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Facts
The assessee's case was reopened under Section 147 due to undisclosed capital gains from an immovable property transaction, leading to a significant addition. The assessee challenged the assessment on additional legal grounds, arguing that the notices for reassessment were issued in a faceless manner before the effective date of the relevant notification.
Held
The Tribunal, relying on a precedent (Nabiul Industrial Metal Pvt. Ltd. vs. ITO), held that the notification enabling faceless assessments under Section 151A came into effect on 29.03.2022. As the notices for reassessment (Section 142(1) and show-cause notice) were issued prior to this date, they were deemed invalid and without jurisdiction, rendering the subsequent assessment order null and void.
Key Issues
The primary issue was the jurisdictional validity of reassessment notices issued in a faceless manner under Sections 147 and 148 before the operational date (29.03.2022) of the notification for the eAssessment of Income Escaping Assessment Scheme under Section 151A.
Sections Cited
250, 147, 148, 143(2), 282, 127, 151A, 144B, 142(1), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: October 27, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
1. This appeal filed by the assessee is directed against the order dated 01.07.2025 of the National Faceless Appeal Centre [‘CIT(A)’] passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
2. Brief facts of the case of the assessee are that the assessee filed return of income for the assessment year under consideration declaring business income of Rs.113194 and income from other sources of Rs.463649/-. The case of the assessee was reopened u/s 147 of the Act as it appears that the assessee has not shown any income under the head capital gain and further found that the assessee has entered into an immovable property transaction during the financial year 2012-13 and that has not been discussed by him in the ITR. After due approval of the competent authority, notice u/s 148 of the Act was issued on Tatun Guha 31.03.2021. Notice u/s 143(2) of the Act had also issued on 11.08.21 and further a show-cause notice cum draft assessment order proposing addition of Rs.2,63,44,488/- on account of capital gain was issued on 24.03.2022. The Assessing Officer did not accept the submission of the assessee being tenable and made an addition of Rs.2,63,44,488/- in the total income of the assessee.
3. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) wherein the appeal of the assessee has been dismissed.
Being aggrieved and dissatisfied, the assessee preferred appeal before us. The ld. AR challenges the very impugned order by taking several grounds in the memo of appeal but during the course of hearing, he took additional ground by filing a petition being the legal ground and prayed that the additional ground may be taken for hearing first. The additional ground taken by the assessee are as follows:
“Additional Ground: (A). For that in assessing the appellant, the Ld. A.O had signed the notice u/s 148 of the Income Tax Act, 1961 on 31.03.2021 and had placed the same against the PAN of the appellant at IT portal. The Ld. A.O had not issued the same to the appellant within the period of limitation of 31.3.2021 in the manner as prescribed in section 282 of the Income Tax Act, 1961 and Rule 127 Income Tax Rules, 1962". (B). For that the Ld. AO has not issued notice u/s.143(2) in prescribed format as per CBDT Instruction F. No. 225/157/2017/ITA II, dated 23.06.2017. Hence, the notice u/s.143(2) issued by the Ld. AO was bad in law and the assessment order of the Ld. AO should be quashed. (C). For that the Ld. AO, NFAC did not have any jurisdiction to issue notices in re-assessment cases u/s.147 of the Act before 29.03.2022, Hence, National faceless Assessment Centre (NFAC) erred in having assumed jurisdiction under section 151A, read with section 144B of the Income Tax Act, 1961 from 14.12.2021 when they were not empowered under any Notification under section 151A about the applicability of the faceless scheme for making income escaping assessment in faceless manner prior to 29.3.2022.”
Tatun Guha 4.1 The ld. AR has cited decision with regard to the third ground being addition ground which are as follows:
Nabiul Industrial Metal Pvt. Ltd. vs. ITO, NFAC, dated 15.10.2024 and
2. Md Mahimud SK vs. ITO, & 2229/Kol/2024 dated 04.03.2025 4.2 The ld. AR submits that the Assessing Officer and ld. CIT(A) did not have any jurisdiction to issue notice in reassessment case u/s 147 prior to 29.03.2022 in faceless manner, hence the NFAC erred in having jurisdiction u/s 151A r.w.s. 144B of the Act and they have not empowered under any notification prior to 29.03.2022.
The ld. DR supports the impugned order and submit that the ld. AR did not raise this issue before the Assessing Officer or the ld. CIT(A).
Upon hearing the submissions of the counsels of the respective parties, we have perused impugned order and find that in the present case, notice u/s 142(1) was issued on 14.12.2021 and show-cause notice was also issued on 24.03.2022 in faceless manner. We have gone through the order passed by this Coordinate bench in Nabiul Industrial Metal Pvt. Ltd. vs. ITO (supra) and find that notification with respect to section 151A has been made w.e.f. 29.03.2022, the relevant portion of the order is reproduced hereinbelow:
“2. We have perused the records and the papers filed by the assessee. It appears that Notification with respect to Section 151A of the Act has been made with effect from 29.03.2022 which is as under: “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. Short title and commencement.—(1) This Scheme may be called the eAssessment of Income Escaping Assessment Scheme, 2022. 3 Tatun Guha (2) It shall come into force with effect from the date of its publication in the Official Gazette.
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.
Scope of the Scheme.—For the purpose of this Scheme,— (a) assessment, reassessment or re-computation 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.” 2.1. We have also gone through the notice u/s 142(1) of the Act dated 29.11.2021 which is as follows: 2.2. We further find the show cause notice issued that also reflects the date 28.03.2022 which is as follows: 2.3. It appears from the show cause notice issued on 28.03.2022 that at the bottom of the page it was digitally signed thereby giving date 29.03.2022 at 00:20:37 IST. 2.4. We further find that in the show cause notice the assessee has been directed to furnish explanation on or before 29.03.2022. It is surprising that when it was issued on 29.03.2022 at 00:20:37 IST and directed the assessee to explain the explanation before 29.03.2022.
3. Keeping in view the entire facts and discussions made above, we find substance in the argument of the ld. CIT(A) that assumption of jurisdiction prior to 29.03.2022 by the ld. AO is to be held to be without jurisdiction. Accordingly, the assessment order, passed, is to be deemed without jurisdiction. Subsequently, all the orders passed are hereby held to be without jurisdiction.
Tatun Guha 7. We have already discussed that in the present case, notice u/s 143(1) was issued on 14.12.2021 and show-cause notice was also issued on 24.03.2022 in faceless manner i.e. prior to 29.03.2022, before the date of effect of the notification. Considering the above facts, we are of the view that notices issued prior to notification is invalid in law. Accordingly, the orders passed on the issuance of invalid notice are also to be held without jurisdiction. The appeal of the assessee is allowed on this legal issue. Since, we have already allowed the appeal on legal issue, hence it is needless to discuss other issue raised by the assessee.
In the result, the appeal filed by the assessee is allowed.
Kolkata, the 27th October, 2025.