DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1), VISAKHAPATNAM vs. DODDI ROOPA, VISAKHAPATNAM
Facts
The assessee, engaged in supplying ship spare parts, was found to have made bogus transactions of Rs. 4,99,65,247/- with two entities (M/s. A.K. Capital Enterprises and M/s. Vihan Enterprises) for AY 2019-20. The AO initiated reassessment proceedings under Section 147, issued a notice under Section 148, and made an addition for unexplained expenditure under Section 69C, based on the assessee's inability to substantiate purchases and the non-existence of one supplier. The CIT(A) subsequently quashed the Section 148 notice and assessment order, primarily on jurisdictional grounds.
Held
The ITAT upheld the CIT(A)'s decision, ruling that the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) under Section 148A and the subsequent notice under Section 148 were void ab initio. This was because, after the introduction of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022" (under Section 144(b) r.w. Section 151A), only a Faceless Assessing Officer (FAO) has the authority to issue such notices, not a JAO. The Tribunal emphasized that jurisdiction cannot be conferred by consent and any action without inherent jurisdiction is a nullity.
Key Issues
Whether a Jurisdictional Assessing Officer (JAO) has the valid authority to initiate reassessment proceedings and issue notices under Section 148/148A(d) after the implementation of faceless assessment schemes under Section 151A.
Sections Cited
147, 148, 148A(d), 144B, 131(1A), 69C, 115BBE, 133(6), 194Q, 151A, 144(b), 124, 124(1), 124(2), 124(3), 120, 120(1), 120(2), 142(1), 143(2), 143(3), 153A, 153C, 115WD, 139(1), 115WE, 115WH, 115WF, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam
Before: Shri Manjunatha G. & Shri Ravish Sood
आदेश / ORDER PER. RAVISH SOOD, J.M:
The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 25/07/2024, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under Section 147 r.w.s 144B of the Income-tax Act, 1961 (for short, “Act”), dated 07/03/2024 for the Assessment Year 2019-20. The revenue has
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assailed the impugned order on the following grounds of appeal before us:
“1. The Order of the Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi is erroneous in law and to the facts of the case Doddi Roopa 2 The Ld.CIT(A) erred in adjudicating that the order passed u/s.148A(d) is devoid of merit and hence the notice issued u/s. 148 is therefore quashed 3. The Ld.CIT(A) ought to have appreciated that the report of the Investigation Wing clearly mentions that summons u/s. 131(1A) were issued to both the assessee and also her husband and it was he who had produced the books of account on behalf of the assessee and had also accepted the fact of bogus purchases made so as to claim input tax credit. 4 The Ld.CIT(A) erred in deleting the addition of Rs.4,99,65,247/- without causing any further verification or enquiry as regards the purchases made from M/s. A.K. Capital Enterprises since the said seller was unavailable at the address mentioned by the assessee, particularly in the light of the fact that there was an admission of bogus purchases by the assessee's husband. 5. As regards the issue of jurisdiction of the JAO to issue notice u/s. 148, the decision of the Ld.CIT(A) is not acceptable since both the decisions i.e. of the Telangana State High Court and also of the Bombay High Court have not been accepted by the Department and have been contested through a SLP filed before the Hon'ble Supreme Court and presently these matters are pending. 6. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and/or at the time of hearing of appeal. 7. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that the above addition be restored.”
Succinctly stated, the assessee is engaged in the business of supplying spare parts of ships and also undertakes installations and repairs to ships under the name and style of M/s. Shiptech. The AO
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based on information that the assessee during the subject year, i.e., AY 2019-20, had made bogus transactions to the tune of Rs. 4,99,65,247/- with M/s. A.K. Capital Enterprises and M/s. Vihan Enterprises initiated proceedings under section 147 of the Act. Thereafter, an order under section 148A(d) of the Act, dated 29/03/2023, was passed, and a notice under section 148 of the Act, dated 29/03/2023, was issued by the AO.
During the course of the assessment proceedings, the AO for verifying the authenticity of the assessee’s claim of having made genuine purchases from the aforementioned concerns, viz., M/s. A.K. Capital Enterprises and M/s. Vihan Enterprises called upon her to place on record supporting documentary evidence. However, the assessee in response only submitted a copy of the ledger account of M/s. A.K. Capital Enterprises as was appearing in her books of accounts. The AO, taking note of the fact that the assessee had neither submitted any contract/agreement nor any ledger confirmations of the aforementioned parties, observed that the assessee had failed to substantiate the authenticity of the subject purchase transactions based on supporting documentary evidence. Also, it was observed by him that the assessee had not deducted any tax at source (TDS) on the payments made to M/s. A.K. Capital Enterprises, as against the purchases made during the year under consideration. Accordingly, the AO, based on his conviction that
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the assessee has failed to justify the purchases of Rs. 4,99,65,247/-, passed an order under section 148A(d) of the Act, dated 29/03/2023. Thereafter, the AO issued notice under section 148 of the Act, dated 29/03/2023, wherein the assessee was called upon to file her return of income in response to the same.
Thereafter, the AO issued notices under section 133(6) of the Act, dated 25/10/2023 to the aforementioned parties, viz., M/s. (i) A.K. Capital Enterprises; and (ii) M/s. Vihan Enterprises. In response, Shri. Devesh, Proprietor of M/s. Vihan Enterprises (PAN: CMXPD2478N) vide its reply dated 20/01/2024 submitted that he is running a small rental shop and is engaged in selling and pasting stickers on cars, bikes etc., and is not aware of the fake concerns that were made by using his PAN. It was stated by him that his PAN had been misused by someone, and a fraud had been committed upon him. It was further stated by him that he had neither carried out any transactions with the assessee as mentioned in the notice nor issued any bills/vouchers. Also, it was brought to the notice of the AO that he, on learning about the aforesaid fraud, had filed an online complaint and an FIR regarding the same.
Apropos, the other party, viz., M/s. A.K. Capital Enterprises, the AO referred the matter to the Verification Unit (VU) for physical delivery
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of the notice to the said concern. In response, the AO was informed that, based on the verification carried out at the address provided, no such business entity was found running from the said address. Also, the AO was informed that the enquiries from the locals did not reveal any information regarding the aforementioned concern, viz., M/s. A.K. Capital Enterprises.
Considering the aforesaid facts, the AO concluded that the assessee had made bogus purchases to the tune of Rs. 4,99,65,247/- from both the aforementioned parties, viz., (i) M/s. A.K. Capital Enterprises; and (ii) M/s. Vihan Enterprises. Accordingly, the AO made an addition of Rs. 4,99,65,247/- by treating the same as an unexplained expenditure under section 69C r.w.s 115BBE of the Act. Accordingly, the AO vide his order under section 147 r.w.s 144 of the Act, dated 07/03/2024, determined the income of the assessee at Rs. 5,26,58,927/.
Aggrieved, the assessee carried the matter in appeal before the CIT(A).
The CIT(A), after considering the contentions advanced by the assessee, observed that the order passed by the AO under section 148A(d) of the Act was devoid of merit, and thus, it was not a fit case for issuing notice under section 148 of the Act. Accordingly, the CIT(A),
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based on his aforesaid observations, quashed the notice issued under section 148 of the Act. Also, the CIT(A) observed that the purchases made by the assessee from the aforementioned parties could not have been disregarded altogether, especially when the sales were accepted by the FAO. Apart from that, the CIT(A) observed that the assessee had been contending from the beginning that no purchases were made from M/s. Vihan Enterprises, and that the entire disputed purchases of Rs. 4,99,65,247/- were made from M/s. AK Capital Enterprises. Apropos, the purchases made from M/s. AK Capital Enterprises, the CIT(A) observed that though the matter was referred to the Verification Unit (VU), wherein the said supplier party could not be located at the given address, but on the said standalone basis, it could not be concluded that the entity did not exist and the subject purchases were bogus. Also, the CIT(A) observed that the provisions of section 194Q had been made applicable from 01/07/2021, i.e., deduction of tax at source on the payments made against the purchases, and the same did not apply to the case of the assessee for the year under consideration, i.e., AY 2019-20.
Apart from that, we find that the CIT(A) concurred with the assessee that pursuant to the introduction of the Faceless Jurisdiction of Income Tax Authorities Scheme, 2022 which mandate the revenue to conduct/initiate proceedings pertaining to reassessment under section
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147, 148 and 148A in a faceless manner, the notices under section 148 of the Act issued by the Jurisdictional Assessing Officer (JAO) did not comply with the procedure prescribed by the Act, i.e., Faceless Jurisdiction of Income Tax Authorities Scheme, 2022 in particular, and, thus, was void ab initio and liable to be quashed. The CIT(A), while so concluding, relied upon the judgment of the Hon’ble High Court of Telangana in the case of Kankanal Ravindra Reddy vs. ITO (2023) 156 Taxmann.com 178 (Telangana) and the Hon’ble High Court of Bombay in the case of Hexaware Technologies Ltd vs. Asst. Commissioner of Income Tax (2024) 162 Taxmann.com 225 (Bombay). Accordingly, the CIT(A), based on his aforesaid observations, held the notice issued under section 148 of the Act by the DCIT/ACIT, Circle-3(1), Visakhapatnam, i.e., JAO, as contrary to the ‘Faceless Jurisdiction of Income Tax Authorities Scheme, 2022’ and 'e-Assessment of Income Escaping Assessment Scheme, 2022'.
The revenue, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record.
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Sri GVN Hari, Advocate, the Learned Authorized Representative (for short, “Ld.AR”) for the assessee at the threshold of hearing of the appeal, submitted that both the impugned order passed under Section 148A(d) of the Act, dated 29/03/2023 and Notice under Section 148 of the Act, dated 29.03.2023 issued by the Jurisdictional Assessing Officer (JAO), i.e., outside the faceless mechanism as provided under the provisions of Section 144(b) read with Section 151A and the "E- Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151 A, are bad and illegal. Summing up his contention, the Ld. AR submitted that after the introduction of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022", it is only the “Faceless Assessing Officer” (FAO) who can issue the notice under Section 148 of the Act and not the “Jurisdictional Assessing Officer” (JAO), and the assessments are statutorily required to be as per the prescribed faceless mechanism provided under the provisions of Section 144(b) r.w Section 151A of the Act. Elaborating further on his contention, the Ld. AR submitted that as the AO had invalidly assumed jurisdiction and framed the impugned assessment, therefore, the same cannot be sustained and is liable to be struck down for want of a valid assumption of jurisdiction on his part. The
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Ld. AR submitted that the subject issue is squarely covered by the judgment of the Hon’ble High Court of Telangana in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others, Writ Petition Nos 25903 of 2023, dated 14.09.2023.
Per Contra, the Ld. CIT- Departmental Representative (Ld. CIT- DR), submitted that as the assessee within the specified time period contemplated under sub-section (3) of Section 124 of the Act, i.e. within a period of one month from the date on which the said notice was served upon her had not called in question the jurisdiction of the DCIT/ACIT, Circle-3(1), Visakhapatnam (JAO) who had issued Notice under Section 148 of the Act, dated 29/03/2023, therefore, she was precluded from assailing the same for the first time before the Tribunal. The Ld. CIT-DR to support his contention had relied on the judgment of the Hon’ble Supreme Court in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC). The Ld. CIT-DR submitted that the Hon’ble Apex Court in its aforesaid judgment had held that as per the mandate of Section 124(3) of the Act, an assessee is precluded from questioning the jurisdiction of the AO, if he does not do so within 30 days of receipt of notice. The Ld. CIT-DR submitted that in the present case, the assessee as required per the mandate of Section 124(3) of the Act, had within the prescribed time
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period not called in question the jurisdiction of the DCIT/ACIT, Circle- 3(1), Visakhapatnam, i.e., the JAO, who had issued Notice under Section 148 of the Act, dated 29/03/2023, therefore, she cannot now be permitted to object to the same for the very first time before the Tribunal.
Rebutting the Ld. CIT-DR’s contention, Shri. GVN Hari, Ld. AR submitted that, as in the present case, the assessee was challenging the inherent lack of jurisdiction with the JAO to initiate the impugned proceedings under Section 148A of the Act, and also issue notice under Section 148 of the Act, and was not questioning the jurisdiction as provided in Section 120(3) of the Act, which was the subject matter before the Hon’ble Apex Court in the case of Commissioner of Income- tax (Exemption) vs. Kalinga Institute of Industrial Technology (supra), therefore, the said judgment being distinguishable both on facts and the issue therein involved will not assist the case of the revenue.
We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both parties regarding the validity of the jurisdiction assumed by the FAO for framing the assessment vide his order passed under Section 147 r.w.s 144B of the Act, dated 07/03/2024 based on the order passed under Section 148A(d) of the Act, dated
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29/03/2023 and Notice issued under Section 148 of the Act, dated 29/03/2023 by the DCIT/ACIT, Circle 3(1), Visakhapatnam, i.e., the JAO.
We shall first deal with the Ld. DR’s contention that as the assessee had within the specified time period contemplated under sub- section (3) of Section 124 of the Act, i.e. within a period of one month from the date on which the said notice was served upon him not called in question the jurisdiction of the DCIT/ACIT, Circle-3(1), Visakhapatnam i.e., the JAO, who had issued Notice u/s 148 of the Act, dated 29/03/2023, therefore, she was precluded from assailing the same for the first time before the Tribunal.
Before proceeding further, it would be relevant to cull out Section 124(3) of the Act, which reads as under: "124 (1) xxxxxxxx (2) xxxxxxx (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer— (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under subsection (1) of section 142 or sub-section (2) of section 115WE or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or subsection (1) of section 142 or under sub-section (1)
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of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; (c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.”
Having given a thoughtful consideration to the aforesaid claim of the ld. DR in the backdrop of the mandate of Sub-section (3) of Section 124 of the Act, we are unable to fathom that as to how the restriction therein contemplated, which is confined to questioning the jurisdiction of an Assessing Officer, can have any bearing on the claim of the present assessee before us, who has assailed the validity of the assessment order passed under Section 147 r.w.s 144B of the Act, dated 07/03/2024 by the Assessment Unit, Income-Tax Department, i.e., Faceless Assessing Officer (FAO) based on the Notice u/s 148 of the Act, dated 20/03/2024 issued by the DCIT/ACIT, Circle-3(1), Visakhapatnam, i.e., JAO who inherently lacked the jurisdiction for both initiating the proceedings u/s 148A of the Act and issuing Notice u/s 148 of the Act, dated 29/03/2023.
Before dealing with the subject issue, we deem it apposite to look into the fabric of Section 124 of the Act. On a careful perusal of Section
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124 of the Act, it transpires that the same apparently deals with the issue of "territorial jurisdiction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the AO of jurisdiction over a specified area by virtue of any direction or order issued under sub- section (1) and sub-section (2) of Section 120 of the Act. Sub-section (2) of Section 124 contemplates the manner in which any controversy regarding the territorial jurisdiction of an AO is to be resolved. Apropos sub-section (3) of Section 124 of the Act, the same places a restriction upon an assessee to call in question the jurisdiction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or Section 148 or sub- section (1) of Section 153A or sub-section (2) of Section 153C. To sum up, the obligation cast upon an assessee to call in question the jurisdiction of the A.O as per the mandate of sub-section (3) of Section 124 is confined to a case where he objects to the assumption of jurisdiction by the A.O, and not otherwise.
At this stage, we may herein refer to certain judicial pronouncements that had in the past held the field on the aforesaid issue. The Hon'ble High Court of Bombay in the case of Peter Vaz & Ors. Vs, CIT & Ors. (2021) 436 ITR 616(Bom) and the Hon'ble High
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Court of Gujarat in the case of Commissioner of Income-tax v. Ramesh D. Patel [2014] 42 taxmann.com 540/225 Taxman 411/362 ITR 492 (Gujarat), had held that as Section 124 of the Act pertains to territorial jurisdiction vested with an AO under sub-section (1) or sub- section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which puts a restriction on an assessee to object to the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and have no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Further, the Hon'ble High Court of Bombay in the case of Bansilal B. Raisoni & Sons v. Assistant Commissioner of Income Tax [2019] 101 taxmann.com 20/260 Taxman 281 (Bombay) had, inter alia, observed that the time limit for objecting to the jurisdiction of the Assessing Officer prescribed under sub-section (3) of Section 124 has a relation to the Assessing Officer's territorial jurisdiction. It was further observed that the time limit prescribed would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law and, therefore, wholly without jurisdiction. Also, the Hon'ble High Court of Bombay in the case of Commissioner of Income tax v. Lalitkumar Bardia [2017] 84 taxmann.com 213/[2018] 404 ITR 63 (Bombay) had
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addressed the contention of the department that where the assessee had not objected to the jurisdiction within the time prescribed under sub- section (3) of Section 124 of the Act, then, having waived its said right, it was barred from raising the issue of jurisdiction after having participated in the assessment proceedings. The Hon'ble High Court had observed that the waiver can only be of one's right or privilege, but non- exercise of the same will not bestow jurisdiction on a person who inherently lacks jurisdiction. Therefore, the principle of waiver cannot be invoked to confer jurisdiction on an Officer who is acting under the Act when he does not have jurisdiction. The Hon'ble High Court, while concluding as hereinabove, had relied on the judgment of the Hon'ble Supreme Court in the case of Kanwar Singh Saini v. High Court of Delhi (2012) 4 SCC 307. The Hon'ble Apex Court in its aforesaid judgment, had held that it is the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court. The Hon'ble Apex Court further observed that if the court passes an order or decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Also, the Hon'ble Apex Court clarified that an issue can be raised at any belated stage of the proceedings, including in appeal or execution. Elaborating further, it was observed by the
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Hon'ble Apex Court that the finding of a court or tribunal becomes irrelevant and unenforceable and inexecutable once the forum is found to have no jurisdiction. It was further observed by the Hon'ble Apex Court that the acquiescence of a party equally should not be permitted to defeat the legislative animation, and the court cannot derive jurisdiction apart from the statute. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Kanwar Singh Saini (supra) are culled out as under: "22. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. (Vide United Commercial Bank Ltd v. Workmen, Nai Bahu v. Lala Ramnarayan, Natraj Studios (P) Ltd. v. Navrang Studios, Sardar Hasan Siddiqui v. STAT, A.R. Antulay v. R.S. Nayak, Union of India v. Deoki Nandan Aggarwal, Karnal Improvement Trust v. Parkash Wanti, U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., State of Gujarat v. Rajesh Kumar Chimanlal Barot, Kesar Singh v. Sadhu, Kondiba Dagadu Kadam v. Savitribai Sopan Gujar and CCE v. Flock (India) (P) Ltd.)" (emphasis supplied by us)
We further find that the Hon'ble Supreme Court in its recent order passed in the case of Union of India v. Rajeev Bansal [2024] 167
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taxmann.com 70/301 Taxman 238/469 ITR 46 (SC) had, inter alia, observed that the order passed without jurisdiction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. The Hon'ble Apex Court had further observed that any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment, therefore, any consequential order passed or action taken will be invalid and without jurisdiction. For the sake of clarity, the observations of the Hon'ble Apex Court are culled out as under: “30. If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. (Dr. Premachandran Keezhoth v. Chancellor, Kannur University). Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner (CIT v. Anjum M.H. Ghaswala; State of Uttar Pradesh v. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid............. *** ** *** *** ** *** *** ** *** 32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench).There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes v. Onkarmal Nathmal Trust). An order passed without jurisdiction is a
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nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT v. Kelvinator of India Ltd.)" (emphasis supplied by us)
We shall now advert to the judgment of the Hon'ble Supreme Court, in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC), that has been relied upon by the Ld. DR to impress upon us that as the assessee in the present case before us, had, within the time allowed by the notice issued u/s 148 of the Act, dated 20/03/2024, i.e., period of 30 days, not called in question the jurisdiction of the DCIT/ACIT, Circle-3(1), Visakhapatnam, i.e., JAO, based on which the Assessment Unit, Income-Tax Department, i.e., Faceless Assessing Officer (FAO) had thereafter framed the assessment vide his order passed under Section 147 r.w.s 144B of the Act, dated 07/03/2024, therefore, as per the mandate of sub-section (3) of Section 124 of the Act, she cannot in the course of present proceedings before us object to the validity of the jurisdiction so assumed.
It would be relevant to cull out the facts that were involved in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology (supra), as under:
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(i). assessee had in the aforesaid case challenged the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as being without jurisdiction;
(ii). jurisdiction over the case of the assessee that was vested with ACIT, Corporate Circle-1(2), Bhuwaneshwar, was, after the filing of the return of income by the assessee, changed, and got vested with the Jt. CIT(OSD) (Exemption), Bhuwaneshwar;
(iii). it was the assessee's case that, as the jurisdiction to issue notice under Section 143(2) of the Act in its case was with the Jt. CIT (OSD)(Exemption), Bhuwaneshwar, therefore, the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar was without jurisdiction and, thus, liable to be quashed;
(iv). Hon'ble High Court of Orissa, observing that the jurisdiction to issue notice u/s. 143(2) of the Act in the case of the assessee remained with the Jt. CIT(OSD)(Exemption), Bhuwaneshwar, therefore, held the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as having been issued without jurisdiction and quashed the same.
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On Special Leave Petition (SLP) filed by the revenue, the Hon'ble Apex Court had, inter alia, observed that as the record revealed that the assessee had, participated in the assessment proceedings and not questioned the jurisdiction of the AO, there was no justification for the High Court to have set-aside the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar. Elaborating on the scope of Section 124(3)(a) of the Act, the Hon'ble Apex Court observed that the same precluded the assessee from questioning the jurisdiction of the AO if he does not do so within 30 days of receipt of notice u/s. 142(1) of the Act.
Before proceeding further, it would be relevant to point out that a plain reading of sub-section (3) of Section 120 of the Act reveals that the "Jurisdiction" vested with the Income-tax Authorities is classified into four categories, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. The assessee in the present case before us, has not assailed the vesting of jurisdiction with the DCIT/ACIT, Circle-3(1), Visakhapatnam, i.e., JAO based on either of the aforesaid four categories, but has rather challenged the lack of inherent jurisdiction with the Jurisdictional Assessing Officer (JAO), both for initiating the impugned proceedings under Section 148A of the Act, as well as issuing the consequential
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notice under Section 148 of the Act. In our view, as after the introduction of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022", it is only the FAO which can issue the notice under Section 148 of the Act and not the JAO, and the assessments are statutorily required to be as per the prescribed faceless mechanism provided under the provisions of Section 144(b) r.w Section 151A of the Act, therefore, the challenge by the assessee to the inherent lack of jurisdiction with the JAO to initiate the impugned proceedings under Section 148A of the Act, as well as issue the notice under Section 148 of the Act will not be saved by the judgment of the Hon’ble Supreme Court in Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology (supra), which being distinguishable on facts will not assist the case of the revenue before us.
Coming back to the core issue involved in the present appeal, i.e., the validity of the assessment order passed under Section 147 r.w.s 144B of the Act, dated 07/03/2024 by the Assessment Unit, Income-Tax Department, i.e., Faceless Assessing Officer (FAO), based on the order passed u/s 148A(d), dated 29/03/2023 and Notice u/s 148 of the Act, dated 29/03/2023, issued by the ACIT, Circle-3(1), Visakhapatnam, i.e., the JAO, we find that the same as on date is squarely covered by the
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Judgment of the Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of Mr. Kishan Kumar Thotakura & Ors. Vs. The Assistant Commissioner of Income-tax, Writ Petition No. 14681/2023 & Ors, dated 28.10.2025. The Hon’ble High Court in its aforesaid order had held that after the formulation of the "e-Assessment of Income Escaping Assessment Scheme, 2022", the notice under Section 148 of the Act can only be issued by the FAO and not by the JAO. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under:
“7. Discussion and findings: (A). The Division Bench of the Bombay High Court in the case of Prakash Pandurang Patil Vs. Income Tax Officer, Ward 5, Panvel & Others by following the judgment of a Division Bench of the High Court of Bombay, in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors 1 had considered the effect and interpretation of the Section 151 (A) of the Income Tax as extracted herein under: "3. It is apparent that the impugned notice dated 5 April, 2022 issued under Section 148 of the Act and the order of the same date under Section 148A(d) of the Act are issued by the Jurisdictional Assessing Officer ("JAO") and not under the mandatory faceless mechanism as per the provisions of Section 151A of the Act. For a notice to be validly issued under Section 148 of the Act, the respondent No.2 would be required to comply with the provisions of Section 151A of the Act, so as to adhere to the faceless mechanism, as notified by the Central Government by notification dated 29 March 2022. A Division Bench of this Court in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors 2 had considered the effect and interpretation of the said provision. The relevant extract of the said decision reads thus:-
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Further, in our view, there is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the scheme dated 29.03.2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148 of the Act. The Scheme dated 29th March 2022 in paragraph 3 clearly provides that the issuance of notice "shall be through automated allocation" which means that the same is mandatory and is required to be followed by the Department and does not give any discretion to the Department to choose whether to follow it or not. That automated allocation is defined in paragraph 2 (b) of the Scheme to mean an algorithm for randomised allocation of cases by using suitable technological tools including artificial intelligence and machine learning with a view to optimise the use of resources. Therefore, it means that the case can be allocated randomly to any officer who would then have jurisdiction to issue the notice under Section 148 of the Act, It is not the case of respondent No.1 that respondent No.1 was the random officer who had been allocated jurisdiction. 36. With respect to the argument of the Revenue, i.e., the notification dated 29th March, 2022 provides that the Scheme so framed is applicable only 'to the extent' provided in Section 144B of the Act and Section 144B of the Act does not refer to issuance of notice under Section 148 of the Act and hence, the notice cannot be issued by the FAO as per the said Scheme, we express our view as follows:- Section 151A of the Act itself contemplates formulation of Scheme for both assessment, reassessment or re-computation under Section 147 as well as for issuance of notice under Section 148 of the Act. Therefore, the Scheme framed by the CBDT, which covers both the aforesaid aspect of the provisions of Section 151A of the Act cannot be said to be applicable only for one aspect, i.e., proceedings post the issue of notice under Section 148 of the Act being assessment,
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reassessment or recomputation under Section 147 of the Act and inapplicable to the issuance of notice under Section 148 of the Act. The Scheme is clearly applicable for issuance of notice under Section 148 of the Act and accordingly, it is only the FAO which can issue the notice under Section 148 of the Act and not the JAO. The argument advanced by respondent would render clause 3(b) of the Scheme otiose and to be ignored or contravened, as according to respondent, even though the Scheme specifically provides for issuance of notice under Section 148 of the Act in a faceless manner, no notice is required to be issued under Section 148 of the Act in a faceless manner. In such a situation, not only clause 3(b) but also the first two lines below clause 3(b) would be otiose, as it deals with the aspect of issuance of notice under Section 148 of the Act. Respondents, being an authority subordinate to the CBDT, and which has been laid before both House of Parliament is partly otiose and inapplicable....." 37. When an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice. 4. It is hence apparent that in the present case, the impugned order and the notices issued by respondent no.1 are not in compliance with the Scheme notified by the Central Government implementing the provisions of Section 151A of the Act. The Scheme, as tabled before the Parliament as per the requirements of the said provision, is in the nature of a subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. Thus, in view of the explicit declaration of the law in Hexaware Technologies Limited (supra), the grievance of the petitioner- assessee insofar as it relates to an invalid issuance of the impugned order and the notice is required to be accepted. 5. Learned Counsel for the parties agree that in this view of the matter, the proceedings initiated under Section 148 of the Act would not be sustainable and are rendered invalid in view of the judgment rendered
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in Hexaware Technologies Limited (supra)." (B). Further, it is very apt to refer the judgment of the High Court of Telangana in the case of Kanakanala Ravindra Reddy Vs. Income Tax Officer 3 , decided on 14.09.2023 whereby a batch of Writ Petitions were allowed and the proceedings initiated under Section 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notification 18/2022 dated 29.03.2022. (C). It is also to be noted that the same issue had also been decided by various High Courts in India i.e., Gauhati High Court in the case of Ram Narayan Sah Vs. Union of India 4, Punjab and Haryana High Court in the case of Jatinder Singh Banngu Vs. Union of India5 and Telangana High Court in the case of Sri Venkataramana Reddy Patloola Vs. Deputy Commissioner of Income Tax6. Some views have been taken by the Division Bench of Calcutta High Court in the case of Giridhar Gopal Dalmia Vs.Union of India Vs. Ors7, (2023) 156 taxmann.com 178 (Telangana) (2024) 156 taxmann.com 478 (Gauhati) (2024) 165 taxmann.com 115(Punjab & Haryana) (2024) 167 taxmann.com 411 (Telangana) M.A.T. 1690 of 2023 decided on 25.09.2024. In these decisions, the various High Courts allowed the Writ Petitions in favour of the assessee in so far as the issue of jurisdiction is concerned. (D). Admittedly, the Supreme Court has upheld the decision of the Bombay High Court in the case of Prakash Pandurang Patil Vs. Income Tax Officer, Ward 5 Panvel & Ors in S.L.P.(Civil) Diary No.39689/2025, dated 18.08.2025, wherein, the Bombay High Court has allowed the said Writ Petition by following the judgment of the Division Bench of the Bombay High Court in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. In view of the above factual position, we are of the considered view that the issue involved in the present batch of Writ Petitions is no more res integra. (E). Considering the background in notifying the (E-Assessment Scheme of Income Escaping Assessment Scheme, 2022) notified by the Government of India on 29.03.2022, and in the light of the decisions of various High Courts stated supra and upon careful consideration of the contentions raised by the learned counsel appearing on either side, we hold that the impugned notices and orders which have been issued by the Jurisdictional Assessing Officer, or outside the faceless mechanism as provided under the provisions of Section 144 (b) read with Section 151 A and the "E-Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151 A, is bad and illegal. It is made
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clear that the Jurisdictional Assessing Officer ("JAO") had no jurisdiction to issue the impugned orders/notices. (F). In view of the foregoing reasons, all these Writ Petitions are to be allowed in favour of the petitioners, by setting aside the impugned notices/orders. 8. Accordingly, these Writ Petitions are allowed. (i) Consequently, the impugned notices/orders issued under Sections 148-A(b), 148-A(d) and 148 of the Income Tax Act, 1961, in all these Writ Petitions, are hereby set-aside. (ii) The consequential orders, if any, shall stand set-aside. 9. There shall be no order as to costs. As a sequel, miscellaneous petitions pending, if any, shall stand closed.”
We, thus, respectfully follow the judgment of the Hon’ble Jurisdictional High Court in the case of Mr. Kishan Kumar Thotakura & Ors. Vs. The Assistant Commissioner of Income-tax (supra), and on the same terms hold the impugned orders and notices issued by the Jurisdictional Assessing Officer (JAO), i.e., outside the faceless mechanism as provided in Section 144(b) r.w Section 151A and the "E-Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151A of the Act, as bad and illegal. Consequent thereto, we herein uphold the order passed by the CIT(A) who had quashed the impugned assessment order passed
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by the AO under Section 147 r.w.s 144B of the Act, dated 07/03/2024, for want of a valid assumption of jurisdiction on his part.
As we have upheld the quashing of the assessment for want of valid assumption of jurisdiction by the Assessment Unit, Income-Tax Department, i.e., Faceless Assessing Officer (FAO) for framing the impugned assessment vide order passed under Section 147 r.w.s 144B of the Act, dated 07/03/2024, based on the Notice u/s 148 of the Act, dated 29/03/2023 issued by the DCIT/ACIT, Circle-3(1), Visakhapatnam, i.e., JAO, therefore, we refrain from adverting to the other grounds based on which the revenue has assailed the impugned order of the CIT(A) before us, which, thus, are left open.
Resultantly, the order passed by the Assessment Unit, Income- Tax Department, i.e., Faceless Assessing Officer (FAO) under Section 147 r.w.s 144B of the Act, dated 07/03/2024, is quashed for lack of valid assumption of jurisdiction and thus, the appeal filed by the revenue being devoid and bereft of any substance is dismissed in terms of our aforesaid observations.
In the result, the appeal filed by the revenue is dismissed in terms of our aforesaid observations.
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Order pronounced in the open court on 10th December, 2025.
Sd/- Sd/- (MANJUNATHA G.) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 10th December, 2025 *OKK / SPS Copy to: S.No Addresses 1 Deputy Commissioner of Income Tax, Circle-3(1), 35, 50- 92-35, Sankara Matam Road, Opp. Reliance Fresh, Beside Reliance Fresh, Near by Main Road, Madhuranagar, Dwaraka Nagar, Visakhapatnam, Andhra Pradesh-530016. 2 Smt. Doddi Roopa, 50-52-9/2, Srinivasa Apartment, SF- 7 Seedthammadhara, North Extension Layout, Ward-9, Andhra Pradesh-530013. 3 The Pr.CIT, Visakhapatnam. 4 The DR, ITAT, Visakhapatnam. 5 Guard File By Order
Sr. Private Secretary, ITAT, Hyderabad.
S.No. Details Date 1 Draft dictated on .2025 2 Draft placed before author .2025 Draft proposed & placed before the Second 3 Member
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4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement 7 File came to P.S. 8 File sent to Bench Clerk 9 Date on which the file goes to Head Clerk 10 Date on which file goes to A.R. 11 Date of Dispatch of order
