PRABHAKAR REDDY BASIREDDY, NALGONDA vs. DCIT., CENTRAL CIRCLE-1(1) , HYDERABAD

In the facts and circumstances of the case, the learned CIT(A) erred in upholding the validity of reassessment proceedings initiated under section 147 of the IT Act, without appreciating that the very notice issued under section 148 is bad in law and void ab initio.

The Ld. CIT(A) is not justified in sustaining the reopening without (a) any incriminating material relating to AY 2020-21 found in the search on 04.01.2023, and (b) appreciating the fact that the notice u/s 148 was based only on deemed information under Explanation 2(1) and not on any evidence of income 5. The learned CIT(A) is not justified in sustaining the addition of Rs 3,79,605 by estimating profit at 20% of sheep sales turnover of Rs 18,98,023, without appreciating that the appellant had actually incurred a loss in the said activity due to livestock deaths and maintenance expenses.

The appellant craves leave to add, amend, alter, or withdraw any of the above grounds at the time of hearing.”

Succinctly stated, the assessee, who is a non-filer, had not filed his original return of income for AY 2020-21. Prabhakar Reddy Basireddy vs. DCIT

Search and seizure action under section 132 of the Act was carried out in the case of the assessee on 04/01/2023. Thereafter, the AO, based on information that the income of the assessee chargeable to tax had escaped assessment, issued notice under section 148 of the Act, dated 29/11/2023. In compliance, the assessee filed his return of income on 28/02/2024 declaring an income of Rs. 3,88,570/-, and agricultural income of Rs. 1,80,400/-.

During the course of the assessment proceedings, the AO observed that in the course of the search proceedings conducted under section 132 of the Act on 04/01/2023, cash of Rs. 49,32,500/- was found from the residential premises of the assessee at New Tirumala Nagar, Nalgonda. It was observed by him that an amount of Rs. 49 lakhs was seized by the department as the assessee could not explain the source of the same. Also, the AO in the course of the assessment proceedings called upon the assessee to explain the details of the credits in his bank accounts, which aggregated to Rs. 30,11,738/-. In reply, the assessee furnished the requisite details, as under: The assessee submitted before the AO that he had, during the subject year, sold sheep for a consideration of Rs. 18,98,023/-, and the mode of receipt of sale consideration by him comprised of viz, (i) through banking channel: Rs. 17,48,023/-; and (ii) cash receipts: Rs. 1,50,000/-. Elaborating further, it was submitted by the assessee that as he had incurred a loss of Rs. 3,87,230/- on the aforesaid transactions of sale of sheep, therefore, for the said reason, he had not disclosed the said transaction in his return of income. Also, the assessee, in his attempt to substantiate his aforesaid claim, had provided certain details to the AO regarding the purchase/sale of sheep. However, the AO observed that as the assessee had failed to substantiate his aforesaid explanation based on any supporting documentary evidence, viz., bills, vouchers, etc., thus, the same could not be accepted. Accordingly, the AO estimated the income of the assessee from sheep sales @ 20% of his Prabhakar Reddy Basireddy vs. DCIT total receipts of Rs. 18,98,023/-, and made an addition of the same to his returned income. 5. Further, the AO disallowed the assessee’s claim for deduction under section 80C of the Act of Rs. 66,982/-. 6. Accordingly, the AO vide his order under section 147 of the Act, dated 26/03/2025, determined the income of the assessee at Rs. 8,35,157/-. 7. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success. 8. The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 9. We have heard the Ld. Authorised Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions 10. Sri PV Raghavendra Kumar, CA, the Learned Authorised Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the Notice U/s 148 of the Act, dated 29/11/2023 issued by the Juri ictional Assessing Officer (JAO), i.e., outside the faceless mechanism as provided under the provisions of Section 144(b) read with Section 151A and the "E- Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151A of the Act, is bad and illegal. Summing up his contention, the Ld. AR submitted that after the introduction of the "Faceless Juri iction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022", it is only the “Faceless Assessing Officer” (FAO) who can issue the notice under Section 148 of the Act and not the “Juri ictional Assessing Officer” (JAO), and the assessments are statutorily required to be as per the prescribed faceless mechanism provided under the provisions of Section 144(b) r.w Section 151A of the Act. Elaborating further on his contention, the Ld. AR submitted that as the AO had invalidly assumed juri iction and framed the impugned assessment, therefore, the same cannot be sustained and is liable to be struck down for want of a valid assumption of juri iction on his part. The Ld. AR submitted that the subject issue is squarely covered by the judgments of the Hon’ble High Court of Telangana in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others, Writ Petition Nos 25903 of 2023, dated 14.09.2023 and Kings Pride Infra Projects (P) Ltd. Vs. Deputy Commissioner of Income-tax (2025) 176 taxmann.com 704 (Telangana). Elaborating Prabhakar Reddy Basireddy vs. DCIT further on his contention, the Ld. AR submitted that the issue that as to whether or not in a case assigned to “Central Circle” the notice under Section 148 of the Act could be issued by the “Juri ictional Assessing Officer” (JAO) or it ought to have been as per the amendment carried out w.e.f 01.04.2021 in a faceless manner, has been answered by the Hon’ble Juri ictional High Court in the case of Kings Pride Infra Projects (P) Ltd. Vs. DCIT (supra). The Ld. AR submitted that the Hon’ble High Court has held that the reassessment notice under Section 148, in case assigned to “Central Circle”, cannot be issued by JAO and has to be issued in a faceless manner as per amended provisions brought in by Finance Act, 2021 w.e.f 01.04.2021. The Ld. AR had placed on record the judgment of the Hon’ble High Court in the case of Kings Pride Infra Projects (P) Ltd. Vs. DCIT and drawn our attention to the observations of the Hon’ble High Court.

Per Contra, Shri T Venkanna, the Ld. Senior Departmental Representative (for short, “Sr. DR”), fairly admitted that the issue involved in the present appeal is covered in favour of the assessee by the judgments of the Hon’ble High Court of Telangana. However, the Ld. Sr. DR submitted that as the assessee within the specified time period contemplated under sub-section (3) of Section 124 of the Act, i.e. Central Circle 1(1), Hyderabad (JAO) who had issued Notice under Section 148 of the Act, dated 29/11/2023, therefore, he was precluded from assailing the same for the first time before the Tribunal. The Ld. Sr. DR to support his contention had relied on the judgment of the Hon’ble Supreme Court in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC). The Ld. Sr. DR submitted that the Hon’ble Apex Court in its aforesaid judgment had held that as per the mandate of Section 124(3) of the Act, an assessee is precluded from questioning the juri iction of the AO, if he does not do so within 30 days of receipt of notice. The Ld. Sr. DR submitted that in the present case, the assessee as required per the mandate of Section 124(3) of the Act, had within the prescribed time period not called in question the juri iction of the ACIT, Central Circle 1(1), Hyderabad, i.e., the JAO, who had issued Notice under Section 148 of the Act, dated 29/11/2023, therefore, he cannot now be permitted to object to the same for the very first time before the Tribunal.

We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both parties regarding the validity of the order passed under Section 147 of the Act, dated 26/03/2025, based on the Notice issued under Section 148 of the Act, dated 29/11/2023, by the ACIT, Central Circle 1(1), Hyderabad (copy placed on record). 13. We shall first deal with the Ld. DR’s contention that as the assessee has within the specified time period contemplated under sub- section (3) of Section 124 of the Act, i.e., within a period of one month from the date on which the said notice was served upon him not called in question the juri iction of the ACIT, Central Circle 1(1), Hyderabad i.e., the JAO, who had issued Notice u/s 148 of the Act, dated 29/11/2023, therefore, he was precluded from assailing the same for the first time before the Tribunal. 14. Before proceeding further, it would be relevant to cull out Section 124(3) of the Act, which reads as under: "124 (1) xxxxxxxx

Having given a thoughtful consideration to the aforesaid claim of the ld. DR in the backdrop of the mandate of Sub-section (3) of Section 124 of the Act, we are unable to fathom that as to how the restriction therein contemplated, which is confined to questioning the juri iction of an Assessing Officer, can have any bearing on the claim of the present assessee before us, who has assailed the validity of the assessment order passed under Section 147 of the Act, dated 26/03/2025 by the ACIT, Central Circle- 1(1), Hyderabad, based on the Notice u/s 148 of the Act, dated 29/11/2023 issued by the said Juri ictional Assessing Officer (JAO) who inherently lacked the juri iction for issuing Notice u/s 148 of the Act. 16. Before dealing with the subject issue, we deem it apposite to look into the fabric of Section 124 of the Act. On a careful perusal of Section 124 of the Act, it transpires that the same apparently deals with the issue of "territorial juri iction" of an Assessing Officer. Ostensibly, sub- section (1) of Section 124 contemplates vesting with the AO of Prabhakar Reddy Basireddy vs. DCIT juri iction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. Sub-section (2) of Section 124 contemplates the manner in which any controversy regarding the territorial juri iction of an AO is to be resolved. Apropos sub-section (3) of Section 124 of the Act, the same places a restriction upon an assessee to call in question the juri iction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or Section 148 or sub-section (1) of Section 153A or sub-section (2) of Section 153C. To sum up, the obligation cast upon an assessee to call in question the juri iction of the A.O as per the mandate of sub-section (3) of Section 124 is confined to a case where he objects to the assumption of juri iction by the A.O, and not otherwise. 17. At this stage, we may herein refer to certain judicial pronouncements that had in the past held the field on the aforesaid issue. The Hon'ble High Court of Bombay in the case of Peter Vaz & Ors. Vs, CIT & Ors. (2021) 436 ITR 616(Bom) and the Hon'ble High Court of Gujarat in the case of Commissioner of Income-tax v. Ramesh D. Patel [2014] 42 taxmann.com 540/225 Taxman 411/362 ITR 492 (Gujarat), had held that as Section 124 of the Act pertains to territorial juri iction vested with an AO under sub-section (1) or sub- Prabhakar Reddy Basireddy vs. DCIT section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which puts a restriction on an assessee to object to the validity of the juri iction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial juri iction and have no relevance in so far his inherent juri iction for framing the assessment is concerned. Further, the Hon'ble High Court of Bombay in the case of Bansilal B. Raisoni & Sons v. Assistant Commissioner of Income Tax [2019] 101 taxmann.com 20/260 Taxman 281 (Bombay) had, inter alia, observed that the time limit for objecting to the juri iction of the Assessing Officer prescribed under sub-section (3) of Section 124 has a relation to the Assessing Officer's territorial juri iction. It was further observed that the time limit prescribed would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law and, therefore, wholly without juri iction. Also, the Hon'ble High Court of Bombay in the case of Commissioner of Income tax v. Lalitkumar Bardia [2017] 84 taxmann.com 213/[2018] 404 ITR 63 (Bombay) had addressed the contention of the department that where the assessee had not objected to the juri iction within the time prescribed under sub- section (3) of Section 124 of the Act, then, having waived its said right, it was barred from raising the issue of juri iction after having participated in the assessment proceedings. The Hon'ble High Court had observed that the waiver can only be of one's right or privilege, but non-exercise Prabhakar Reddy Basireddy vs. DCIT of the same will not bestow juri iction on a person who inherently lacks juri iction. Therefore, the principle of waiver cannot be invoked to confer juri iction on an Officer who is acting under the Act when he does not have juri iction. The Hon'ble High Court, while concluding as hereinabove, had relied on the judgment of the Hon'ble Supreme Court in the case of Kanwar Singh Saini v. High Court of Delhi (2012) 4 SCC 307. The Hon'ble Apex Court in its aforesaid judgment, had held that it is the settled legal proposition that conferment of juri iction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court. The Hon'ble Apex Court further observed that if the court passes an order or decree having no juri iction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Also, the Hon'ble Apex Court clarified that an issue can be raised at any belated stage of the proceedings, including in appeal or execution. Elaborating further, it was observed by the Hon'ble Apex Court that the finding of a court or tribunal becomes irrelevant and unenforceable and inexecutable once the forum is found to have no juri iction. It was further observed by the Hon'ble Apex Court that the acquiescence of a party equally should not be permitted to defeat the legislative animation, and the court cannot derive juri iction apart from the statute. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Kanwar Singh Saini (supra) are culled out as under: "22. There can be no dispute regarding the settled legal proposition that conferment of juri iction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no juri iction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no juri iction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive juri iction apart from the statute. (Vide United Commercial Bank Ltd v. Workmen, Nai Bahu v. Lala Ramnarayan, Natraj Studios (P) Ltd. v. Navrang Studios, Sardar Hasan Siddiqui v. STAT, A.R. Antulay v. R.S. Nayak, Union of India v. Deoki Nandan Aggarwal, Karnal Improvement Trust v. Parkash Wanti, U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., State of Gujarat v. Rajesh Kumar Chimanlal Barot, Kesar Singh v. Sadhu, Kondiba Dagadu Kadam v. Savitribai Sopan Gujar and CCE v. Flock (India) (P) Ltd.)"

We further find that the Hon'ble Supreme Court in its recent order passed in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC) has, inter alia, observed that the order passed without juri iction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. The Hon'ble Apex Court had further observed that any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the juri iction of assessment, therefore, any consequential order passed or action taken Prabhakar Reddy Basireddy vs. DCIT will be invalid and without juri iction. For the sake of clarity, the observations of the Hon'ble Apex Court are culled out as under: “30. If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. (Dr. Premachandran Keezhoth v. Chancellor, Kannur University). Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner (CIT v. Anjum M.H. Ghaswala; State of Uttar Pradesh v. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid.............

A statutory authority may lack juri iction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its juri iction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench).There cannot be any waiver of a statutory requirement or provision that goes to the root of the juri iction of assessment. (Superintendent of Taxes v. Onkarmal Nathmal Trust). An order passed without juri iction is a nullity. Any consequential order passed or action taken will also be invalid and without juri iction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT v. Kelvinator of India Ltd.)"

We shall now advert to the judgment of the Hon'ble Supreme Court, in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC), that has been relied upon by the Ld. DR to impress upon us that as the assessee in the present case before us, had, within the time allowed by the notice issued u/s 148 of the Act, dated 29/11/2023, i.e., period of 30 days, not called in question the juri iction of the ACIT, Central Circle 1(1), Hyderabad, i.e., JAO, based on which the assessment order had been passed under Section 147 of the Act, dated 26/03/2025, therefore, as per the mandate of sub-section (3) of Section 124 of the Act, he cannot in the course of present proceedings before us object to the validity of the juri iction so assumed. 20. It would be relevant to cull out the facts that were involved in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology (supra), as under: (i). assessee had in the aforesaid case challenged the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as being without juri iction; (ii). juri iction over the case of the assessee that was vested with ACIT, Corporate Circle-1(2), Bhuwaneshwar, was, after the filing of the return of income by the assessee, changed, and got vested with the Jt. CIT(O ) (Exemption), Bhuwaneshwar; (iii). it was the assessee's case that, as the juri iction to issue notice under Section 143(2) of the Act in its case was with the Jt. CIT (O )(Exemption), Bhuwaneshwar, therefore, the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar was without juri iction and, thus, liable to be quashed; Hon'ble High Court of Orissa, observing that the juri iction to issue notice u/s. 143(2) of the Act in the case of the assessee remained with the Jt. CIT(O )(Exemption), Bhuwaneshwar, therefore, held the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as having been issued without juri iction and quashed the same. 21. On Special Leave Petition (SLP) filed by the revenue, the Hon'ble Apex Court had, inter alia, observed that as the record revealed that the assessee had, participated in the assessment proceedings and not questioned the juri iction of the AO, there was no justification for the High Court to have set-aside the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar. Elaborating on the scope of Section 124(3)(a) of the Act, the Hon'ble Apex Court observed that the same precluded the assessee from questioning the juri iction of the AO if he does not do so within 30 days of receipt of notice u/s. 142(1) of the Act. 22. Before proceeding further, it would be relevant to point out that a plain reading of sub-section (3) of Section 120 of the Act reveals that the "Juri iction" vested with the Income-tax Authorities is classified into four categories, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. The assessee in the present case before us, has not assailed the vesting of Prabhakar Reddy Basireddy vs. DCIT juri iction with the ACIT, Central Circle 1(1), Hyderabad, i.e., JAO based on either of the aforesaid four categories, but has rather challenged the lack of inherent juri iction with the Juri ictional Assessing Officer (JAO), for issuing the notice under Section 148 of the Act. In our view, as after the introduction of the "Faceless Juri iction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022", it is only the FAO which can issue the notice under Section 148 of the Act and not the JAO, and the assessments are statutorily required to be as per the prescribed faceless mechanism provided under the provisions of Section 144(b) r.w Section 151A of the Act, therefore, the challenge by the assessee to the inherent lack of juri iction with the JAO to issue the notice under Section 148 of the Act will not be saved by the judgment of the Hon’ble Supreme Court in Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology (supra), which being distinguishable on facts will not assist the case of the revenue. 23. We have given thoughtful consideration on the issue of validity of the juri iction assumed for framing of the assessment vide order passed under Section 147 of the Act, dated 26/03/2025 based on the Notice issued U/s 148 of the Act, dated 29/11/2023 by the ACIT, Central Circle 1(1), Hyderabad, i.e., the “Juri ictional Assessing Officer” (JAO). 24. In our view, the issue involved in the present appeal, i.e., the validity of the assessment order passed under Section 147 of the Act, dated 26/03/2025, based on the Notice u/s 148 of the Act, dated 29/11/2023 issued by the ACIT, Central Circle 1(1), Hyderabad, i.e., the JAO, as on date is squarely covered by the Judgment of the Hon’ble High Court of Telangana in the case of Kings Pride Infra Projects (P) Ltd. Vs. Deputy Commissioner of Income-tax (2025) 176 taxmann.com 704 (Telangana). The Hon’ble Juri ictional High Court, in its aforesaid order, was seized of the following question of law: "Whether in cases assigned to "central charges" the notice issued under Section 148 of the Act could have been issued by JAO or it ought to have been as per the amendment carried out w.e.f. 01.04.2021 in a faceless manner?"

For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed.

The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very juri ictional issue. Since the impugned notices and orders are getting quashed on the point of juri iction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal (1 supra) as a one-time measure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal (1 supra)."

From the aforesaid judgment and the principles of which have been reiterated in a large number of writ petitions subsequently filed, it would be evidently clear that the view of this High Court and the ratio laid down was that on and after coming into force of the Finance Act, 2021 w.e.f. 01.04.2021, and with the introduction of the amendment to Section 148 of the Act wherein it was envisaged that the assessments have to be done by way of an automated faceless mechanism, all proceedings of assessment drawn subsequently have to be by following the same mechanism. Further, the Hon'ble Supreme Court in the case of UOI v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/ 444 ITR 1 (SC)/2022 SCC OnLine SC 543, in very categorical terms has held as under:

Following the aforesaid judgment of the Hon'ble Supreme Court in Ashish Agarwal (supra), it has been emphatically held by the Division Bench of this High Court in the case of Ravindra Reddy (supra) that there is no further dispute to be adjudicated so far as what is the mechanism which has to be applied for assessment / reassessment even if it is for assessment of previous years if the proceedings have been initiated on or after 01.04.2021. It has to be only through automated faceless mechanism and no other way.

1. Hence, the question of law as framed in the earlier paragraph of this order is "whether in the case of central charges, could the aforementioned principles of law be deviated and whether the proceedings drawn under the central charges could be by the JAO or it too has to be in a faceless manner?"

The CBDT in respect of the same had issued a notification dated 29.03.2022 in exercise of its powers under Sub-Section (1) and (2) of Section 151A of the Act and, framed a scheme, which for ready reference is reproduced hereunder:

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.

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 recomputation under section 147 of the Act, 21. Similarly, the CBDT earlier also vide order dated 06.09.2021, in exercise of its powers under Section 119 of the Act introduced certain exceptions / exclusions to Section 144B of the Act. The said order dated 06.09.2021, for ready reference is again reproduced hereunder: Section 144B(2) of the Income Tax Act, 1961 144B. Faceless Assessment: (1).

A plain reading of the aforesaid order dated 06.09.2021 conjointly with the notification dated 29.03.2022 would go to show that the CBDT has in fact carved out Prabhakar Reddy Basireddy vs. DCIT two exceptions so far as implementing the scheme of faceless assessment. Those two exceptions are (i) assessment orders in cases assigned to central charges; and (ii) assessment orders in cases assigned to international tax charges. So far as the assessment orders in cases assigned to international tax charges, recently the said exception was under challenge in a batch of writ petitions before this High Court in the case of Sri Venkataramana Reddy Patloola (supra). While deciding the said batch of writ petitions, the Hon'ble Division Bench hearing the said writ petitions took note of the order dated 06.09.2021 and notification dated 29.03.2022 and in very categorical terms held in paragraph Nos.23, 24, 27 and 29 as under:

Thus, there is no cavil of doubt that Section 144B of the Act and order of CBDT dated 06.09.2021 give exemption from following the mandatory faceless procedure only in relation to passing of assessment orders in cases of central charges and international tax charges. Any other interpretation would amount to doing violence with the language employed in the scheme/notification dated 29.03.2022, Section 144B(2) of the Act and order dated 06.09.2021. Since in our view, the plain and unambiguous language used in the scheme and order dated 06.09.2021 shows that the notice under Section 148 does not fall within the 'exception', the judgments cited by the learned Senior Standing Counsel for Income Tax Department are of no assistance. The Taxpayer is nowhere distinguished between NRIs and Indian Citizens. The notice issued under Section 148 must comply with the requirement of the Scheme whether or not the Taxpayer is NRI/Indian Citizen. Thus, the second limb of argument of the learned Senior Standing Counsel for Income Tax Department deserves to be rejected.

We are in respectful agreement with the view taken by the Bombay High Court and are of the opinion that the aforesaid underlined expression used in clause 3(b) of the scheme dated 29.03.2022 does not preclude the mandatory faceless procedure for issuance of notice under Section 148 of the Act. Any other interpretation, in our humble view, will not only cause violence to the language used, but will also defeat the object for which a transparent 'faceless procedure' was introduced. Hence, we are unable to persuade ourselves to accept a different meaning than the literal meaning flowing and conveyed from the provisions.

In view of foregoing analysis, it is clear that the respondents have erred in not following the mandatory faceless procedure as prescribed in the scheme dated 29.03.2022. Since notices under Section 148 of the Act were not issued in a faceless manner, the entire further proceeding founded upon it and assessment orders stand vitiated. Thus, the impugned notices under Section 148 of the Act and all consequential assessment orders based thereupon are set Prabhakar Reddy Basireddy vs. DCIT aside. Liberty is reserved to the respondents to proceed against the petitioners in accordance with law."

A plain reading of paragraph Nos.23 and 24 would make the picture very clear so far as the fact that even though the batch of writ petitions in the case Sri Venkataramana Reddy Patloola (supra) were primarily pertaining to assessment orders in cases assigned to international tax charges, but the Division Bench has also dealt with the aspect of the assessment orders in cases assigned to central charges as well holding that it would not make any difference whether it is cases assigned to central charges or cases assigned to international tax charges. What was held was that, once when the statute substantially mandate having the assessment proceedings drawn through automated scheme allocation in a faceless manner, subsequently there does not seem to be any exceptions carved out permitting the JAO to issue proceedings under Section 148 of the Act.

In view of the said view expressed by the Division Bench of this High Court in the case of Sri Venkataramana Reddy Patloola (supra), we are of the considered opinion that, if at all if we accept the analogy canvassed by the Income Tax Department, that by itself would be diluting the mandate of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra) and at the same time it would also water down the series of writ petitions where the proceedings were issued by JAO and this High Court while allowing the writ petitions had set aside those proceedings.

The entire basis of the learned Additional Solicitor General seems to be the judgment of the Delhi High Court in the case of T.K.S. Builders (P.) Ltd. (supra). However, since there is an authoritative decision on the said issue by this very High Court, the judicial propriety requires for this Bench to honor the view taken by the Division Bench of this High Court itself.

The Hon'ble Supreme Court in the case of CIT v. G.M. Mittal Stainless Steel (P.) Ltd. [2003] 130 Taxman 67/263 ITR 255 (SC)/2003 11 Supreme Court Cases 441, dealing with an issue of not following the judgment of the juri ictional High Court, held at paragraph No.9 as under:

Apart from the effect of judicial propriety, we are of the considered opinion that plain reading of the judgment of the Hon'ble Supreme Court in the case of Ashish 28. So far as the ground raised by the learned Additional Solicitor General that unless the notices in cases pertaining to central charges are issued by JAO it would be difficult to enforce the requirement as is otherwise required under Section 153D of the Act is concerned, we need to look into the provisions of Section 153D as to what it speaks for. For ready reference, the relevant portion of Section 153D is reproduced hereunder:

Section 153A of the Act speaks of how assessment in a case of search and seizure or requisition is to be made. For ready reference, the relevant portion of Section 153A is also reproduced hereunder:

In view of the same, we are of the considered opinion that the present batch of writ petitions also deserve to be and are accordingly allowed quashing the impugned orders under challenge as they are in violation of the provisions enacted by way of Finance Act, 2021 which came into force w.e.f. 01.04.2021. Accordingly, we hold that the question of law framed, as to "whether in cases assigned to central charges and the notices issued therein for reassessment could be issued by the JAO or it has to be in a faceless manner" stands decided in favour of the petitioners holding that it can be in a faceless manner alone and the question of law thus stands answered against the Revenue. No costs.

As a sequel, miscellaneous petitions pending if any, shall stand closed.”

We, thus, respectfully follow the aforesaid judgment of the Hon’ble Juri ictional High Court in the case of King Pride Infra Projects (P) Ltd. Vs. Deputy Commissioner of Income-tax (2025) 176 taxmann.com 704 (Telangana), and on the same terms hold the impugned notice issued U/sec. 148 of the Act, dated 29/11/2023 by ACIT, Central Circle-1(1), Hyderabad, i.e., outside the faceless mechanism as provided in Section 144(b) r.w Section 151A and the "E- Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151A of the Act, as bad and illegal. Consequent thereto, we herein set aside the order passed by the CIT(A), and quash the impugned assessment order passed by the ACIT, Central Circle-1(1), Hyderabad under Prabhakar Reddy Basireddy vs. DCIT

As the facts and the issue involved in the present appeal remain the same as are involved in the appeal of the assessee for the AY 2020-21, i.e., ITA No.1591/Hyd/2025, therefore, the order therein passed shall apply mutatis mutandis for the purpose of disposing of the present appeal. 32. Accordingly, we in terms of our observations recorded while disposing off the assessee’s appeal for AY 2020-21 in ITA No. 1591/Hyd/2025, set aside the order passed by the CIT(A), and quash the impugned assessment order passed by the ACIT, Central Circle- 1(1), Hyderabad under Section 147 of the Act, dated 26/03/2025, for want of a valid assumption of juri iction on his part. 33. In the result, both the appeals filed by the assessee in ITA Nos. 1591/Hyd/2025 and 1592/Hyd/2025 for AY 2020-21 & AY 2022-23 are allowed in terms of our aforesaid observations. S - (मधुसूदन सावͫडया) (MADHUSUDAN SAWDIA) लेखासदèय/ACCOUNTANT MEMBER (रवीश सूद) (RAVISH SOOD) ÛयाǓयकसदèय/JUDICIAL MEMBER d/- d Hyderabad, dated 24.12.2025. *OKK/sps

Ǔनधा[ǐरती/The Assessee : Prabhakar Reddy Basireddy, C/o. CA PV Raghavendra Kumar, Sowbhagya Avenue Apts, 4th Floor, 402, Ashok Nagar, Street No.1, Hyderabad. 2. राजèव/ The Revenue : Dy. Commissioner of Income Tax, Central Circle- 1(1), Aayakar Bhavan, Opposite LB Stadium, Basheerbagh, Hyderabad. 3. The Principal Commissioner of Income Tax, Central Circle, Hyderabad. 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण /DR,ITAT, Hyderabad. 5. The Commissioner of Income Tax 6. गाड[फ़ाईल / Guard file