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Facts
The assessee filed an appeal against the order of the CIT(A) with a delay of 48 days, citing being a senior citizen and unaware of online tax procedures. The assessee's original assessment was reopened by the AO under Section 147 r.w.s. 144 for AY 2016-17 due to non-filing of return and alleged unexplained cash deposits.
Held
The Tribunal condoned the delay, finding sufficient cause. The core issue was the validity of the notice issued under Section 148 by the ITO, which the assessee argued was without jurisdiction as per the Faceless Assessment Scheme and High Court pronouncements. The Revenue contended that the notice was part of the assessment procedure, but the Tribunal found the notice to be invalid and quashed the assessment order.
Key Issues
Validity of notice issued under Section 148 of the Income Tax Act, 1961, in light of the Faceless Assessment Scheme and High Court judgments, and whether the assessment order based on such notice is liable to be quashed.
Sections Cited
Section 147, Section 144, Section 148, Section 148A, Section 151A, Section 144B, Section 69A, Section 115BBE
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Income Tax Appellate Tribunal, Hyderabad “A” Bench, Hyderabad
करदाता का प्रतततितित्व/ : CA Shri P.Murali Mohan Rao Assessee Represented by राजस्व का प्रतततितित्व/ : Shri Sankar Pandi, Sr. A.R. Department Represented by सुिवाई समाप्त होिे की ततति/ 28.01.2026 : Date of Conclusion of Hearing घोर्णा की तारीख/ : 30.01.2026 Date of Pronouncement O R D E R PER MANJUNATHA G., A.M : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No. ITBA/NFAC/S/250/2024- 25/1073629223(1) dated 24.02.2025, arising out of order passed by the 2 Satya Kour A.O. under Section 147 r.w.s. 144 of Income Tax Act, 1961 (for short “the Act”) pertaining to the assessment year 2016-17.
At the outset, we find that there is a delay of 48 days in filing the appeal before the Tribunal. The Ld.AR submitted that the assessee filed a petition for condonation of delay and submitted that the order of the learned CIT(A), NFAC was passed on 24.02.2025 and the due date for filing of appeal before the Tribunal was 25.04.2025, but the assessee could file appeal before the Tribunal on 17.06.2025 with the delay of 48 days, owing to the fact that the assessee is a senior citizen and unaware of income tax / online matters in the Income Tax Portal. The assessee pleaded that the reasons for filing the appeal with the delay were neither intentional nor deliberate, but due to the circumstances beyond the control of the assessee and therefore, pleaded to condone the delay and admit the appeal for hearing in the interest of justice for which the Ld.DR has not raised any objection.
We have heard both the parties and gone through the condonation petition filed by the assessee. We find a reasonable and sufficient cause for the assessee to file the appeal belatedly before the Tribunal. We, 3 Satya Kour therefore, condone the delay and admit the appeal for hearing in the interest of justice.
The grounds raised by the assessee read as under :
The order of the learned Commissioner of Income Tax (Appeals) is not justified both in law and in the facts and circumstances of the case; 2. The learned Commissioner of Income Tax (Appeals) erred in not considering the previous cash withdrawals from the Bank account of the appellant as available sources for the deposits into Bank of the appellant. 3. The learned Commissioner of Income Tax (Appeals) is not correct in sustaining the addition to the extent of Rs.21,02,900/- as unexplained cash deposits in the bank accounts of the appellant without appreciation of the facts on record properly. 4. Any other ground or grounds that may be urged at the time of appeal hearing.
5. The assessee also raised additional grounds and filed a petition, pleading for admission of additional grounds, being legal grounds. The additional grounds raised by the assessee read as under :
1. The Ld.CIT(A) erred in appreciating that the A.O. has failed to follow the procedure as laid down in the provisions of section 151A of the Act which is against the law and is bad in law.
2. The Ld.CIT(A) ought to have appreciated that as per the provisions of section 151A of the Act, the notice u/s 4 Satya Kour 148 has to be issued by the A.O., NFAC, Delhi after duly following the procedure as laid down u/s 148A of the Act, whereas, in the case of the assessee, the notice u/s 148 dt.23.03.2023 was issued by the ITO, Ward-17(1), Hyderabad, which is invalid and bad-in-law.
3. The Ld.CIT(A) ought to have considered the judicial pronouncements regarding the fact that the JAO has not jurisdiction to issue notice u/s 148 of the Act, which is supported by the decision of the Hon’ble Supreme Court in SLP (Civil) dairy No.(S) 33956/2025 dt.16.07.2025 on the SLP filed by Revenue against the jurisdictional HC’s order.
4. Without prejudice to the above, the Ld.CIT(A) ought to have considered that the sources for the cash deposits of Rs.21,02,900/- were from out of the earlier year’s withdrawal of Rs.19,32,100/-, which was kept with him and from out of the withdrawals of Rs.11,84,070/- during the year under consideration and thus no addition can be made u/s 69A of the Act.
Appellant may, add or alter or amend or modify or substitute or delete and /rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.
6. The brief facts of the case are that the assessee, an individual had made cash deposits of Rs.36,11,800/- in account held with Punjab National Bank, time deposits of Rs.25,20,000/- and earned interest income of Rs.3,62,448/- in account held with State Bank of Hyderabad during the A.Y.2016-17, but had not filed return of income for the year under consideration. Accordingly, the A.O. reopened the case of the assessee by issuing notice u/s 148 of the Act dated 23.03.2023 and 5 Satya Kour completed the assessment vide order u/s 147 r.w.s. 144 read with section 144B of the Act by passing an order dated 18.01.2024, determining income at Rs.88,91,872/- by making addition of Rs.58,48,422/- as unexplained money u/s 69A r.w.s. 115BBE of the Act and Rs.25,00,000/- as unexplained investment u/s 69 r.w.s.115BBE of the Act.
7. Aggrieved by the order of the A.O., the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) partly allowed the appeal filed by the assessee.
8. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal.
9. At the outset, the learned counsel for the assessee, submitted that, the Ld. CIT(A) erred in confirming the action of the JAO issuing notice under Section 148 of the Act, without having proper power to do so in view of the decision of the Hon'ble Telangana High Court in the case of Yashnu Yasavi Polucherla Vs. ITO, 179 taxmann.com 470, dated 16.10.2025, and the decision in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit, 178 taxmann.com 781. Therefore, he 6 Satya Kour submitted that, the assessment order passed by the A.O. under Section 147 r.w.s. 144 consequent to the invalid notice issued by the JAO is bad in law and liable to be quashed. Therefore, he submitted that, the assessment order passed by the A.O. should be quashed.
The learned Senior A.R. for the Revenue, on the other hand, fairly agreed that, the issue is now settled by the decision of Hon'ble High Court of Telangana in number of cases, including the decision relied upon by the learned counsel for the assessee. However, he further submitted that, the issue is now sub judice before the Hon'ble Supreme Court in SLPs, and the matter is pending for adjudication. Therefore, he submitted that, the Bench may decide the issue in accordance with the law, however the liberty may be given to the Revenue or the assessee to revive the appeal in case, the issue is settled in favour of the Revenue/assessee to decide the issues involved in the appeal on merits.
We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. We have also carefully considered the relevant case laws relied upon by the learned counsel for the assessee in support of his arguments. We find that, the Hon'ble High Court of Telangana in the case of Deloitte 7 Satya Kour Consulting India Pvt. Ltd. Vs. Assessment Unit (supra) has considered an identical issue of notice issued by the JAO instead of the Faceless Assessing Officer (FAO), and after considering the relevant provisions of the Act, and also various notifications issued by the CBDT as per Section 151A of the Act, held that, any notice issued under Section 148 of the Act, after 29.03.2022 by the JAO is without jurisdiction and consequently, the assessment order passed in pursuant to the said notice is illegal and cannot be sustained. A similar view has been taken by the Hon'ble High Court of Telangana in the case of Yashnu Yasavi Polucherla Vs. ITO (supra), where the Hon'ble High Court, by following its earlier decision in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit (supra) held that, the JAO does not have the power to issue notice under Section 148 after the introduction of the Faceless Assessment Scheme.
The assessee had also relied upon the decision of Hon’ble Telangana High Court in the case of Sri Venkata Ramana Reddy Patloola Vs. DCIT, Central Circle 1(1) in W.P.No.13353, 16141, 16877/2024, where under identical set of facts held as under :
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12. In the present case, as per the facts available on record, the A.O., i.e., ITO, Ward 17(1), Hyderabad, issued a notice under Section 148 of the Act, dated 23.03.2023, which was followed by an order under Section 148A(d) of the Act, dated 23.03.2023 by the very same A.O. Since the issue is covered by the jurisdictional High Court in the case of Yashnu Yasavi Polucherla Vs. ITO (supra) in our considered view, the assessment order passed by the JAO under Section 147 r.w.s. 144 of the Income-tax Act dated 18.01.2024, consequent to the notice under Section 148 of the Act, dated 23.03.2023 issued by the JAO, is without jurisdiction and 17 Satya Kour cannot be sustained. Thus, we quash the order passed by the A.O. under Section 147 r.w.s. 144 of the Income-tax Act, 1961, dated 18.01.2024.
We further noted that, although the issue is now settled by the decisions of the jurisdictional High Court of Telangana in a number of cases, but fact remains that, the above issue is pending for adjudication before the Hon'ble Supreme Court in multiple SLPs filed by the Revenue against orders of various High Courts. We further noted that, both parties, i.e., the learned counsel for the assessee and the learned Senior A.R. for the Revenue, fairly agreed that, the decision rendered by the Hon'ble Supreme Court will be binding on both the parties, and in such cases, liberty may be given to either parties to revive the appeal, if necessary for adjudication on merits. Since the issue is now pending for adjudication before the Hon'ble Supreme Court, in our considered view, the A.O. is directed to give effect to the order of the Hon'ble Supreme Court as and when the judgment is delivered by the Hon’ble Supreme Court and pass consequential orders, if need arises. We further make it clear that, both parties are at liberty to restore this appeal, if necessary, in case the decision goes against the assessee or in favour of the Revenue to decide the issues involved in the appeal on merits. With these observations, we allow the appeal filed by the assessee.
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In the result, appeal filed by the assessee is allowed.