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Facts
The assessee, an NRI, did not file a return of income for AY 2015-16. The AO initiated reassessment proceedings under Section 147 read with Section 148 of the Act, issuing notices and orders through the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO), which was contrary to the CBDT's e-assessment scheme.
Held
The Tribunal held that the notices and orders were issued by an authority without jurisdiction, as they were not in accordance with the faceless assessment scheme mandated by CBDT Notification No. 18/2022. Following various High Court judgments, the Tribunal quashed the proceedings.
Key Issues
Whether the reassessment proceedings initiated by the Jurisdictional Assessing Officer, instead of the Faceless Assessing Officer, are valid in light of the CBDT's e-assessment scheme.
Sections Cited
147, 144, 148A, 148, 144B, 139, 151A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ DB-B ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
(निर्धारण वर्ा/Assessment Year: 2015-16) Shri Abhishek Reddy Vs. Income Tax Officer Boyapally, Hyderabad International Taxation-2, PAN: BODPB0397F Hyderabad (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: CA Y. V. Bhanu Narayan Rao रधजस् व द्वधरध/Revenue by: Dr.Narendra Kumar Naik, CIT(DR) सुिवधई की तधरीख/Date of hearing: 15/10/2025 घोर्णध की तधरीख/Pronouncement: 17/10/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by Shri Abhishek Reddy Boyapally (“the assessee”), feeling aggrieved by the Assessment Order passed by the ITO, International Taxation-2, Hyderabad (“Ld. AO”), dated 25.12.2024 for the A.Y 2015-16.
The assessee has raised the following grounds of appeal:
3. At the outset, it is observed that the assessee, as per Ground No. 4 of the appeal, has raised a legal ground which was not taken before the lower authorities and has been raised for the first time before this Tribunal. Accordingly, the said ground is in the nature of an additional Page 2 of 27 ground. The Ld. Authorised Representative (“Ld. AR”) submitted that the assessee seeks to raise this legal ground which goes to the root of the matter, and for adjudication of which no further factual verification is required. It was further submitted that being purely legal in nature, such a ground can be raised at any stage of the proceedings. Relying on the decision of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (229 ITR 383), the Ld. AR prayed before the Bench to treat Ground No. 4 as an additional ground and admit the same for adjudication. 3.1 Per contra, the Learned Departmental Representative (“Ld. DR”) objected to the admission of this additional ground, submitting that since the assessee had not raised it before the lower authorities, the same should not be entertained at this stage. 3.2 We have heard the rival contentions and perused the material available on record. It is well settled by the decision of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (supra) that a pure question of law, which does not require investigation into fresh facts and goes to the root of the assessment, can be raised for the first time before the appellate authority, including the Tribunal. Since the issue raised in Ground No. 4 is legal in nature and all necessary facts are already available on record, we find merit in the contention of the assessee. Accordingly, the additional ground raised
by the assessee is admitted for adjudication.
4. The brief facts of the case are that the assessee is an NRI who had not filed any return of income under section 139 of the Income Tax Act, 1961 (“the Act”). The Learned Assessing Page 3 of 27 Officer (“Ld. AO”), based on the information available with him, issued a notice under section 148 of the Act to the assessee on 12.04.2022, after passing an order under section 148A(d) of the Act on the same date. After considering the submission of the assessee the Ld. AO passed draft order under section 144C of the Act proposing addition of Rs.1,892/- under income from other sources and Rs.37,21,500/- towards Short Term Capital Gain on the sale of immovable property. Against the said draft order the assessee filed objections on 02.04.2024 before the Learned Dispute Resolution Panel (“Ld. DRP”). Finally, after the directions of Ld. DRP dated 04.12.2024, the Ld. AO passed the final assessment order under section 147 read with section 144B of the Act on 25.12.2024, making additions of Rs.1,892/- under income from other sources and Rs.18,60,750/- towards Short Term Capital Gain on the sale of immovable property., thereby determining the total income of the assessee at Rs.18,62,642/-.
Aggrieved by the final assessment order of the Ld. AO, the assessee has preferred the present appeal before this Tribunal. At the outset, the Ld. AR submitted that the assessee is pressing only single legal ground out of the ground of appeal, i.e. challenging the validity of the notice issued under section 148 of the Act and the order passed under section 148A(d) of the Act. He submitted that both the notice and the order were issued by the Jurisdictional Assessing Officer (“JAO”) instead of the Faceless Assessing Officer (“FAO”), which is contrary to the scheme of faceless reassessment introduced by the CBDT.
The Ld. AR invited our attention to the order under section 148A(d) dated 12.04.2022 and the notice issued under section 148 of the Act on the same date. He demonstrated that both documents clearly bear the name and designation of the JAO. It was submitted that the CBDT Notification No. 18/2022 dated 29.03.2022, issued under section 151A(1) and (2) of the Act, mandates that with effect from 29.03.2022, all notices under section 148 of the Act must be issued through the Faceless Assessment Unit. Relying on various decisions of the Coordinate Benches of the Tribunal and Hon’ble High Courts, the Ld. AR argued that when a notice is issued by an authority having no jurisdiction in law, such notice is void ab initio, and all consequential proceedings stand vitiated. He therefore submitted that the notice issued under section 148 of the Act and the consequent assessment order passed under section 147 read with section 144B of the Act are bad in law and liable to be quashed.
Per contra, the Ld. DR strongly supported the orders of the lower authorities. He submitted that the legal issue raised by the assessee is pending adjudication before the Hon’ble Supreme Court in the case of Hexaware Technology Ltd., in the SLP filed by the Revenue 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.
We have considered the rival submissions and perused the material available on record. We have gone through the order Page 5 of 27 passed under section 148A(d) of the Act, dated 12.04.2022 , which is to the following effect:
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On perusal of para no.2 of the above, it is clear that the notice under section 148A(b) of the Act was issued by JAO on 24.03.2022. It is also evident that the order under section 148A(d) of the Act was passed by JAO on 12.04.2022. Further, we have carefully examined the CBDT Notification No. 18/2022 dated 29.03.2022, issued in exercise of power conferred under section 151A(1) and (2) of the Act, which is to the following effect:
10. On perusal of para no. 3(b) of the said notification, it is evident that any notice under section 148 of the Act issued on or after 29.03.2022 shall be issued in accordance with the Faceless Assessment Scheme by the FAO. In this regard, we have also gone Page 9 of 27 through the notice issued under section 148 of the Act, which is to the following effect :
11. On perusal of the above, it is evident that the notice under section 148 of the Act have been issued by the JAO on 12.04.2022. Hence, on perusal of the order under section 148A(d) of the Act, notice issued under section 148 of the Act and the CBDT notification, we find that in the present case, while the notice under section 148A(b) of the Act was issued before the date of the CBDT notification, the order under section 148A(d) of the Act and the notice under section 148 of the Act was issued on 12.04.2022, i.e., after the said CBDT notification came into effect. However, in terms of the CBDT Notification, the JAO ceased to have authority to issue notice under section 148 of the Act w.e.f. 29.03.2022. It is manifest from the above that the issue of notice under section 148 of the Act as well as the passing of order under section 148A(d) of the Act were conducted by the JAO and not in the Faceless manner as prescribed by the CBDT notification dated 29.03.2022. We note that similar issue has been considered by the Coordinate Bench of ITAT, Hyderabad in the case of Shri Kotha Kanthaiah vs. ITO in ITA.No.1259/Hyd/2024 for the assessment year 2016-17 vide Order dated 04.09.2025 wherein the Tribunal in para nos. 9 to 16 of its order held 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 :
Thereafter, the AO also passed an order u/s 148A(d) on 29.03.2023, wherein, the AO has recorded that, despite Page 12 of 27 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 Page 13 of 27 involved in the said petition in para 4 of the said judgement as under :
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 :
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13. 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 178 (Telangana), 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 Page 25 of 27 the Hon’ble Supreme Court on this issue necessitate to modify this order”.
On perusal of the above, it is clear that the Hon’ble Jurisdictional High Court for the State of Telangana has taken a consistent view that the notice under section 148 of the Act by the JAO is not valid and liable to be set-aside/quashed. In the present case, there is no dispute on the fact that the notice under section 148 of the Act has been issued by the JAO after the date of CBDT notification. Therefore, 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 JAO under section 148 of the Act, dated 12.04.2022 is 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 Revenue 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.
Page 26 of 27 Accordingly, appeal of the assessee is allowed in terms of our above observation.