SHANMUGAM PALANISAMY,KEERAMBUR vs. INCOME TAX OFFICER, WARD 2, NAMAKKAL, NAMAKKAL

Per contra, the Ld.DR supported the action of the JAO issuing notice u/s.148 of the Act and submitted that both the NFAC & JAO have got concurrent jurisdiction and therefore, notice is valid and also submitted (AY 2020-21) Shanmugam Palanisamy. :: 4 :: that there was no prejudice caused to the assessee. Therefore, he asserted that the action of the JAO issuing notice is valid and doesn’t want us to interfere with the action of AO and instead, wants us to dismiss the legal issue, and he cited the decision of the Hon’ble Delhi High Court & Hon’ble Calcutta High Court as well as the Hon’ble Single Bench of Madras High Court in favor of the Revenue and cited the following orders:

We have heard both the parties and perused the material available on record. We on the legal issue raised by the assessee note that the JAO Shri Vaiyapuri Kamalakannan Ward 2 Namakkal, had issued notice u/s.148 of the Act on 22.03.2024 [a copy of which has been placed before us], and pursuant to it, reopened the assessment for AY 2020-21 u/s.147 of the Act and thereafter, the Assessment Unit Income Tax Department passed the re/assessment order on 29.01.2025 making certain additions.

Aggrieved, the assessee preferred an appeal before the Ld.CIT(A)

Since the assessee has raised legal issue against the impugned action of the JAO issuing notice u/s.148 of the Act dated 22.03.2024, we will decide it first.

We note that on this legal issue there are divergent views expressed by different Hon’ble High Courts. However, it is noted that on this issue the Hon’ble jurisdictional High Court i.e. Madras High Court (Division Bench) in Mark Studio India (P.) Ltd. (supra) has expressed its view in favour of the assessee, and has concurred with the view on this issue as held by the Hon’ble Bombay High Court in the case of Hexaware Technologies (supra). And it is noted that similar view in favour of assessee has been taken by Hon’ble Gujarat High Court, the Hon’ble Telangana High Court and the Hon’ble Punjab & Haryana High Court as cited by Ld AR (supra). Even though, the Ld.DR has brought to our notice that on the legal issue, the Hon’ble Delhi High Court & Hon’ble Calcutta High Court and Hon’ble Single Bench of Madras High Court in Mark Studio India (P.) supra has held in favour of the Revenue; but since the Hon’ble jurisdictional High Court (Division Bench) in Mark Studio India (P.) (supra) has reversed the Hon’ble Single Bench and has taken view in favour of assessee as held in Hexaware Technologies Ltd. (Bom), according to us, the legal issue raised by the assessee is no longer res-integra and we are bound to follow the decision in favour of the assessee on the legal issue raised before us.

The Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd., (supra) is noted to have has even dealt with the decision rendered by the Hon’ble Calcutta High Court in favour of the Revenue, but concurred with the view of the Hon’ble Telangana High Court in the case of Sri Venkataramana Reddy Patloola v. DCIT reported in [2023] 156 taxmann.com 178 (Telangana) and held that in view of the provisions of Sec.151A of the Act read with Faceless Scheme dated 29.03.2022, notices issued by the JAO u/s.148A(d)/148 of the Act was invalid and bad in law. We further note that aforesaid decision of the Hon’ble Telangana High Court has been followed not only by the Hon’ble Bombay High Court, but also by the Hon’ble Gauhati High Court in the case of Ram Narayan Sah v. Union of India reported in 163 taxmann.com 478, and the Hon’ble Punjab & Haryana High Court in the case of Jatinder Singh Bhangu v. Union of India reported in 165 taxmann.com 115 and other cited cases (supra). And as noted (supra)

In the light of the aforesaid discussion, and subject to caveat given by Hon’ble High Court supra, we find that in the case in hand, the JAO had issued notice u/s.148 dated 22.03.2024 which impugned notice has been issued despite faceless scheme was notified by Central Government on 29.03.2022 pursuant to section 151A of the Act, making it mandatory for the issuance of notice u/s.148A(b), 148A(d) as well as 148 of the Act by the Faceless Mechanism, the impugned notices especially issued u/s.148 dated 22.03.2024 is found to be invalid and bad in law, since it (AY 2020-21) Shanmugam Palanisamy. :: 8 :: has been issued contrary to law and is against the ‘Rule of Law’; which impugned action of the JAO vitiates the reopening of assessment for AY 2020-21 by issuance of impugned notice dated 22.03.2024 u/s.148 of the Act and is therefore held to be illegal and bad in law and therefore, assessment order dated 29.01.2025 is held to be null in eyes of law; and the assessee succeeds, on the legal issue which is held in favour of the assessee and therefore, we are inclined not to go into the merits of the addition made by the NFAC.

Before parting, we clarify that since our aforesaid action on the legal issue is based on the decision of Hon’ble jurisdictional High Court (DB) passed on 24.06.2025 in Mark Studio India (P.) Ltd. v. Income-tax Officer supra, wherein their Lordship had given the Revenue liberty to approach the Court [i.e. to read in this context, this Tribunal], as observed at para 4 & 5 of the High Court order (supra), if the Revenue succeeds in Supreme Court, which observation giving liberty to Revenue would apply ‘mutatis-mutandis’ in this case also.

In the result, appeal filed by the assessee is allowed. Order pronounced on the 07th day of January, 2026, in Chennai.