KARTHIK KUMAR KYATHAM,NIZAMABAD vs. ITO, WARD-1, ADILABAD

The assessee has raised the following grounds of appeal : 1. “The order of appeal passed by the Ld. CIT(A) u/s 250 of the Act dt. 29.09.2025 is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant. 2. The Ld. CIT(A) erred in dismissing the appeal, without admitting the appeal for adjudication on the reason of belated filing. 3. The Ld. CTT(A) erred in not condoning the delay of 37 days in filing the appeal before him, without appreciating that the appellant has reasonable and sufficient cause for such delay in filing of the appeal.

The Ld. CIT(A) ought to have admitted and heard the appeal on the basis of merits, rather than dismissing the appeal without appreciating that the delay is due to reasons that are beyond the control of the appellant. 5. The Ld. CIT(A) has erred in rejecting the appeal on the technical reason of delay in filing, which amounts to denial of justice to the appellant on the technical and curable delay in seeking justice.

The Ld. CIT(A) ought to have appreciated that the AO erred in reopening assessment without there being any tangible material in his possession. Therefore, impugned assessment order passed by the A.O is without juri iction and hence liable to be quashed.

The Ld. CIT(A) ought to have appreciate that the A.O. erred in reopening the assessment under section 147 of the Act and issuing notice under section 148 of the Act, without having reasonable satisfaction or bonafide belief on his part to show that the assessees actual income has escaped assessment.

The Ld. CIT(A) erred in considering the fact that the Ld. AO inadvertently invoked the provisions u/s 147 of the Act for the assessment year is invalid as there is no new tangible material found that income chargeable to tax has escaped assessment.

The Ld. CIT(A) sought to have fairly appreciated the position of law on the issue that when notice issued u/s 148 is invalid, the consequential assessment order passed based on the invalid notice itself, is not valid and is liable to be quashed.

The Ld. CIT(A) erred in reopening the assessment without considering the fact there was no failure on part of assessee to disclose fully and truly the income of the assessee to say that there is escapement of income to tax.

The Ld. CTI(A) ought to have appreciated the fact that, as per section 151A of the Act, the Ld. JAO Ward- (1) has no juri iction to issue notice u/s 148 and such notice has to be issued only by the NFAC.

The Ld. CIT(A) erred in passing the order without giving proper reasonable opportunity of being heard to the assessee, which is incorrect and bad in law.

The Ld. CIT(A) erred in considering the fact that, the Ld. AO inadvertently has made addition under section 69 of the Act amounting to Rs. 2,62,000/- without considering the submissions made by the assessee.

The Ld. CIT(A) deleted. 14 The Ld. CIT(A) erred in confirming the addition made by the A.O amounting to Rs.23,171/- by disallowing the claim of deduction under chapter VI A.

The Ld. CIT(A) erred in confirming the addition made by the A.O amounting to Rs.30,675/- by disallowing the claim of loss from house property u/s 24(b) of the Income Tax Act, 1961. 16. The Ld. CIT(A) erred in confirming the addition as made by A.O of Rs.13,024/- as interest income under the head income from other sources.

Appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.”

The assessee is an individual and has filed his return of income for the assessment year 2020-2021 on 20.08.2020, declaring total income of Rs.4,88,850/-. As per the information available on PAN database of the assessee,

Aggrieved by the Order of the learned CIT(A), the assessee is in appeal before the Tribunal.

In Ground no.11, the assessee has challenged the validity of the notice issued by the JAO, Ward-(1), Adilabad and consequently, the re-assessment order on the ground that the procedure as per the National Faceless Assessment Scheme has not been followed. In support of this contention,

On the other hand, the learned DR has relied upon the Orders of the authorities below and submitted that the issue is pending adjudication before the Hon’ble Supreme Court in the case of Hexaware Technology Ltd., in the SLP filed by the Department against the Judgment of Hon’ble High Court of Bombay and, therefore, the same may be kept in abeyance till the outcome of the SLP filed by the Department before the Hon’ble Supreme Court.

We have heard the learned Authorised Representative of the Assessee as well as the learned DR and considered the relevant material on record. At the outset, we

Thereafter, the ITO, Ward-1, Adilabad passed an Order u/sec.148A(d) dated 23.03.2024 and also issued notice u/sec.148 dated 23.03.2024 which reads as under :

Thus, it is clear that the notice issued u/sec.148A(b), Order u/sec.148A(d) and notice u/sec.148 for reopening of the assessment were issued by the Juri ictional Assessing Officer, without following the procedure as per the National Faceless Assessment Scheme. An identical issue has been considered by this Bench of Hyderabad Tribunal in the case of Vijay Kumar Kamdar, Adilabad vs., ITO, Ward-1, Adilabad (supra) in Para Nos.7 to 9 as under :

1. Thus, it is clear that the said notice was issued by the Juri ictional Assessing Officer. Thereafter, the Assessing Officer passed an order u/sec.148A(d) dated 22.03.2023 by holding that “he has satisfied that it is a fit case for issue of notice u/sec.148 of the Act”. The same is reproduced as under:

2. Thereafter, the Assessing Officer has issued notice u/sec.148 of the Act dated 23.03.2023 which reads as under :

3. It is manifest from the above notice as well as the Order u/sec.148A(d) of the Act that these proceedings were conducted by the Juri ictional Assessing Officer and not in the Faceless manner as prescribed under the Income Tax Act. At the outset, we note that an identical issue has been considered by the Coordinate Bench of ITAT, Hyderabad in the case of M/s. Pitti Holdings Pvt. Ltd., Hyderabad vs., ACIT, Central Circle-1(1), Hyderabad in ITA.No.450/Hyd./ 2025 for the assessment year 2018-2019 vide Order even date wherein the Tribunal in paras 5 to 5.2 of it’s Order held as under :

02.2023 by JAO. For ready reference, the same is reproduced as under :

Thereafter, the AO also passed an order u/s 148A(d) on 29.03.2023, wherein, the AO has recorded that, despite sufficient time allowed to the assessee in accordance with the provisions of section 148A(b) for compliance to the show cause notice dated 21.02.2023, there is no compliance on behalf of the assessee to the said show cause notice. The AO decided that it is a fit case for issue of notice u/s 148 of the Act and consequently notice u/s 148 was issued on 30.03.2023 as under :

Undisputedly, the show cause notice u/s 148A(b) as well as notice u/s 148 were issued by the JAO and not by the faceless Assessing Officer. At the outset, we note that the Hon’ble Juri ictional High Court has considered an identical issue in assessee's own case for the immediate preceding assessment year i.e. 2015-16 vide judgement dated 24.04.2025 in W.P.No.344 of 2025 and has recorded the issue involved in the said petition in para 4 of the said judgement as under :

It was further noted by the Hon’ble juri ictional High Court that this issue has been decided against the Revenue by various High Courts and the details of all the judgements of various High Courts are given in para 5 of the said judgement as under: “5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e.. by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA', Punjab and Haryana High Court in the case of JATINDER SINGH INCOME TAX OFFICER, WARD 3(3)(5)", Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIA", Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitions" which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of 20 ITA.No.1658/Hyd./2025

In light of various judgements of the Hon’ble High Courts, including the judgement of the juri ictional High Court in the case of Kankanala Ravindra Reddy Vs. Income Tax Officer [2024] 156 taxmann.com 478 (Gauhati), the Hon’ble High Court has held in para 13 to 19 as under: “13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in n faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized of or, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes.

In the case of BANK OF INDIA vs. ASSISTAN COMMISSIONER, INCOME TAX", on an issue whether it was justifiable on the part of the Income Tax Department in no following an order passed by the adjudicating authority only on the ground that the appeals are pending,

We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made

What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the Finance Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.

In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter.

So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 36, 37 and 38 of the order which, for ready reference, is reproduced hereunder:

The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very juri ictional issue. Since the 26 ITA.No.1658/Hyd./2025

Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, 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, supra.”

We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue.

Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of juri iction is concerned. As a 27 ITA.No.1658/Hyd./2025

Thus, it is clear that the issue raised by the assessee in the present appeal is now covered by the decision of Hon’ble Juri ictional High Court in the assessee’s own case for the A.Y.2016-17. As regards the contention of the Ld.DR that no such issue was raised by the assessee before the authorities below, we find from the Grounds of Appeal raised before the CIT(A) that the assessee had raised this issue in ground No.2 to 5 as under : “2. On the facts and in the circumstances of the case and in law, the Juri ictional Assessing Officer erred by initiating proceedings u/s 147 of the Act, simply relied on the SFT information shown in the verification module of Insight Portal at the time of reopening, however, either no information gathered or not conducted any Inquiry further in order to form an honest, and a reasonable belief that certain income had escaped assessment in the case of the appellant, As such, said proceedings and the consequent order ought to be declared full and void-ab- Initio.

On the facts and in the circumstances of the case and in law, the Juri ictional Assessing Officer erred in the proceedings Initiated u/s 147 of the Act without following due procedure prescribed by CBDT vide Instruction No F.No.299/ 10/2022- Dir(Inv.1)/647 dt., 22.08.2022 and accordingly the said proceedings and the consequent order ought to be declared null and void ab initio.”

In view of the facts emanating from the record, we find that the assessee has duly raised this issue before the CIT(A) and therefore, the contention raised by the Ld.DR is devoid of any merit. Accordingly, the show cause notice issued u/s 148A(b) dated 21.02.2023 as well as notice issued u/s 148 dated 30.03.2023 by the JAO are not valid and liable to be quashed. We order accordingly.

However, since the matter is pending adjudication before the Hon’ble Supreme Court and Hon’ble High Court has also given the liberty to the parties to move an appropriate petition, seeking revival of W.P. in light of judgement of Hon’ble Supreme Court on this very issue, we also grant liberty to the parties to get this appeal revived, if, in case the judgement of the Hon’ble Supreme Court on this issue necessitate to modify this order.” 5.1. In the case in hand it is not disputed that the notice u/s. 148 of the Act was issued by the JAO and not by the Faceless Assessing Officer. By following the judgment of Hon’ble juri ictional High Court in the case of Kotha Kanthaiah dated 24.04.2025 in Writ Petition No.344 of 2025 as well as the decision of co-ordinate bench of this Tribunal (supra), we hold that the notice issued u/s. 148A(b) of the Act as well as the decision of co-ordinate bench as well as u/s. 148 of the Act in the case of the assessee by the JAO are not valid and liable to be set aside. We order accordingly. 5.2. Since the matter is pending adjudication before the Hon'ble Supreme Court and the Hon'ble High Court in the case of Kotha Kanthaiah (supra) has also given the liberty to the parties to move an appropriate petition seeking revival of the petition in the light of judgement of Hon'ble Supreme Court on this very issue, therefore, we grant the liberty to the parties to get this appeal revived, if judgment of Hon'ble Supreme Court on this issue necessitate to modify this order. 7.4. Thus, it is clear that the Hon’ble Juri ictional High Court for the State of Telangana has taken a consistent view that the notice u/sec.148 of the Act by the Juri ictional Assessing Officer is not valid and liable to be set-aside/quashed. We, therefore, by respectfully following

Further, since the issue is pending for adjudication before the Hon’ble Supreme Court in the SLP filed by the Department in the case of Hexaware Technology Ltd., against the Judgment of Hon’ble High Court of Bombay and the Order of Hon’ble Juri ictional High Court for the State of Telangana in the case of Kotha Kanthaiah, Karimnagar in WP.No.344 of 2025, dated 24.04.2025 (supra) has also given the liberty to the parties to move an appropriate petition seeking revival of the petition in light of Judgment of Hon’ble Supreme Court in the case of Hexaware Technology Ltd., (supra) on this issue. Therefore, we grant liberty to the parties to get this appeal revived, if the Judgment of Hon’ble Supreme Court on this issue necessitates to modify this Order. Accordingly, grounds of appeal nos.2 to 6 are allowed.

Since we have quashed the notice issued u/sec.148 of the Act and consequently, vitiates the re- assessment order passed by the Assessing Officer. Therefore, we do not propose to adjudicate the other grounds of appeal raised by the assessee on the merits of the additions.”

Respectfully following the Judgment of Hon’ble Juri ictional High Court as relied upon by this Tribunal in the earlier Order (supra) as well as to maintain rule of consistency, we decide this issue in favour of the assessee by holding that the notice issued u/sec.148 of the Act by the JAO without following the procedure provided under National Faceless Assessment Scheme is invalid and liable to be quashed. We Order accordingly.

Since the matter is pending adjudication before the Hon’ble Supreme Court in the case of Hexaware Technology Ltd., therefore, the parties are at liberty to get this appeal revived as per the outcome of the SLP on the same issue pending adjudication before the Hon’ble Supreme Court. Since, we have quashed the notice issued u/sec.148 of the Act, it also vitiates the re-assessment order passed by the Assessing Officer, therefore, we do not propose to other grounds which are also not pressed by the learned Authorised Representative of the Assessee at this stage and prayed

In the result, appeal of the Assessee is allowed.

Karthik Kumar Kyatham, 5-11/1, Bussapoor, BALKONDA, Nizamabad – 503 218. Telangana. 2. The Income Tax Officer, Ward-1, Adilabad – 504 001. 3. The Pr. CIT, Hyderabad. 4. The DR, ITAT, “SMC” Bench, Hyderabad. 5. Guard file.