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Facts
The assessee, a real estate firm, did not file an ITR for AY 2015-16 due to partner disputes, leading the AO to complete an assessment u/s 144 with a substantial addition after issuing notices u/s 148 and 142(1). The CIT(A) dismissed the assessee's appeal, which was filed with a delay. The assessee subsequently challenged the jurisdiction of the National Faceless Assessment Centre (NFAC) to pass the assessment order dated 27.03.2022.
Held
The Tribunal held that the National Faceless Assessment Centre (NFAC) lacked jurisdiction to issue notice u/s 142(1) prior to 30.03.2022, when the faceless enquiry scheme u/s 142B was notified. It also found that NFAC had no jurisdiction to make assessment u/s 147 or issue notice u/s 142(1) prior to 29.03.2022, as the e-assessment of income escaping assessment scheme u/s 151A was notified only on that date. Since the assessment order was passed before these effective dates, it was without jurisdiction.
Key Issues
Whether the assessment order passed by the National Faceless Assessment Centre (NFAC) was without jurisdiction as the statutory provisions and schemes enabling it to act came into effect after the date of the assessment order and notice issuance.
Sections Cited
147, 144, 144B, 151A, 148, 142(1), 142B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH, PATNA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA
(Through Virtual hearing at Kolkata)
BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM
ITA No.716/PAT/2024
(Assessment Year: 2015-16)
Kashyap Constructions &
Developers
ACIT, CIR-4
503, Hariom Commercial Complex, New Dak Bunglow Road, Patna-800001, Bihar
Patna-800001, Bihar
(Appellant) (Respondent)
PAN No. AALFK2264K
Vs.
Assessee by : Shri S .K . Tulsiyan, AR Revenue by : Shri Rinku Singh, DR
> Date of hear ing: 11 .03 .2025 Date of pronouncement : 02 .04.2025
O R D E R
Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the "Ld. CIT(A)"] dated 21.11.2024 for the AY 2015-16.
- 02. The issue raised in ground no.1 is as under:- - "1. That the order passed u/s 147 r.ws. 144 r.w.s. 144B of the II Act, 1961 on 27.03.2022 by National Faceless Assessment Centre is without jurisdiction in as much as the impugned provision of section 151A investing jurisdiction to the National Faceless Assessment Centre came with effect from 29.03.2022 vide Notification No. 18/2022/F.No. 370142/16/2022-TP1. only." - 03. The facts in brief are that the assessee is a partnership firm engaged in the business of real estate development and renting of immovable properties. During the year the firm had undertaken the construction
and development of residential project called Jasmati Complex having an area of 15,800 sq. feet comprising of 12 units at Mohalla-Aparna Colony, Mauza-Jalalpur, Survey Thana-Danapur, at present P.S. Rupsapur-1 in the town and Disrict of Patna, bearing Survey Plot No.217/, Khata No.04, Thana-22, Danapur, Patna. The assessee was following Project Completion Method (PCM) for the purpose of ascertaining its income. Though the assessee has filed its returns of income for A.Y. 2013-14 and 2014-15, however, in A.Y. 2015-16, due to feud amongst partners there was complete deadlock and the operations of the firm were heavily and severely affected with the result no accounts were prepared and finalized and consequently no return of income was filed for the impugned assessment year. The ld. AO issued notice u/s 148 of the Act on 31.03.2021, and thereafter notice u/s 142(1) of the Act was also issued and served upon the assessee, however, there was no compliance on the part of the assessee. The ld. AO finally completed the assessment u/s 144 of the Act by making an addition of ₹3,44,15,000/- to the income of the assessee.
Thereafter the assessee filed the appeal before the ld. CIT (A) with a delay of 4 and half months for which a condonation petition with supporting affidavit of the partner was filed. However, the ld. CIT (A) dismissed the appeal. Now, the assessee has raised legal issue before us that order passed u/s 147 read with section 144B of the Act dated 27.03.2022, by National Faceless Assessment Centre, is without jurisdiction as provisions of Section 151A of the Act as the the eassessment of Income escaping assessment scheme, 2022 was notified on 29.03.2022 vide notification No.18/2022/F.No.370142/16/2022-TPL for assessment.
After hearing the rival contentions and perusing the materials available on record, we find that the notice u/s 142(1) was issued on 16.12.2021, by National Faceless Assessment Centre (NFAC), when there was no power vested with the said NFAC to issue such notice. We note that there is a separate section of 142B of the Act which was inserted w.e.f. 01.11.2020 for faceless enquiry and valuation and we further note that the faceless enquiry and valuation scheme 2022, was duly notified on 30.03.2022 vide notification no. 19/2022 F.No.370142/15/2022-TPI for issuing notice u/s 142(1) of the Act in a faceless manner through automated allocation in accordance with and to the extent provided in Section 144B of the Act with reference to making faceless assessment of total income or loss of assessee. We also note that Section 144B of the Act was substituted by Finance Act, 2022 w.e.f. 01.04.2022 to include provision of issuance of notice u/s 142(1) of the Act vide clause (iii) of Section 144B of the Act. We further note that Section 151A of the Act was inserted w.e.f. 01.11.2020 for faceless assessment of income escaping assessment u/s 147 of the Act and u/s 151A of the Act, e-assessment of income escaping assessment scheme, 2022 was duly notified on 29.03.2022 vide notification no. 18/2022/F.No/370142/16/2022-TPL for assessment, reassessment or recomputation under section 147 of the Act through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner to the extent provided in Section 144B of the Act. Therefore, it is apparent from the above that the NFeAC had no jurisdiction to issue notice u/s 142(1) of the Act prior to 30.03.2022, because the scheme of faceless enquiry u/s 142B of the Act for issuance of notice u/s 142(1) of the Act by NFeAC was notified on 30.03.2022 vide
Notification no. 19/2022 and vide notification no. 18/2022, dated 29.03.2022 u/s 151A of the Act , NFeAC was vested with power to make assessment u/s 147 of the Act.
- 06. The ld. CIT DR also filed a detailed submissions dated 04.03.2025, controverting the augments taken by the ld. Counsel for the assessee, however, we find that the arguments and submissions made by the ld. DR is devoid of any merit. - 07. The case of the assessee find support from the decision of the coordinate bench in the case of Nabiul Industrial Metal Pvt. Ltd. Vs. ITO in ITA no. 1328/KOL/2024, wherein the co-ordinate Bench vide Para 2.1 to 2.3, allowed the appeal of the assessee by holding that the assumption of jurisdiction by the NFAC is invalid as there is no power with NFAC to issue notice u/s 142(1) of the Act prior to 29.03.2022 because the scheme of faceless enquiry u/s 142B of the Act for issuance of notice u/s 142(1) of the Act by NFAC was notified on 30.03.2022 vide Notification no. 19/2022 though it was inserted on the statute book w.e.f. 1.11.2020 for faceless enquiry and valuation. Further u/s 151A of the Act, e-assessment of income escaping assessment scheme, 2022 was duly notified on 29.03.2022 vide notification no. 18/2022/F.No/370142/16/2022-TPL for assessment, reassessment or recomputation under section 147 of the Act through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner to the extent provided in Section 144B of the Act. Therefore prior to 29.3.2022, the NFeAC has no jurisdiction to make assessment u/a 147 of the Act or to issue notice 142(1) of the Act vide notification no. 18/2022, dated
- 29.03.2022 u/s 151A of the Act. Accordingly the ground no. 1 of the appeal of the assessee is allowed. - 08. The other grounds raised on merits are not being adjudicated and are left open to be decided at later stage if need arises for the same. - 09. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 02.04.2025.
Sd/-(PRADIP KUMAR CHOUBEY) (JUDICIAL MEMBER)
Sd/-(RAJESH KUMAR) (ACCOUNTANT MEMBER)
Kolkata, Dated: 02.04.2025
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to:
- 1. The Appellant - 2. The Respondent - 3. CIT - 4. DR, ITAT, - 5. Guard file.
BY ORDER.
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Patna