VENKATA RAMANAMMA SAKAMURI,MARRIPADU, NELLORE vs. ITO., WARD-1, NELLORE

PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 31/12/2024, which in turn arises from the order passed by the Assessment Unit, Income tax Department, i.e., Faceless Assessing Officer (“FAO”)Assessing Officer (for short, “AO”) under Section 144 r.w.s 147 r.w.s 144B of the Income-tax Act, 1961 (for short, “Act”), dated 19/02/2024 for the Assessment Year 2019- 20. The assessee has assailed the impugned order on the following grounds of appeal before us: 1. “The learned Commissioner of Income Tax (Appeals), NFAC, is not justified in holding that the juri ictional Assessing Officer has concurrent juri iction and therefore, the notices issued u/s 148A(b), order u/s 148A(d) and notice u/s 148 are valid. 2. The learned Commissioner of Income Tax (Appeals) NFAC, is not justified in not following the decisions of the Juri ictional High Court and also the decisions of several other High Courts, which are in favour of the assessee. 3. The Id First Appellate Authority failed to appreciate that the juri ictional Assessing Officer (ITO, Ward-1, Nellore) has no juri iction to issue notices u/s 148A(b), order u/s 148A(d) and Notice u/s 148, as per the CBDT's Notification dated 29-02-2022; and hence, the Assessment order passed based on such illegal notices is invalid. 4. a) The learned Comfnissioner of Income Tax (Appeals), NFAC, in the facts and circumstances of the case, is not justified in confirming the addition of Rs.3,96,89,476/- ignoring the appellant's claim that the credits in the bank accounts represent the sale proceeds in liquor business as evidenced by Form 26AS and fuel station and hence only Profit element is taxable income. b) The Id First Appellate Authority is not justified in sustaining the addition of Rs.9,98,180/- being cash withdrawals from Banks out of credits representing business receipts taxed separately c)The Id First Appellate Authority is not justified in sustaing the addition of Rs. 28,18,631/- being the income estimated by Assessing Officer @ 10% separately on payments of Rs 2,81,86,311/- to Prohibition and excise as appearing in 26As, ignoring the fact that sale proceeds of such purchase of liquor credited in Bank were taxed entirely separately. d) The Id First Appellate Authority failed to appreciate the fact that action of the Assessing Officer having treated as income, the entire credits in Bank being the business turnover, making separate addition for withdrawals and estimate of business income amounts to double addition and unjustified. 5. The appellant prays leave to add or amend or alter any of the grounds at the time of hearing of appeal.”

constrained to frame the assessment to the best of his judgment under section 144 of the Act.

5
9. Sri K.A. Sai Prasad, CA, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the AO had grossly erred in law and facts of the case in wrongly assuming juri iction and framing the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 19/02/2024. Elaborating on his contention, the Ld. AR submitted that both the impugned order passed under Section 148A(d) of the Act, dated 31/03/2023 and Notice under Section 148 of the Act, dated
31/03/2023 issued by the Juri ictional Assessing Officer (JAO), i.e.,

ITO, Ward 1, Nellore, being 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, are 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 judgment of the Hon’ble Juri ictional High
Court of Andhra Pradesh in the case of Mr. Kishan Kumar Thotakura
& Ors. Vs. The Assistant Commissioner of Income-tax, Writ
Petition No. 14681/2023 & Ors, dated 28.10.2025 and that 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. 12. Per Contra, the Ld. Senior Departmental Representative (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. within a period of one month from the date on which the said notice was served upon him had not called in question the juri iction of the ITO,
Ward-1, Nellore (JAO) who had issued Notice under Section 148 of the Act, dated 31/03/2023, therefore, he was precluded from assailing the same for the first time before the Tribunal. The Ld. Sr. DR to support her 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 ITO, Ward-1, Nellore i.e., the JAO, who had issued Notice under Section 148 of the Act, dated 31/03/2023, therefore, he cannot now be permitted to object to the same for the very first time before the Tribunal.

(2) xxxxxxx
(3) No person shall be entitled to call in question the juri iction of an Assessing Officer—

(a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under subsection (1) of section 142 or sub-section (2) of section 115WE or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier;

(b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or subsection (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier;

(c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub- section (2) of section 153C or after the completion of the assessment, whichever is earlier.”

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.

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 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.)"

(emphasis supplied by us)

exercise of power by statutory authorities inconsistent with the statutory prescription is invalid.............
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32. 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.)"

(emphasis supplied by us)

(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;

(iv).
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.

Pradesh in the case of Mr. Kishan Kumar Thotakura & Ors. Vs. The Assistant
Commissioner of Income-tax,
Writ
Petition
No.
14681/2023 & Ors, dated 28.10.2025. The Hon’ble High Court in its aforesaid order had held that after the formulation of the "e-Assessment of Income Escaping Assessment Scheme, 2022", the notice under Section 148 of the Act can only be issued by the FAO and not by the JAO. For the sake of clarity, the observations of the Hon’ble High
Court are culled out as under:

“7. Discussion and findings:
(A). The Division Bench of the Bombay High Court in the case of Prakash
Pandurang Patil Vs. Income Tax Officer, Ward 5, Panvel & Others by following the judgment of a Division Bench of the High Court of Bombay, in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors 1 had considered the effect and interpretation of the Section 151 (A) of the Income Tax as extracted herein under:

"3. It is apparent that the impugned notice dated 5 April, 2022 issued under Section 148 of the Act and the order of the same date under Section 148A(d) of the Act are issued by the Juri ictional
Assessing Officer ("JAO") and not under the mandatory faceless mechanism as per the provisions of Section 151A of the Act. For a notice to be validly issued under Section 148 of the Act, the respondent No.2 would be required to comply with the provisions of Section 151A of the Act, so as to adhere to the faceless mechanism, as notified by the Central Government by notification dated 29 March 2022. A Division Bench of this Court in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors 2 had considered the effect and interpretation of the said provision. The relevant extract of the said decision reads thus:-

first two lines below clause 3(b) would be otiose, as it deals with the aspect of issuance of notice under Section 148 of the Act. Respondents, being an authority subordinate to the CBDT, and which has been laid before both
House of Parliament is partly otiose and inapplicable....."
37. When an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law.
Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice.
4. It is hence apparent that in the present case, the impugned order and the notices issued by respondent no.1 are not in compliance with the Scheme notified by the Central Government implementing the provisions of Section 151A of the Act. The Scheme, as tabled before the Parliament as per the requirements of the said provision, is in the nature of a subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. Thus, in view of the explicit declaration of the law in Hexaware Technologies Limited (supra), the grievance of the petitioner- assessee insofar as it relates to an invalid issuance of the impugned order and the notice is required to be accepted.
5. Learned Counsel for the parties agree that in this view of the matter, the proceedings initiated under Section 148 of the Act would not be sustainable and are rendered invalid in view of the judgment rendered in Hexaware
Technologies Limited (supra)." (B). Further, it is very apt to refer the judgment of the High Court of Telangana in the case of Kanakanala Ravindra Reddy
Vs. Income Tax Officer 3 , decided on 14.09.2023 whereby a batch of Writ
Petitions were allowed and the proceedings initiated under Section 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notification 18/2022 dated 29.03.2022. (C). It is also to be noted that the same issue had also been decided by various High Courts in India i.e., Gauhati High Court in the case of Ram taxmann.com 478 (Gauhati) (2024) 165 taxmann.com 115(Punjab &
Ward 5 Panvel & Ors in S.L.P.(Civil) Diary No.39689/2025, dated 18.08.2025, wherein, the Bombay High Court has allowed the said Writ Petition by following the judgment of the Division Bench of the Bombay High Court in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. In view of the above factual position, we are of the considered view that the issue involved in the present batch of Writ Petitions is no more res integra.
(E). Considering the background in notifying the (E-Assessment Scheme of Income Escaping Assessment Scheme, 2022) notified by the Government of India on 29.03.2022, and in the light of the decisions of various High Courts stated supra and upon careful consideration of the contentions raised by the learned counsel appearing on either side, we hold that the impugned notices and orders which have been issued by the Juri ictional Assessing Officer, or outside the faceless mechanism as provided under the provisions of Section 144 (b) read with Section 151 A and the "E-Assessment Scheme of Income
Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151 A, is bad and illegal. It is made clear that the Juri ictional Assessing Officer ("JAO") had no juri iction to issue the impugned orders/notices.
(F). In view of the foregoing reasons, all these Writ Petitions are to be allowed in favour of the petitioners, by setting aside the impugned notices/orders.
8. Accordingly, these Writ Petitions are allowed.
(i) Consequently, the impugned notices/orders issued under Sections 148-
A(b), 148-A(d) and 148 of the Income Tax Act, 1961, in all these Writ
Petitions, are hereby set-aside.
(ii) The consequential orders, if any, shall stand set-aside.
9. There shall be no order as to costs.
As a sequel, miscellaneous petitions pending, if any, shall stand closed.”

We, thus, respectfully follow the judgment of the Hon’ble Juri ictional
High Court in the case of Mr. Kishan Kumar Thotakura & Ors. Vs. The 23

Assistant Commissioner of Income-tax (supra), and on the same terms hold the impugned orders and notices issued by the Juri ictional
Assessing Officer (JAO), 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 Assessment Unit, Income-tax Department, i.e., FAO under Section 147 r.w.s 144 r.w.s 144B of the Act, dated 19/02/2024, for want of a valid assumption of juri iction on his part.

147 r.w.s 144 r.w.s 144B of the Act, dated 19/02/2024, is quashed for lack of valid assumption of juri iction by him.

Order pronounced in the open court on 05th December, 2025. S - (मधुसूदन सावͫडया)
(MADHUSUDAN SAWDIA)
लेखासदèय/ACCOUNTANT MEMBER (रवीश सूद)
(RAVISH SOOD)
ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Hyderabad, dated: 05.12.2025. OKK/sps
आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:-

आदेशानुसार / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad.