Loading judgment…
Facts
The Revenue preferred an appeal against the order of the Ld.CIT(A) which deleted an addition made by the AO. The assessee, supporting the Ld.CIT(A)'s action, raised a legal issue regarding the AO's jurisdiction to reopen the assessment under Section 147 of the Income Tax Act, 1961, by issuing notice under Section 148.
Held
The Tribunal held that the notice issued under Section 148 of the Act by the Jurisdictional Assessing Officer (JAO) was invalid and bad in law because it was issued after the notification of the faceless scheme, which mandated such notices to be issued through the Faceless Mechanism. The Tribunal followed the jurisdictional High Court's decision in Mark Studio India (P.) Ltd. and other High Courts.
Key Issues
Whether the notice issued by the Jurisdictional Assessing Officer under Section 148 of the Income Tax Act, 1961, is valid in light of the e-Assessment Scheme notified on 29.03.2022.
Sections Cited
147, 148, 151, 151A, 144B, 148A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeal)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 29.07.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2013-14.
At the outset, the assessee appearing in-person supported the action of the Ld.CIT(A), by relying on the Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 [hereinafter, the Rules] submitted that (AY 2013-14) Srinivasagam Selvamathan :: 2 ::
the Ld.CIT(A) has deleted the addition made by the AO to the tune of ₹15,31,46,680/- on merits and he supported the impugned action of the Ld.CIT(A) by relying on the Rule 27 of the Rules, also on a legal issue/ground that the AO’s action to reopen and frame assessment order making addition of ₹15,31,46,680/- itself was without jurisdiction. In other words, he submitted that at the first place, the AO didn’t had the jurisdiction to reopen the assessment u/s.147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘), by issuing notice u/s 148 on 25.07.2022. Explaining further on the legal issue, he submitted that after 29.03.2022, the Jurisdictional Assessing Officer (JAO) didn’t had the jurisdiction to issue notice u/s.148 of the Act. And in this regard, he drew our attention to the contents of the assessment order, wherein he pointed out that the JAO had issued the notice u/s.148 of the Act on 25.07.2022 and therefore, the notice is invalid and hence the consequent passing of the assessment order by order dated 27.05.2023 is bad in law. Since the assessee by way of Rule 27, supra has supported the impugned action of Ld CIT(A) deleting the addition made by AO on the legal issue noted supra we will deal with it first, since if the legal issue is answered in assessee’s favor, it will go to the root of the reopen/assessment order itself.
According to the assessee, the impugned notice issued u/s.148 dated 24.07.2022, is invalid and bad in law being issued by the (AY 2013-14) Srinivasagam Selvamathan :: 3 ::
Jurisdictional Assessing Officer which is not in accordance with Sec.
151/151A of the Act read with the faceless Scheme notified by CBDT on 29th March 2022 for assessment, reassessment or re-computation u/s.147/issuance of notice u/s.148 of the Act or for conducting of inquiry or issuance of show cause notice or passing of order u/s.148A of the Act or sanction for issuance of notice under section 151 of the Act. Further, according to the assessee, in exercise of the powers conferred u/s.151A of the Act, CBDT had issued a notification dated 29.03.2022 [after laying the same before each House of Parliament] and formulated a Scheme called "the e-Assessment of Income Escaping Assessment Scheme, 2022"
(herein after ‘the Scheme’). And that the Scheme provides that (a) the assessment, reassessment or re-computation u/s.147 of the Act and (b) the issuance of notice u/s.148 of the Act shall be 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 with reference to making assessment or reassessment of total income or loss of assessee. Therefore, according to assessee, since the impugned notice u/s 148 dated 25.07.2022 has been issued by JAO and not by the NFAC, there is per-se contravention of the provisions of the Act, thus violating the principles of Rule of Law, which vitiates the reopening of the assessment; and further pointed out that this legal issue raised by the (AY 2013-14) Srinivasagam Selvamathan :: 4 :: assessee has been answered in favor of the assessee by the jurisdictional High Court & other Hon’ble High Courts;-
Sl.No. Date Citation 1 24.06.2025 Mark Studio India (P.) Ltd. v. Income-tax Officer - High Court of Madras [DB] - WA No. 781 OF 2025, order dated 24.06.2025 2 14.09.2023 Kankanala Ravindra Reddy v. Income-tax Officer High Court of Telangana - 156 taxmann.com 178 3 03.05.2024 Hexaware Technologies Ltd. v. Assistant Commissioner of Income- tax High Court of Bombay - 464 ITR 430 4 20.05.2024 Ram Narayan Sah v. Union of India - High Court of Gauhati 163 taxmann.com 478 5 02.07.2024 Sushila Sureshbabu Malge v. Income-tax Officer - High Court of Bombay - 468 ITR 624 6 19.07.2024 Jatinder Singh Bhangu v. Union of India High Court of Punjab & Haryana - 466 ITR 474 7 24.07.2024 Sri Venkataramana Reddy Patloola v. Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad and Others High Court of Telangana - 468 ITR 181 [W.P.No.13353, 16141 & 16877 of 2024] 8 29.07.2024 Jasjit Singh v. Union of India - High Court of Punjab & Haryana - 467 ITR 52 9 05.08.2024 Samp Furniture Pvt. Ltd. v. Income Tax Officer, Ward 3(3)-Thane & Ors High Court of Bombay - 165 taxmann.com 581 10 05.08.2024 Kairos Properties Private Limited v. ACIT, Circle-15(1)(2), Mumbai & Ors - High Court of Bombay-468 ITR 168 11 29.08.2024 W.P.No.23573/2024 in the Case of ADIT(Int Taxn), Hyderabad v. Deepanjan Roy followed the decision in W.P.No.13353 of 2024 dated 24.07.2024 [Sri Venkataramana Reddy Patloola (supra)] 12 05.02.2025 Sappahire Educational & Charitable Trust v. The ITO, Exemptions Ward, Trichy. - Income Tax Appellate Tribunal, Chennai - & 2417/CHNY/2024 13 24.04.2025 Tecumseh Products India (P.) Ltd. v. Deputy Commissioner of Income-tax High Court of Telangana - 174 taxmann.com 1203
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 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 (AY 2013-14) Srinivasagam Selvamathan :: 5 :: of Madras High Court in favor of the Revenue and cited the following orders:
• Triton Overseas (P) Ltd. v. Union of India – Calcutta High Court – 156 Taxmann.com 318 • T.K.S. Builders (P) Ltd. v. ITO – Delhi High Court – 469 ITR 657 • Mark Studio India (P.) Ltd. v. Income-tax Officer, High Court of Madras 169 taxmann.com 542, order dated 20.12.2024 5. 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 P. Raveendran ACIT Circle 1 Tirunelveli, had issued notice u/s.148 of the Act on 25.07.2022 [a copy of which has been placed before us], and pursuant to it, reopened the assessment for AY 2013-14 u/s.147 of the Act and thereafter, the Assessment Unit Income Tax Department passed the re/assessment order on 27.05.2023 making addition of ₹15,31,46,680/-. The action of JAO issuing impugned notice dated 25.07.2022 is assailed before us as bad in law on the strength of Hon’ble Jurisdictional High Court and other judicial precedents cited supra and in this regard notes that the impugned notice shows that it was issued by JAO/Shri P. Raveendran ACIT Circle 1 Tirunelveli, thereafter, the Assessment Unit Income Tax Department is noted to have framed the assessment order on 27.05.2023 making certain additions.
(AY 2013-14) Srinivasagam Selvamathan :: 6 ::
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A)
who was pleased to delete the addition of the AO/NFAC, against which, revenue has preferred this appeal before us.
Since the assessee has raised legal issue against the impugned action of the JAO issuing notice u/s.148 of the Act dated 25.07.2022, under Rule 27, supporting the impugned action of Ld CIT(A), 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)
(AY 2013-14) Srinivasagam Selvamathan :: 7 :: 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)
the Hon’ble jurisdictional High Court (Single Bench) order in the case of Mark Studio India (P.) Ltd. v. Income-tax Officer, held in favour of (AY 2013-14) Srinivasagam Selvamathan :: 8 ::
Revenue, was reversed by the Hon’ble Division Bench by order dated 24.06.2025 by holding as under:
This appeal impugns an order passed by the learned Single Judge.
The learned Single Judge was pleased to dismiss the petition on the ground that even if the notice has been issued by Jurisdictional Assessment Officer and not Faceless Assessment Officer, the notice issued under Section 148A/148 of the Income Tax Act will be valid.
Ms.Vardhini Karthik submitted that this Court has, in many matters, held, following the judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax', that notice that has to be issued by Faceless Assessment Officer has to be issued Faceless Assessment Office and if issued by Jurisdictional Assessment Officer, the same is not valid.
Ms.Premalatha, who takes notice for the Revenue, states that the law as proposed by Ms.Vardini Karthick is correct and therefore, the Court may quash and set aside the notices, but keep open liberty of the Revenue to re-ignite the notices in case the Apex Court interferes with the order and judgment of the Bombay High Court in Hexaware Technologies (supra).
Keeping open the Revenue's rights and contentions, as noted above, the impugned notices dated 15.04.2024 are quashed and set aside. The appeal is disposed of. There shall be no order as to costs. Consequently, the interim application is closed.
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 25.07.2022 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 25.07.2022 is found to be invalid and bad in law, since it 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 2013-14 by issuance of impugned notice dated 25.07.2022 u/s.148 of the (AY 2013-14) Srinivasagam Selvamathan :: 9 ::
Act and is therefore held to be illegal and bad in law and therefore, assessment order dated 27.05.2023 is held to be null in eyes of law; and the assessee succeeds, on the legal issue raised under Rule 27, which is held in favour of the assessee and therefore, we are inclined not to go into the merits of the addition deleted by the Ld CIT(A).
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 revenue is dismissed.
Order pronounced on the 05th day of January, 2026, in Chennai.
Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी. वक�) (S.R.RAGHUNATHA) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 05th January, 2026. TLN