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Facts
The assessee filed an appeal against an order for AY 2018-19, raising an additional ground regarding jurisdiction. The challenge was to a notice issued under Section 148 of the Income Tax Act by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessment Officer (FAO), subsequent to the CBDT Notification dated 29.03.2022.
Held
The tribunal, following the jurisdictional Madras High Court's decision, held that the notice issued under Section 148 by the JAO was invalid as it contravened the e-assessment scheme formulated by the CBDT Notification of 29.03.2022. The impugned notice and consequential orders were set aside, with a provision for revival if the Revenue succeeds before the Apex Court.
Key Issues
Whether a notice issued under Section 148 of the Income Tax Act by a Jurisdictional Assessing Officer (JAO) is valid after the CBDT Notification dated 29.03.2022, which mandates faceless assessment and issuance of such notices by a Faceless Assessing Officer (FAO).
Sections Cited
147, 148, 144B
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short ‘the Ld.CIT(A)’), Delhi, dated 12.03.2025 for the Assessment Year (hereinafter in short ‘AY’) 2018-19.
2. At the outset, the Ld.Counsel for the assessee has raised an additional ground relating to jurisdiction in the light of the CBDT
We have heard admission of legal issue and found any substance in the submissions of the Ld. Counsel for the assessee and hence, we admit the legal issue/jurisdictional ground in view of the decision of the Hon’ble Supreme Court in the case of NTPC v. CIT reported in [1998] 229 ITR 383 (SC). The Ld. Counsel for the assessee referred to Page Nos.5 to 8 of the Paper Book which consists of notice u/s.148 of the Act and order in Clause (d) of section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) and pointed out that the notice u/s.148 has been issued by the ITO, Non-Corporate Ward-3, Coimbatore, and similarly, the order under Clause (d) to Section 148 of the Act has been passed by the ITO, Non- Corporate Ward-3, Coimbatore. He further referred to CBDT Notification dated 29.03.2022 which formulated a Scheme called “the e-assessment of income assessment scheme, 2022”. The Ld.DR relied upon the impugned order and further, pleaded that CBDT Notification dated 29.03.2022 is not applicable in the present case.
We have heard the rival submissions perused the appeal papers and case law cited by the assessee. We find that the CBDT issued a Notification dated 29.03.2022 formulating “the e-assessment of income assessment Scheme, 2022”. The Scheme provides that (a) the (AY 2018-19) Ennarasu Chitra assessment/re-assessment are re-computation u/s.147 of the Act and (b) 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 u/s.148 of the Act for issuance of notice and in a faceless manner to the extent providing in Section 144B of the Act with reference to making assessment/re-assessment of total income or loss of the assessee. We find that the impugned notice dated 31.03.2022 has been issued by the ITO, Non-Corporate Ward-3, Coimbatore [JAO] and not by the NFAC which is not in accordance with the aforesaid Scheme. We also find that the impugned notice under Clause (d) to Section 148 of the Act has been issued after CBDT Notification dated 29.03.2022. Hence, the aforesaid CBDT Notification dated 29.03.2022 is directly applicable in this case. Therefore, the Hon’ble Madras High Court in the case of TVS Credit Services Ltd. v. DCIT in WP No.22402 of 2024 & WMP No.13336 of 2023 on similar issued held as under:
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 Tax'; and opined that it was mandatory for the FAO to issue notice and issuance of notice by JAO would make the notice invalid.
3. Learned Single Judge thereafter directed the matter to be placed before the Chief Justice for constituting a Division Bench to consider the divergent views. It is, therefore, all these matters were listed before us today.
4. We follow the law as laid down in Hexaware Technologies Ltd (supra), the said judgment was authored by one of us (Chief Justice), that it is mandatory (AY 2018-19) Ennarasu Chitra for the FAO to issue the concerned notices and issuance thereof by the JAO would make the notice invalid.
5. Counsels for assessees are ad idem that the law as laid down in Hexaware Technologies Ltd (supra) will apply. Learned Additional Solicitor-General, however, submits that the Revenue does not accept the law as laid down in Hexaware Technologies Ltd (supra); and that there is a special leave petition filed against the order and judgment in Hexaware Technologies Ltd (supra) and the same is expected to be taken up after the Supreme Court reopens.
Admittedly, learned Additional Solicitor-General, in fairness, states that there is no stay. Therefore, the law as laid down by Hexaware Technologies Ltd (supra) applies.
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.
Keeping open all rights and contentions of parties, including liberty to apply to this Court, in case the Revenue succeeds before the Apex Court, for revival of these petitions, the notices issued in these petitions are quashed and set aside.
In these petitions, apart from the issue of notices issued by JAO instead of FAO, all or many of the issues which were considered in Hexauxare Technologies Ltd (supra) are involved.
To the extent the issues raised in Hexaware Technologies Ltd (supra) are not covered, those are kept open to be raised at the appropriate stage.
With the liberty as noted above, all petitions stand disposed of holding in favour of assessees. There will be no order as to costs. Consequently, the interim applications also stand disposed of.
Respectfully following the decision of the Hon’ble jurisdictional High Court, we set aside the impugned notice u/s.148 of the Act and consequential orders thereof. However, in the light of the Para No.8 of the judgment of the jurisdictional High Court, we also keep open of rights and contentions of parties including liberty to approach this bench, in case, the Revenue succeeds before the Apex Court for revival of this appeal.
Order pronounced on the 18th day of July, 2025, in Chennai.