DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, LUDHIANA vs. RAMAN SETH, LUDHIANA

Whether upon facts and circumstances of the case, the Ld. CIT(A) has erred on facts and law, in deleting the addition of Rs.81,78,030/- u/s 69A of the Income Tax Act, 1961 made on account of unexplained receipt of cash by ignoring the incriminating material found in the form of notepad and nature of transactions recorded therein?

Whether upon facts and circumstances of the case, the Ld. CIT(A) has erred on facts and law, in deleting the addition of Rs. 81,78,030/- u/s 69A of the Income Tax Act, 1961 and holding the same to be business transactions and applying gross profit of 8% without appreciating that assessee has failed to provide Name, PAN, address of the parties with whom these transactions were undertaken as required under section 69A of the Act to prove the source of unexplained money?

Whether upon facts and circumstances of the case, the Ld. CIT(A) has erred on facts and law, by ignoring the test of human probabilities as upheld by Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More (1971) 82 801 (SC)?

Assessee has raised the following grounds in its Cross Objection:

That the reopening by the Juri ictional AO the JAO is illegal in as much as JAO is not empowered to issue notice under s. 148 of the IT Act, 1961 In support of this argument, reliance was placed upon the decision of the Chandigarh Bench of the Tribunal in the case of Garoh Co-operative Agricultural Service Society Ltd. wherein it had been held, after examining the statutory scheme and CBDT directives, that any notice issued by the Juri ictional AO post-notification is void ab initio for lack of juri iction.

2 The Ld. AR further relied upon the judgment of the Hon’ble Bombay High Court in Abhin Anilkumar Shah v. ITO, W.P. No. 16750 of 2024, decided on 28.08.2024, where it was categorically held that after the amendment, the power to issue notice under section 148 is to be exercised only through the faceless mechanism, and that manual or direct issuance by the Juri ictional AO is without authority of law. Reliance was further placed on the recent decisions of the Hon’ble Punjab & Haryana High Court dealing with identical issues, notably Jatinder Singh Bhangu v. Union of India, where the High Court held that once the CBDT Notifications mandating faceless issuance are issued, the Juri ictional AO ceases to have authority to issue notices under section 148; and also upon Amit Khanna v. Union of India, CWP No. 32206 of 2025 (P&H High Court), where the same principle was reiterated with clarity, holding that faceless reassessment is mandatory and any notice issued outside the faceless system is void.

Per contra, the Ld. CIT-DR supported the order of the Assessing Officer and submitted that the decisions in Hexaware Technologies are not applicable to the present facts, as the present case pertains to the Central Circle where certain administrative differences may exist. It was submitted that the High Court in Jatinder Singh Bhangu and in Amit Khanna (CWP 32206/2025) had relied upon Hexaware, but those decisions pertain to non- central cases and therefore, according to the Revenue, may not be 4

We have heard the rival contention of the parties and perused the material available on the record. It is undisputed that the impugned notice under Section 148, dated 27.03.2023, was issued by the Juri ictional Assessing Officer (JAO) and not by the Faceless Assessing Officer. The assessment order itself explicitly records this fact. The Tribunal, in Garoh Co- operative Agricultural Service Society Ltd., has already examined this statutory issue in depth, holding that following the CBDT Notifications dated 28.03.2022 and 29.03.2022, the JAO is divested of the juri iction to issue notices under Section 148. Consequently, only notices generated through the automated faceless system are valid in law. This view has been affirmed by the Juri ictional High Court in Jatinder Singh Bhangu and Amit Khanna (CWP 32206/2025), which held that the faceless issuance of notice is mandatory under the amended statutory framework. The judgment of the Bombay High Court in Abhin Anilkumar Shah further reinforces this position, establishing that any deviation from the faceless scheme constitutes a juri ictional error.

1 The Revenue's contention that Central Circle cases constitute an exception to this rule was examined and found to be untenable. Neither the statute, the CBDT Notifications, nor any judicial precedent carves out a separate or exempt category for Central Circle assessments; the statutory mandate applies uniformly. Furthermore, the Revenue's plea regarding the inapplicability of Hexaware is rendered inconsequential, as the Assessee’s case is founded not on Hexaware, but on the binding ratios of the Juri ictional High Court in the cases of Jatinder Singh Bhangu, and Amit Khanna. Since the valid issuance of a notice is a foundational juri ictional requirement, any defect therein vitiates the entire assessment proceedings . Such a defect is not curable under section 292B or section 292BB.

2 In light of the binding precedent of the Coordinate Bench in Garoh, the judgments of the Hon’ble Bombay High Court in Abhin Anilkumar Shah, and the judgments of the Hon’ble Punjab & Haryana High Court in Jatinder Singh Bhangu as well as Amit Khanna (CWP No. 32206 of 2025), the notice issued under section 148 by the Juri ictional AO is held to be without juri iction and consequently void. As the very assumption of juri iction stands vitiated, the reassessment order framed under section 147 r.w.s. 143(3) cannot survive in law.

Accordingly, the Cross Objection filed by the assessee is allowed and the reassessment proceedings are quashed.

अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File