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Facts
The appeals were filed by the revenue and cross objections by the assessee challenging an order by the National Faceless Appeal Centre (NFAC) / CIT(A). The NFAC/CIT(A) had quashed reassessment proceedings initiated under Section 147 and Section 148A of the Income Tax Act. The assessee had challenged the validity of the notice issued under Section 148(b) on additional grounds, which were admitted by the CIT(A).
Held
The Tribunal noted that the matter involved amendments by the Finance Bill and that the issue of reassessment proceedings needed to be restored to the AO for fresh adjudication, with due opportunity to the parties. For the cross-objection, the Tribunal found that the grounds were not raised before the CIT(A) and needed factual verification, hence it was also restored to the AO.
Key Issues
Whether the CIT(A) was justified in quashing reassessment proceedings based on the Hexaware Technologies Ltd. judgment and whether the JAO had powers to initiate proceedings under Sections 148/148A post the Faceless Reassessment Scheme.
Sections Cited
147, 148, 148A, 250, 144B
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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
PER SANDEEP GOSAIN (JM): The present appeals have been filed by the revenue and cross objections by the assessee challenging the impugned order dt. 24.11.2024 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment years 2014-15 & 2016-17. 2. Since all the issues involved in these appeals and cross objection are common and identical and belongs to one assessee therefore, they have been clubbed, heard together and consolidated order is being passed. Firstly, we shall take A.Y 2014-15 as lead case and facts narrated therein.
A.Y 2014-15 The Revenue has raised the following grounds of appeal:
1. 1. 1. 1. 1. 1. 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in quashing reassessment proceedings merely relying upon the judgement of the Hon'ble Bombay High Court in the case of Hexaware Technologies Ltd, and holding that the JAO had no powers to initiate proceedings under section 148/148A of the Income Tax Act, post introduction of the Faceless Re assessment scheme 2022.
2. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) was right in holding that section 144B of the IT Act, 1961 precluded the JAO from initiating proceedings from reassessment as per section 148 and 148A of the IT Act, 1961 Astra Exim Pvt. Ltd., Mumbai 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in quashing the order passed under Section 148A(d) by the Jurisdictional Officer (JAO) and the notice 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? 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in quashing the order passed by the Jurisdictional Assessing Officer (JAO) under Section 148A(d) and the notice issued by the JAO under Section 148, failed to appreciate that the same are consistent with the legislative intent, when the powers to issue the notice u/s 148 remained intact with the JAO even after bringing the "Faceless Assessment Scheme? 5. Whether on the facts and circumstances of the case and in law, the Ld. CITIA) is right in holding that the JAO cannot issue notice us 148 of the Act, when both the JAO as well as unita 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 W.P. No. WPO/ 1566/2023 dated 13.09.2023 in the case of M/s Triton Overseas Pvt. Ltd.? 6. Whether on the facts and circumstances of the case and in law, the Hon'ble Delhi High Court, vide judgment delivered in the case of T.K.S Builders Pvt. Ltd v.s. Income Tax Officer Ward 25, 2024 has dealt with this issue and held that the JAO has the authority for the purpose of proceeding u/s.148 & 148A of the IT Act, 1961. The ratio laid down by the Hon'ble Delhi High Court, holding that the JAO has powers to initiate proceedings under section 148/148A of the Income Tax Act, needs to be applied to the facts of the present case.
3. All the grounds raised by the Revenue are interrelated and interconnected and relates to challenging the order of the learned CIT(A) in quashing the reassessment proceedings by relying on the judgment of the Hon’ble Bombay High Court in the case of Hexaware Technologies Astra Exim Pvt. Ltd., Mumbai Ltd. Therefore, we have decided to adjudicate these grounds through the present consolidated order.
We have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue authorities. From the record, we noticed that the assessment proceedings were initiated under Section 147 of the Act by the jurisdictional Assessing Officer. During the course of the assessment proceedings, the assessee had submitted certain details which were perused by the AO, however, the AO did not accept the same. Accordingly, the assessment was concluded by disallowing the deduction claimed under the head “Profits and Gains from Business or Profession (PGBP)” and also by disallowing the claim of brought-forward losses.
During the appellate proceedings, the learned CIT(A) admitted the additional grounds raised
by the assessee, whereby the assessee challenged the validity of the notice issued under Section 148(b) of the Act. Ultimately, by following the decision of the jurisdictional Hon’ble Bombay High Court in Hexaware Technologies Ltd. vs ACIT (2024) 162 taxmann.com 225, the learned CIT(A) decided the issue raised in the additional ground in favour of the assessee and declared the reassessment order as annulled.
6. Now, before us, it has been specifically argued by the learned DR that the matter is still pending before the Hon’ble Supreme Court. Moreover, we have also taken Astra Exim Pvt. Ltd., Mumbai judicial notice of the fact that the Government of India, vide the Finance Bill, has carried out certain amendments in the Income-tax Act. Therefore, we are of the view that this issue needs to be restored to the file of the AO for fresh adjudication. Needless to say, the AO shall decide the matter afresh after providing sufficient and due opportunity of being heard to the parties.
Before parting, we make it clear that our decision to restore the matter back to the file of AO shall in no way be construed as having any reflection or expression on the merits of the dispute which shall be adjudicated by AO independently in accordance with law. Co. No. 108/Mum/2025, A.Y 2014-15.
At the very outset, we noticed that the assessee had filed the cross objection with delay. In this regard, after hearing the Ld. AR, we found sufficient cause for not filing the cross objection in time; therefore, we condone the delay. And proceed to hear the matter on merits 9. We have heard the counsel for both parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that the grounds raised in the cross objection were neither raised nor argued before the CIT(A) and are not even emanating from the order of first appellate authority. Therefore, we are of the view that that the cross objection raised by the assessee needs factual verification, as these Astra Exim Pvt. Ltd., Mumbai were never taken before, therefore we restore the matter back to the file of the AO. Needless to say, the AO shall decide the matter afresh after providing sufficient and due opportunity of being heard to the parties.
Before parting, we make it clear that our decision to restore the matter back to the file of AO shall in no way be construed as having any reflection or expression on the merits of the dispute which shall be adjudicated by AO independently in accordance with law.
A.Y 2016-17 11. As the facts and circumstances in the connected matter i.e. A.Y 2014- 15, are identical to A.Y 2016- 17 (except variance in days of delay) therefore, the decision rendered in above paragraphs would apply mutatis mutandis for connected appeal also. Accordingly, the grounds of appeal of the connected appeal also stands allowed for statistical purposes.