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Facts
The Revenue appealed against the CIT(A)'s order for AY 2018-19, which deleted additions made during reassessment. The assessee, a non-filer, had its assessment reopened based on information of payment subjected to TDS u/s 194C, leading to a notice u/s 148 and subsequent best judgment assessment u/s 144 for Rs. 1,21,65,471/- due to non-response. The CIT(A) quashed the reassessment proceedings and deleted the additions, citing a jurisdictional High Court decision that declared the notice u/s 148 invalid and the assessment u/s 147 unsustainable.
Held
The Tribunal upheld the CIT(A)'s order, acknowledging the jurisdictional High Court's ruling that the notices u/s 148 and 148A issued by the Jurisdictional Assessing Officer (JAO) (instead of Faceless Assessing Officer) were invalid under the amended provisions of the Income Tax Act. While noting that the larger issue of validity of such notices is pending before the Supreme Court, the Tribunal allowed the assessee's appeal, granting liberty to both parties to revive the appeal if the Supreme Court's judgment necessitates a modification of the current order.
Key Issues
Whether the notices issued under Section 148A and Section 148 by the Jurisdictional Assessing Officer (JAO) for reassessment were valid, or if they should have been issued by a Faceless Assessing Officer (FAO) under the amended provisions of the Income Tax Act, particularly in light of conflicting High Court judgments and pending Supreme Court adjudication.
Sections Cited
148A(d), 148, 147, 194C, 144, 151A, 130, 148A(b)
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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Revenue is directed against the order dated 01.02.2025 of Learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the Asst. Year 2018-19.
2 ITA.No.481/Hyd./2025 2. The Revenue has raised the following grounds of appeal :
1. “The Learned CIT(A) erred in quashing the orders passed under Section 148A(d) by the Jurisdictional Officer (JAO) and the notices issued under Section 148 by the JAO, given that the Finance Act, 2021 introduced provisions for faceless assessment and the automated allocation of cases, and does not explicitly prohibit the JAO from issuing such notices.
The Learned CIT(A) erred in quashing the orders passed by the jurisdictional Assessing Officer(JAO) u/s 148 when the same were in consistent with the legislative intent when the powers to issue the notice u/s 148 remained with intact with the JAO even after bringing the Faceless Assessment Scheme.
3. The Learned CIT(A) erred in quashing the notice u/s 148 issued by the JAO when both the JAO as well as units under NFAC have concurrent jurisdiction under the Income-tax Act as has been held by the Hon'ble Kolkata High Court in its order in WP. No. WPO/ 1566/2023 and WPO/1549/2023 in the case of Triton Overseas Pvt Ltd and in the case of Sanghi Steel Udyog Private Ltd respectively vide order dt. 13.9.2023.
4. The learned CIT(A) erred in appreciating that the JAO has rightly followed the directions of the Hon'ble Apex Court in its order in the case of UOI vs Ashish Agarwal, wherein the "Assessing Officers were directed to conduct an enquiry and pass orders in relation to the reopening of cases.
5. The learned CIT(A) erred in considering the fact that the Assessing Officers are the authorities specified in the said
3 ITA.No.481/Hyd./2025 provisions of section 148 of the Income-tax Act, 1961 which stand was taken by the Hon'ble Apex Court in the case of UOI s Ashish Agarwal.
6. The Learned CIT(A) erred in law in holding that the Section 151A of the Income Tax Act, r/w CBDT Notification No. 18/2022 dt.29- 03-2022 and notification no.SO. 1400(E) dt.28-03-2022 issued u/s 130 of the Act mandate that the proceedings under Section 148A and notices u/s 148 shall only be Faceless, when the provisions of Sections 148A and 148 of the Act require enquiry and issue of notices by 'Assessing Officers'
7. The Learned CIT(A) ought to have appreciated that this issue was challenged by the Revenue before the Hon'ble Apex Court vide SLP(C) Diary No. 48034 of 2023 in Union of India Vs. Suryalakshmi Cotton Mills and Batch cases which are pending adjudication.
8. The Learned CIT(A) ought to have appreciated the decision rendered by the Hon'ble Delhi High Court in the case of T.K.S Builders (P) Vs ITO W.P.(C) No. 1968/2023 and others dt. 28.10.2024 wherein it was held that the notices issued by the JAO u/s 148 cannot be quashed and dismissed the writ petitions of the assessee's.
9. The Learned CIT(A) ought to have observed the decision rendered by the Hon'ble High Court of Bombay in the case of JD Printers Pvt Ltd Vs ITO & Ors in W.P. No. 12187 2024 wherein an interim stay was granted by the said High Court pending SLP filed by revenue before Apex Court.
10. The Learned CIT(A) ought to have appreciated the decision rendered by the Hon'ble High Court of Telangana in W.P. No.
4 ITA.No.481/Hyd./2025 26304/2024 dt. 25.09.2024 in the case of Rakshit Pharmaceuticals Ltd Vs ITO, Ward 3(1) which relied upon the decision of the Hon'ble High Court of Bombay in the case of JD Printers Pvt Ltd Vs ITO & Ors in W.P. No. 12187/2024.”
The assessee is an individual and non-filer of return of income. As per the information regarding the payment to the tune of Rs.1,21,65,471/- to the contractor subjected to TDS u/sec.194C, the Assessing Officer has reopened the assessment by issuing a notice u/sec.148 of the Income Tax Act, 1961 [in short "the Act"] on 31.03.2022. Since there was no response on behalf of the assessee to the notices issued by the Assessing Officer, therefore, the Assessing Officer proceeded to frame the assessment as best Judgment assessment u/sec.144 of the Act on 18.03.2023, thereby, the Assessing Officer assessed the total income of the assessee at Rs.1,21,65,471/-.
The assessee challenged the action of the Assessing Officer before the learned CIT(A) and pointed-out that the Hon’ble jurisdictional High Court has quashed the order passed u/sec.147 vide order dated 04.03.2024 in W.P.No.5606/2024 and consequently, the learned CIT(A)
5 ITA.No.481/Hyd./2025 has held the notice issued u/sec.148 is invalid and consequently, the assessment order passed u/sec.147 is also not sustainable. Accordingly, the additions made by the Assessing Officer were deleted by the learned CIT(A).
Before the Tribunal, the Learned DR for the Revenue has submitted that the issue of validity of notice issued u/sec.148 by the Jurisdictional Assessing Officer [in short “JAO”] vs., Faceless Assessment Officer [in short “FAO”] is pending before the Hon’ble Supreme Court and, therefore, this issue may be kept open to be decided in accordance with the Judgment of Hon’ble Supreme Court on this issue.
On the other hand, learned Authorised Representative of the Assessee has fairly submitted that the parties may be given liberty to get this appeal revived as per the outcome of the proceedings pending before the Hon’ble Supreme Court on this issue.
We have considered the rival submissions as well as perused the impugned order of the learned CIT(A). The 6 ITA.No.481/Hyd./2025 learned CIT(A) has allowed the appeal of the assessee in Paras-5 and 6 of the impugned order as under :
“5.0. In the appellate proceedings, the assessee submitted that the HC of Telangana quashed the proceedings u/s 147.
I am writing to inform you that a WRIT petition has been filed in the Honourable High Court of Telangana challenging the Order passed under Section 147 for the Assessment Year 2018-19 in my case. We have recently received the order copy from the High Court, vide WRIT No. 5606 OF 2024, dated 04.03.2024. The Court has ruled in our favour, acknowledging our objections regarding the proceedings not being drawn in accordance with the amended provisions of the Income Tax Act. Furthermore, the Court has provided direction that consequently, any pending miscellaneous petitions shall stand closed.
In light of the above, I kindly request honourable CIT (A) to consider the same & delete the addition made as the initiation of proceedings are not valid. Enclosed herewith is a copy of the WRIT order for your reference and consideration.
6.0. I have considered the submissions. The issue is whether the JAO had the jurisdiction to issue notice u/s 148 under the newly introduced faceless regime w.e.f 1.4.2021. There is a cleavage of opinion on this matter by the High Courts. While the Bombay HC, in tune with the Telangana HC also held that the JAO is not vested with the power to initiate re-assessment, the Delhi HC and Madras
7 ITA.No.481/Hyd./2025 HC vide their judgments in late 2024 have rendered a contrary decision. Since the HC in the present case held the notice u/s 148 as invalid, the assessment u/s 147 cannot be sustained and hence the addition made is deleted. In result, the appeal is allowed.”
7.1. Thus, it is clear that when the assessee brought this fact to the notice of the learned CIT(A) that the Hon’ble jurisdictional High Court has quashed the proceedings u/sec.147 of the Act, the learned CIT(A) has deleted the addition by holding that the assessment framed u/sec.147 of the Act is not sustainable. At the outset, we note that an identical issue has been considered by this Tribunal in series of decisions and in 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 dated 08.10.2025 has considered this issue in Paras-5 to 5.1 as under :
“5. We have heard the Learned Authorised Representative and Learned Departmental Representative on this issue which is pending
8 ITA.No.481/Hyd./2025 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) [As per Corrigendum dated 10th October, 2025 the correct citation is Kotha Kanthaiah, Karimnagar vs., The Income Tax Officer, Ward-2, Karimnagar in ITA.No.1259/Hyd./2024] 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 :
9 ITA.No.481/Hyd./2025
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 10 ITA.No.481/Hyd./2025 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 :
11 ITA.No.481/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 :
12 ITA.No.481/Hyd./2025 12. 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 :
13 ITA.No.481/Hyd./2025
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 :
14 ITA.No.481/Hyd./2025 15 ITA.No.481/Hyd./2025 16 ITA.No.481/Hyd./2025 17 ITA.No.481/Hyd./2025 18 ITA.No.481/Hyd./2025 19 ITA.No.481/Hyd./2025 20 ITA.No.481/Hyd./2025 21 ITA.No.481/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 :
22 ITA.No.481/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, 23 ITA.No.481/Hyd./2025 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.”
In case of the assessee when the Hon’ble Jurisdictional High Court has quashed the initiation of proceedings u/sec.147 of the Act, then, it would vitiate the re-assessment order passed by the Assessing Officer. Following the Judgment of Hon’ble Jurisdictional High Court as well as the decision of this Tribunal in the case of M/s. Pitti Holdings Pvt. Ltd., Hyderabad vs., ACIT, Central Circle-1(1), Hyderabad (supra), we do not find any reason to interfere with the Order of the learned CIT(A). The same is upheld. However, an identical issue is pending adjudication 24 ITA.No.481/Hyd./2025 before the Hon'ble Supreme Court and the Hon’ble Jurisdictional 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 case in light of Judgement of Hon'ble Supreme Court on this very issue. Therefore, we also 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.
In the result, appeal of the Assessee is allowed.