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Facts
The assessee raised an additional ground challenging the jurisdiction of the National Faceless Appeal Centre (NFAC) to frame assessment orders. The core issue is whether the NFAC had the authority to assume jurisdiction under Section 151A of the Income Tax Act, 1961, considering the notification dates and the effective date of the provision.
Held
The Tribunal held that the assessment proceedings were without jurisdiction. Section 151A of the Income Tax Act, 1961, which deals with faceless assessment for escaped income, was brought onto the statute book with effect from 01.11.2020, but was notified only on 29.03.2022. Therefore, any assessment framed by the NFAC prior to the notification date is considered invalid and unsustainable.
Key Issues
Whether the National Faceless Assessment Centre (NFAC) assumed valid jurisdiction under Section 151A of the Income Tax Act, 1961, for framing assessment orders, considering the effective date of the provision versus the date of notification.
Sections Cited
Section 151A of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961, Section 143(2) of the Income Tax Act, 1961, Section 69A of the Income Tax Act, 1961, Section 115BBE of the Income Tax Act, 1961, Section 271(1)(c) of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, “B” BENCH,KOLKATA
Date of concluding the hearing : 28.01.2026 Date of pronouncing the order :17.02.2026 O R D E R Per Rajesh Kumar, AM
The present two appeals filed by the assessee are arising from orders dated 19.05.2025 and 02.06.2025 passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter referred to as “the Ld.CIT(A)].
At the outset, the Ld. Counsel of the assessee pointed out that the assessee has raised additional ground challenging the jurisdiction of National Faceless Appeal Centre (NFAC) to frame assessment order dated 29.09.2021 as without jurisdiction and therefore, the same is invalid and “National faceless Assessment Centre (NFAC) erred in having assumed jurisdiction under section 151A, read with section 144B of the Income Tax Act, 1961 from 18.02.2021 when they were not empowered under section any Notification under section 151A about the applicability of the faceless scheme for making income escaping assessment in faceless manner prior to 29.03.2022.”
After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688, ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, we are inclined to admit the same for adjudication.
The ld. AR vehemently submitted before us that the order passed by the NFAC is without jurisdiction as though the provisions dealing with the faceless assessment of income escaping the assessment u/s 151A of the Act was brought on statute book by taxation and other law (relaxation and amendment of certain provisions) Act, 2020, with effect from 01.11.2020, however, the counsel of the assessee vehemently submitted before us that though the provisions of Section 151A of the Act came on the statute book on 01.11.2020 but the same were notified on 29.03.2022 vide notification no. 18/2022 on e-assessment of income
Gautam Kumar Sarkar escaping income scheme of 2022. Therefore, the ld. Counsel for the assessee submitted that the assumption of jurisdiction by the National faceless assessment center was without valid jurisdiction as the provisions of Section 151A of the Act had not come into operation on the date 29.3.2022 when these were notified and therefore, the assessment is without jurisdiction and not sustainable in law.
The ld. DR on the other hand submitted that the assessment have been framed by the NFAC after issuing notice u/s 143(2) of the Act and show cause notice as the Provisions of Section 151A of the Act was brought on the statute book with effect from 01.11.2020. Therefore, the legal issue raised by the assessee may kindly be dismissed.
After hearing the rival contentions and perusing the materials available on record, we find that the Section 151A of the Act deals with the faceless assessment or income escaping assessment and was brought on the statue book by taxation and other law (relaxation and amendment of certain provisions) Act, 2020, with effect from 01.11.2020 which was notified on 29.03.2022 vide notification no.18/2022/F. No. 370142/16/2022-TPL(Part)]. Therefore, the issuance of notice u/s 143(2) of the Act and show cause notice prior to 29.3.2022 and thereafter farming of assessment by the NFAC are, in our opinion, without jurisdiction as the Provisions of Section 151A of the Act were with effective from 29.03.2022. In considered opinion, the assessment framed is without jurisdiction and cannot be sustained. The case of the assessee is squarely covered by the decision of the co-ordinate in case of MD Mahimud SK Vs. ITO in & 2229/KOL/2024 vide order dated 04.03.2025 wherein the co-ordinate Bench has decided the issue by observing and holding as under:.
“11. We have perused the section of Section 151A of the Act, which deals with the faceless assessment of income escaping assessment and was brought on the statute book by taxation and other law (realization and amendment of certain provisions) Act, 2020, with effect from 01.11.2020
Gautam Kumar Sarkar which was notified on 29.03.2022 vide notification no.18/2022/F. No. 370142/16/2022-TPL(Part)]. Therefore, the assessment proceedings were taken by the National Faceless Assessment Centre, Delhi by issuing notice u/s 142(1) dated 09.02.2022 and thereafter the assessment was framed ac- cordingly after issuing show cause notice which in our opinion is without ju- risdiction. The provisionw of Section 151A of the Act were brought on the stat- ute book with effect from 01.11.2020. However, the same were made effective and applicable with effect from 29.03.2022 vide notification no. when the CBDT notified the new scheme for assessment of income escaping assess- ment scheme, 2022. In our considered view the assessment framed is without jurisdiction and cannot be sustained. The case of the assessee find force from the decision of Nabiul Industrial Metal Pvt. Ltd., Paschim Medinipur VS. I.T.O., in for A.Y. 2017-18, the order dated 15.10.2024, wherein a similar issue has been decided in favor of the assessee. For the sake of ready reference, the notice issued u/s 142(1) dated 09.02.2022 and show cause notice dated 17.03.2022, are extracted below:-
Considering the above facts and legal position, we are of the con- sidered opinion that the order passed by the NFAC, Delhi is without juris- diction and is hereby quashed. The appeal of the assessee is allowed.
The additional ground raised A.Y.2017- 18 is similar to one as decided by us in A.Y. 2015-16. Therefore, our decision would, mutatis mutandis, apply to this appeal as well. The appeal of the assessee is allowed.
14. In the result, the appeal of the assessee is allowed.”
7. Considering the above facts and legal position, we are of the considered opinion that the order passed by the NFAC, Delhi is without jurisdiction and is hereby quashed. The appeal of the assessee is allowed.
Since we have quashed the assessment framed by the AO u/s 147 read with section 144 read with section 144B of the Act as without jurisdiction, therefore, the penalty imposed u/s 271(1)(c) of the Act vide order dated 16.03.2022 passed u/s 271(1)(c) of the Act of Rs.
In the result, both the appeals of the assessee are allowed.
Order pronounced on 17.02.2026