification dated 29.03.2022 of Central Board of Direct Taxes, reassessment notice u/s 148 was to be issued by the faceless assessing officer and that issuance of the same by the jurisdictional assessing officer u/s 148 dated 31.03.2022 was unwarranted and not in conformity with statutory conditions governing the matter. It was urged that consequent to notification dated 29th March 2022 issued by the Central Board of Direct Taxes, reassessment u/s 148 can be issued by a faceless assessing officer only. It was urged that in the present case as the notice u/s 148 dated 31.03.2022 was issued by the jurisdictional assessing officer the same was invalid and consequently the assessment order u/s 147 r.w.s. 144 dated 27.03.2023 also became an order to be deemed as void ab initio. In support of its contentions, the Ld.Counsel for the assessee placed heavy reliance upon the decision of the Hon’ble Madras High Court dated 24.06.2025 in the batch of writ petitions bearing no.22402 of 2024. 4.0 Per contra, the Ld.DR relied upon the order of lower authorities. It was argued that the decision of Hon’ble Bombay High Court in the case of Hexaware Technologies Limited which is the basis of impugned decision of the Hon’ble Madras High Court dated 24.06.2025 (supra) has been contested by the Revenue before the Hon’ble Apex Court and hence no reliance can be placed. 5.0 We have heard rival submissions in the light of material available on records. It is an admitted fact on records that the notice u/s. 148 dated 31.03.2022, upon which the assessment order u/s 147 r.w.s. 144 dated 27.03.2022is resting, was issued by the jurisdictional assessing officer and not the faceless assessing officer. We have noted the following provisions of section 151A of the Act:- “…..[Faceless assessment of income escaping assessment.97 151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 14898[or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.]….”

Page - 5 - of 10 The legal prescription thus mandated is that post issuance of notification by the central government, notices u/s. 148 shall be issued by faceless assessing officers. 6.0 We have noted that the Central Board of Direct Taxes has passed a notification dated 29.03.2022 stipulating as under:- “….NOTIFICATION New Delhi, the 29th March, 2022 S.O. 1466(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:-

1. 1. Short title and commencement.—(1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022. (2) It shall come into force with effect from the date of its publication in the Official Gazette.

2. Definitions.––(1) In this Scheme, unless the context otherwise requires, –– (a) ―Act‖ means the Income-tax Act, 1961 (43 of 1961); (b) ―automated allocation‖ means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act.

3. Scope of the Scheme.––For the purpose of this Scheme,–– (a) assessment, reassessment or recomputation under section 147 of the Act, (b) issuance of notice under section 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. [Notification No. 18/2022/F. No. 370142/16/2022-TPL(Part1] SHEFALI SINGH, Under Secy….” Thus through the above notification the Central Government has mandated that w.e.f. 29th March 2022 all the notices u/s 148 of the Act shall be through automated allocation and in a faceless manner for initiating any reassessment of income. It thus alludes that notice u/s 148 shall be issued by a faceless assessing officer. 7.0 We have also noted the decision of Hon’ble Bombay High court in the case of Hexaware Technologies Limited dated 03.05.2024 in WP No.1778 of 2023. The Hon’ble court's decision was , inter alia, based on the newly introduced faceless assessment scheme, established under Section 151A of the Act which mandated that reassessment notices be issued through automated allocation and in a faceless manner, thereby eliminating direct Page - 6 - of 10 interaction between the taxpayer and the tax authorities. The court interpreted this to mean that the authority to issue reassessment notices under the faceless assessment scheme rests solely with the FAO, not the JAO. The Hon’ble Bombay High Court held the view that allowing concurrent jurisdiction would lead to chaos and undermine the purpose of the faceless assessment scheme. It clarified that the scheme's automated allocation process randomly assigns cases to assessing officers, and in this case, the JAO was not the designated officer. Therefore, the reassessment notice issued by the JAO was deemed invalid and quashed. The Revenue had argued that both the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) had concurrent jurisdiction in issuing such notices. However, the Hon’ble Bombay High Court disagreed, ruling that the JAO lacked the authority to issue the reassessment notice in this specific instance. While doing so the Hon’ble High Court had distinguished the order of the Hon’ble Calcutta High Court. 8.0 We have also noted with reverence the decision of Hon’ble Madras High Court dated 24.06.2025 in WP No.22402. In the impugned decision the Hon’ble High Court has held as under:- “…..2. Learned Single Judge in order dated 20.12.2024 in WP Nos.25223 of 2024 held that it does not matter if the Jurisdictional Assessing Officer (JAO) issues the notice and it is not mandatory that it should be issued by the Faceless Assessment Officer (FAO). Another learned Single Judge in order dated 21.04.2025 in WP No.22402 of 2024 and batch cases, followed what was held by the Bombay High Court in Hexaware Technologies Ltd vs. Assistant Commissioner of Income Tax1; and opined that it was mandatory for the FAO to issue notice and issuance of notice by JAO would make the notice invalid.

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9.0 It is seen that the Hon’ble Madras High Court has through its aforesaid order reaffirmed the decision of Hon’ble Bombay High Court in the case of Hexaware Technologies Limited ruling that post 29.03.2022 i.e after issuance of CBDT notification, notices u/s 148 deserved to be issued by faceless assessing officer only. It goes on to indicate that any notices issued by any jurisdictional assessing officer shall be invalid. Consequently, any assessment order which is resting on any such notice shall also be invalid and void ab initio. We have noted that in the present case the notice u/s 148 was issued on 31.03.2022 by the jurisdictional assessing officer and that the assessment order u/s 147 dated 27.03.2022 is resting upon the same. In respectful compliance to the decision of the Hon’ble Madras High Court (supra) it is held that notice u/s 148 issued on 31.03.2022 by the jurisdictional assessing officer is an invalid notice and same is therefore quashed. It is trite law that once foundation goes the superstructure is bound to collapse. Accordingly, in the present case the assessment order u/s 147 dated 27.03.2022 shall also not survive. We therefore set aside the order of the lower authorities. The legal ground of appeal no. 6 raised by the assessee are therefore allowed. 10.0 We have however also noted that the Hon’ble Madras High Court in their impugned decision , in para 7 ruled that “….. It is clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court….” and therefore this order is also subject to the decision of Hon’ble Apex court in response to revenue’s appeal in the case of Hexaware Technologies (supra) . 11.0 As the assessee has succeeded in terms of its legal grounds of appeal No. 6, all other grounds of appeal contesting the merits of the addition have become academic in nature and hence not adjudicated…..”

7.0 In respectful compliance to the decision of Hon’ble Madras High Court, Bombay High Court as well as for the purposes of consistency qua decisions of this tribunal it is held that notice u/s 148 issued on 18.04.2022 by the jurisdictional assessing officer is an invalid notice and same is therefore quashed. It is trite law that once foundation goes the superstructure is bound to collapse. Accordingly, in the present case

Page - 8 - of 10 the assessment order u/s 147 dated 19.02.2024 shall also not survive. We therefore set aside the order of the lower authorities. The legal ground of appeal no. 2 raised by the assessee is therefore allowed. 7.1 We would however reiterate that since the Hon’ble Madras High Court in their impugned decision, in para 7 have ruled that “….. It is clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court….” and therefore this order is also subject to the decision of Hon’ble Apex court in response to revenue’s appeal in the case of Hexaware Technologies (supra) and therefore the decision in this case shall also be governed by the decision of the Apex Court in the case of Hexaware supra. .

8.0 As the assessee has succeeded in the legal ground of appeal no.2 indicated in Form-36 of this appeal, all the other grounds of appeal raised on merits of the addition as well as additional grounds are left open. 9.0 In the result the appeal of the assessee is allowed. Order pronounced on 8th , Aug-2025 at Chennai. Sd/- Sd/- (मनु कुमार धिरर) (अधमताभ शुक्ला) (MANU KUMAR GIRI) (AMITABH SHUKLA) न्याधयक सदस्य / Judicial Member लेखा सदस्य /Accountant Member