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Facts
The assessee challenged the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) for Assessment Year 2016-17, contending that the notices under Section 148A(b) and 148 were invalid as they were not issued by the Faceless Assessment Unit, contrary to the e-assessment scheme and CBDT notification. The AO had made additions for unexplained fixed deposits, cash deposits, unexplained investment under Section 69, and unexplained money under Section 69A.
Held
The tribunal, following several High Court judgments (including Kankanala Ravindra Reddy) and its own previous decisions, held that the reassessment notices issued by the Jurisdictional Assessing Officer were invalid due to procedural non-compliance with the faceless assessment scheme. Consequently, the reassessment order was quashed. The tribunal granted liberty to the parties to revive the appeal if the Supreme Court's decision on similar pending matters (e.g., Hexaware Technology Ltd.) necessitates a modification of this order. Other grounds on the merits of additions were not adjudicated and kept open.
Key Issues
Validity of reassessment notices issued by the Jurisdictional Assessing Officer instead of the Faceless Assessment Unit, in contravention of the e-assessment scheme and CBDT notifications.
Sections Cited
250, 148A(d), 148, 147, 69, 69A, 234A, 234B, 151A, 149(1)(a), 144B, 156
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
आदेश/ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the assessee is directed against the order dated 01.07.2025 of order of National Faceless Appeal Centre (NFAC), Delhi [Learned Commissioner of Income Tax (Appeals)] for the Asst. Year 2016- 17.
The assessee has raised the following grounds of appeal :
3. In Ground Nos.1 to 3, the assessee has raised a legal issue challenging the validity of notice issued u/s.148 of the Income Tax Act, 1961 (the Act) by the Jurisdictional Assessing Officer without following the reassessment of income scheme, 2022 notified by the CBDT vide Notification dated 29.03.2022.
The Ld. AR of the assessee has submitted that the ITO, Ward 1, Nalgonda issued show cause notice u/s.148A(b) dated 21.03.2023 and thereafter an order u/s.148A(d) of the Act was passed on 06.04.2023. The ITO, Ward 1, Nalgonda issued a notice u/s.148 of the Act is placed at page No.81 of the paper book of appeal set. Thus he has submitted that the notice u/s.148 issued by the JAO without following the procedure as per the National Faceless Assessment Scheme / Reassessment Scheme notified by the CBDT is not valid and liable to be quashed. Thus the Ld. AR has submitted that the notice u/s. 148 as well as the consequential reassessment order passed by the Assessing Officer are invalid and liable to be set aside. In support of his contention, he has relied upon the following decisions : (i) Vijay Kumar Kamdar Vs. ITO (ITA No.618/Hyd/2025 dated 08.10.2025) (ii) Ramesh Sistla Vs. ITO (ITA No.45/Hyd/2025 dated 15.10.2025) (iii) Abhishek Reddy Boyapally Vs. ITO (International Taxation-2), Hyderabad (ITA No.352/Hyd/2025 dated 17.10.2025)
The Learned DR for the Revenue, on the other hand, has submitted that this issue is pending adjudication before the Hon’ble Supreme Court of India in the case of Hexaware Technology Ltd., in the SLP filed by the Department against the Judgment of Hon’ble High Court of Bombay. Therefore, this issue may be kept open till the outcome of the SLP pending before the Hon’ble Supreme Court. He has relied upon the Orders of the authorities below.
We have considered the rival contentions as well as the material available on record. There is no dispute that the show cause notice u/s.148A(b) of the Act, the order u/s.148A(d) of the Act as well as the reassessment notice u/s.148 of the Act are issued by the ITO, Ward-1, Nalgonda (JAO) without following the procedure as laid down in the National Faceless Assessment Scheme / Reassessment Scheme notified by the CBDT. At the outset, we note that an identical issue has been considered by this Tribunal in the case of Vijay Kumar Kamdar Vs. ITO (supra) in paras 7 to 9 held 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 :
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:
7.2. Thereafter, the Assessing Officer has issued notice u/sec.148 of the Act dated 23.03.2023 which reads as under :
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 21.02.2023 by JAO. For ready reference, the same is reproduced as under : 10. 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 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 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 taxmann.com 478 (Gauhati), the Hon’ble High Court has held in para 13 to 19 as under :
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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 :
15. 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 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 (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.”
7. A similar view has been taken by this Tribunal in other decisions as relied upon by the Ld. AR cited supra i.e. (i) Ramesh Sistla Vs. ITO (ITA No.45/Hyd/2025 dated 15.10.2025) and (ii) Abhishek Reddy Boyapally Vs. ITO (International Taxation-2), Hyderabad (ITA No.352/Hyd/2025 dated 17.10.2025). To maintain the rule of consistency as well as in view of the judgement of the Hon'ble jurisdictional High Court as well as the Hon'ble Bombay High Court followed by this Tribunal in the earlier decisions, we decide this issue in favour of the assessee and against the revenue. Accordingly, the notice issued by the Assessing Officer u/s.148 of the Act dated 06.04.2023 is held as invalid and liable to be quashed. We order accordingly.
8. Since the issue is pending adjudication before the Hon’ble Supreme Court and in view of the judgment of Hon'ble jurisdictional High Court in the case of Kotha Kanthaiah Vs. ITO in W.P. No.344 of 2025 dated 24.04.2025 as relied upon in the case of Meghana Enterprises (supra), a liberty is given to the parties to get this appeal revived if the judgment of Hon’ble Supreme Court on this issue necessitates to modify this order.
Since we have quashed the notice issued u/s.148 of the Act which also vitiates the reassessment order passed by the Assessing Officer, therefore, we do not propose to adjudicate the other grounds raised
by the assessee on merit and the same are kept open depending upon the outcome of the judgment on the legal issue pending before the Hon’ble Supreme Court.
10. In the result, the appeal filed by the assessee is allowed.