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Facts
The Revenue filed an appeal against the CIT(A)'s order deleting an addition of Rs. 81,78,030/- made under Section 69A of the Income Tax Act, 1961. The Assessee filed a Cross Objection challenging the validity of the reassessment proceedings initiated by the Jurisdictional Assessing Officer.
Held
The Tribunal held that the notice under Section 148 was issued by the Jurisdictional Assessing Officer (JAO) without jurisdiction after the introduction of the faceless assessment regime, making it void ab initio. Consequently, the reassessment order was also void.
Key Issues
Whether a notice under Section 148 issued by the Jurisdictional Assessing Officer is valid after the mandatory implementation of faceless assessment and associated CBDT notifications, and if not, whether it renders the entire reassessment proceedings void.
Sections Cited
147, 148, 69A, 143(3), 148B, 148A, 292B, 292BB
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M: The present appeal filed by the Revenue and Cross Objection filed by the Assessee against the order of the Ld. CIT(A)-5, Ludhiana dt. 02/04/2025 pertaining to Assessment Year 2020-21. 2. Revenue has raised the following grounds in its appeal:
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? 2. 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? 3. 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 ITR 540 (SC) and Sumati Dayal vs. Commissioner of Income tax (1995) 214 ITR 801 (SC)? 3. Assessee has raised the following grounds in its Cross Objection:
1. That the reopening by the Jurisdictional AO the JAO is illegal in as much as JAO is not empowered to issue notice under s. 148 of the IT Act, 1961 after the new regime of faceless assessment has been brought into force by the amendment made under s. 148 of the Act, 1961 which has so been held by the Jurisdictional High Court of Punjab and Haryana in the case of JASJIT SINGH VS UNION OF INDIA AND OTHERS in CWP 21509 2023 O and M vide judgment dated 29.07.2024 and as such the assessment order passed in pursuance of an invalid notice is illegal, arbitrary and unjustified.
2. That the appellant craves leave to add, amend, vary, OR withdraw any ground of cross objection before OR at the time of hearing.
3. That the order passed by the Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.
4. The Cross Objection filed by the assessee was taken up first as it involved a pure legal issue striking at the very root of the reassessment proceedings. The factual matrix indicated that a notice under section 148 had been issued on 27.03.2023 by the Jurisdictional Assessing Officer, as is evident from the assessment order itself as well as from the statutory records placed before the Bench. It was the contention of the Ld. AR that once the faceless reassessment architecture was brought into force by the amendments to sections 144B, 148 and 148A, and upon the issuance of CBDT Notifications dated 28.03.2022 and 29.03.2022, the authority to issue notice under section 148 vested exclusively in the Faceless Assessing Officer through automated allocation, and not in the Jurisdictional Assessing Officer. It was submitted that the issuance of such notice by the JAO constituted a jurisdictional illegality incapable of being cured by participation or acquiescence.
4.1 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 Jurisdictional AO post-notification is void ab initio for lack of jurisdiction.
4.2 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 Jurisdictional 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 Jurisdictional 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 applicable to a Central Circle reassessment. It was further submitted that the Cross Objection itself is not maintainable in such circumstances.
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 Jurisdictional 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 jurisdiction 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 Jurisdictional 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 jurisdictional error.
6.1 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 Jurisdictional High Court in the cases of Jatinder Singh Bhangu, and Amit Khanna. Since the valid issuance of a notice is a foundational jurisdictional requirement, any defect therein vitiates the entire assessment proceedings . Such a defect is not curable under section 292B or section 292BB.
6.2 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 Jurisdictional AO is held to be without jurisdiction and consequently void. As the very assumption of jurisdiction 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.