Loading judgment…
Facts
The assessee's assessment for AY 2016-17 was reopened by the Jurisdictional Assessing Officer (JAO) who issued notices under Sections 148A(b) and 148 of the Income Tax Act, 1961, based on high-value transactions. The CIT(A) sustained an addition of Rs. 22,11,800 as unexplained money under Section 69A. The assessee challenged the validity of these re-assessment proceedings, arguing that the notices were issued by the JAO without following the mandatory faceless procedure.
Held
The Tribunal held that the re-assessment notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148A(b) and 148 without following the National Faceless Assessment Scheme are invalid and liable to be quashed, relying on decisions of the jurisdictional High Court (Kankanala Ravindra Reddy and Kotha Kanthaiah cases) and its own coordinate benches. Consequently, the re-assessment order passed by the Assessing Officer was also vitiated, and the other grounds related to the merits of the addition were not adjudicated but kept open.
Key Issues
Validity of re-assessment notices issued by the Jurisdictional Assessing Officer without adhering to the National Faceless Assessment Scheme and its prescribed procedures.
Sections Cited
147, 148, 148A, 148A(b), 148A(d), 69A, 271D, 149(1)(a), 151A, 144B, 156
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the Order dated 15.09.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2016-2017.
2 ITA.No.1697/Hyd./2025 2. The assessee has raised the following grounds of appeal:
1. “The order of the Commissioner of Income-tax (Appeals), NFAC (CIT(A)) is erroneous on law and on facts of the case.
2. The Assessing Officer erred in making re-assessment u/s 147, basing on notices u/s 148A and 148 issued by the jurisdictional Assessing Officer, since, such notices and consequent re- assessment are not valid as per various judicial decisions. 2.1. The CIT(A) ought to have dismissed the re-assessment, since the re- assessment notice under Sections 148A and 148 were issued by the jurisdictional Income Tax Officer, Ward -11(1), Hyderabad without complying to the faceless procedure, which is mandatory.
2.2. The CIT(A) ought to have quashed the re-assessment made u/s 147, which is in consequence to order passed u/s 148A(d) dated 18/03/2023 and notice issued u/s 148 dated 19/03/2023, both of which were issued by the Income Tax Officer, Ward 11(1). Hyderabad and not by following the faceless procedure.
2.3. The CIT(A) ought to have following various decisions of Hon'ble High Courts and Hon'ble Supreme Court that, re-assessment made in consequence of notices issued u/s 148A or 148 is null and void, if such notices are issued by the jurisdictional officer without complying with the faceless procedure.
3. Notwithstanding to the above legal grounds, the CIT(A) grossly erred in sustaining the addition of Rs.22,11,800 as unexplained money u/s 69A, despite the evidences and explanations submitted during the assessment as well as appellate proceedings. 3.1. The CIT(A) erred in not accepting the contention of the appellant that, the amount of Rs.17,00,000 (out of total amount of Rs. 22,11,800) being the amount received from close relatives for the purpose of education VISA of 3 ITA.No.1697/Hyd./2025 appellant's son, as unexplained, evidenced the source and purpose of taking the amount.
3.2. The CIT(A) erred in not considering the undisputed fact that the amount of Rs. 17,00,000, taken from relatives, was never enjoyed by the assessee but was returned to the relatives within a short span of time, after the VISA purpose is achieved. 3.3. The CIT(A) erred in sustaining the allegation of the Assessing Officer that the amount withdrawn by the assessee is towards the petty household purpose, without any basis when the appellant submitted valid documentary evidence and circumstantial evidence to prove that such withdrawal is for the sole purpose of returning the same to the relatives who had given such money earlier for the purpose of education VISA of appellant's son. 3.4. The CIT(A) erred in not considering the fact the appellant, being a house wife, never had the capacity to earn income of Rs.17,00,000, as above, whether explained or unexplained. 3.5. The CIT(A) erred in not considering the detailed cash flow submitted by the appellant, which explained the source for the balance amount of Rs.5,11,800, which is Rs.22,11,800 cash deposited minus Rs.17,00,000 amount taken from relatives. 3.6. The CIT(A) ought to have considered that, the levy of penalty u/s 271D by the Assessing Officer evidences that the amount of Rs. 17,00,000 cannot be considered as unexplained, which is part of the total addition of Rs.22,11,800. Any 4. Any other ground that may be raised with the prior permission from the Hon'ble Tribunal during the appellate proceedings.”
In Ground nos.2 to 2.3 the assessee has challenged the validity of the notice issued u/sec.148 by the Jurisdictional Assessing Officer [in short “JAO”] and 4 ITA.No.1697/Hyd./2025 consequently, the re-assessment order on the ground that the procedure as per the National Faceless Assessment Scheme has not been followed.
We have heard the learned Authorised Representative of the Assessee as well as the learned DR and considered the relevant material on record. The learned Authorised Representative of the Assessee has relied upon the decision of this Tribunal dated 08.10.2025 in the case of Vijay Kumar Kamdar, Adilabad vs., ITO, Ward-1, Adilabad in ITA.No.618/Hyd./2025 for the assessment year 2016-2017 and submitted that an identical issue has been considered by this Tribunal and decided in favour of the assessee.
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.
5 ITA.No.1697/Hyd./2025 6. Having considered the rival submissions as well as the relevant material on record, at the outset, we note that the ITO, Ward-11(1), Hyderabad issued notice u/sec.148A(b) dated 27.02.2023 as under :
6 ITA.No.1697/Hyd./2025
Thereafter, the ITO, Ward-11(1), Hyderabad passed an Order u/sec.148A(d) dated 18.03.2023 and also issued notice u/sec.148 dated 19.03.2023 which reads as under :
7 ITA.No.1697/Hyd./2025
8 ITA.No.1697/Hyd./2025
9 ITA.No.1697/Hyd./2025 8. 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 Jurisdictional 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 :
“7. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has issued notice u/sec.148A(b) of the Act on 03.03.2023 which reads as under :
10 ITA.No.1697/Hyd./2025 7.1. Thus, it is clear that the said notice was issued by the Jurisdictional 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:
11 ITA.No.1697/Hyd./2025 12 ITA.No.1697/Hyd./2025 7.2. Thereafter, the Assessing Officer has issued notice u/sec.148 of the Act dated 23.03.2023 which reads as under :
13 ITA.No.1697/Hyd./2025 7.3. 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 Jurisdictional 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 :
“5. We have heard the Learned Authorised Representative and Learned Departmental Representative on this issue which is pending adjudication before the Hon’ble Supreme Court. Ld. AR has relied upon the judgment of Hon’ble jurisdictional High Court in the case of Kanakala Ravindra Reddy Vs. ITO 156 taxman.com 478 and submitted that the impugned reassessment order is not valid and liable to be set aside. Having considered the rival submissions as well as relevant material on record, at the outset we note that the co- ordinate bench of this Tribunal in the case of Kanakala Ravindra Reddy Vs. ITO (supra) has considered an identical issue vide order dated 04.09.2025 in para Nos.9 to 16 as under : “9. We have considered the rival submissions as well as material on record. In the case of the assessee, notice u/sec.148A(b) was issued on 14 ITA.No.1697/Hyd./2025 21.02.2023 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 :
15 ITA.No.1697/Hyd./2025 11. 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 Jurisdictional 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 jurisdictional High Court that this issue has been decided against the Revenue by various High Courts and the details of all the judgements 16 ITA.No.1697/Hyd./2025 of various High Courts are given in para 5 of the said judgement as under :
In light of various judgements of the Hon’ble High Courts, including the judgement of the jurisdictional High Court in the case of Kankanala Ravindra Reddy Vs. Income Tax Officer [2024] 156 17 ITA.No.1697/Hyd./2025 taxmann.com 478 (Gauhati), the Hon’ble High Court has held in para 13 to 19 as under :
18 ITA.No.1697/Hyd./2025 19 ITA.No.1697/Hyd./2025 20 ITA.No.1697/Hyd./2025 21 ITA.No.1697/Hyd./2025 22 ITA.No.1697/Hyd./2025 23 ITA.No.1697/Hyd./2025 24 ITA.No.1697/Hyd./2025 25 ITA.No.1697/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 Jurisdictional 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 :
26 ITA.No.1697/Hyd./2025
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 jurisdictional 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 27 ITA.No.1697/Hyd./2025 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 Jurisdictional High Court for the State of Telangana has taken a consistent view that the notice u/sec.148 of the Act by the Jurisdictional Assessing Officer is not valid and liable to be set-aside/quashed. We, therefore, by respectfully following the Judgment of Hon’ble Jurisdictional High Court for the State of Telangana as well as the decisions of this Tribunal (supra), we hold that, the notice issued by the Jurisdictional Assessing Officer u/sec.148A(b) dated 03.03.2023 as well as notice issued u/sec.148 dated 23.03.2023 are not valid and liable to be quashed. We order accordingly.
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 Jurisdictional High Court for the State of Telangana in the case of Kotha Kanthaiah, Karimnagar in WP.No.344 of 2025, dated 24.04.2025 28 ITA.No.1697/Hyd./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.
9. 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 Jurisdictional 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.
29 ITA.No.1697/Hyd./2025 10. 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 for keeping the same open, if need arises. Hence, the other issues raised by the assessee are kept open.
In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 19th day of December, 2025.