ANKIT JAIN, HYDERABAD. vs. DCIT., CENTRAL CIRCLE -1(2), HYDERABAD.
Facts
The assessee filed appeals against the orders passed by the Commissioner of Income Tax (Appeals) arising from orders passed by the Assessing Officer under Section 143(3) r.w.s 147 of the Income Tax Act. The appeals pertained to Assessment Years 2019-20 and 2020-21. The Assessing Officer made an addition of Rs. 7,44,800/- as unexplained cash credit under Section 69 based on seized material from a third party. The assessee denied making cash payments for the purchase of shops.
Held
The Tribunal held that the notice issued under Section 148 of the Act, dated 11/04/2023, by the DCIT, Central Circle-1(2), Hyderabad, was bad and illegal. This was because the notice was issued outside the faceless mechanism, which is mandatory for reassessment proceedings initiated after April 1, 2021, as per the Finance Act, 2021 and subsequent judicial pronouncements. Consequently, the assessment order was quashed for want of valid assumption of jurisdiction.
Key Issues
Whether the reassessment notice issued by the Jurisdictional Assessing Officer (JAO) outside the faceless mechanism, after the amendments brought by the Finance Act, 2021, is valid.
Sections Cited
143(3), 147, 69, 115BBE, 292C, 148, 148A, 124(3), 144B, 151A, 132, 132A, 153A, 153B, 153D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘SMC’ Bench, Hyderabad
PER RAVISH SOOD, JM:
The captioned appeals filed by the assessee are directed against the respective orders passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad, dated 04/07/2025, which in turn arises from the respective orders passed by the Assessing Officer under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (for short, “the Act”), dated 11/12/2024 and under section 147 of the Act, dated 18/12/2024 for AY 2019-20 and AY 2020-21, respectively. As certain common issues are involved in the captioned appeals, therefore, the same are being taken up and disposed of by way of a consolidated order. We shall first take up the appeal filed by the assessee for AY 2019-20 in ITA No.1544/Hyd/2025, and the order therein passed shall apply mutatis mutandis for the purpose of disposing of the other appeal. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. The Learned First Appellate Authority, is not justified in conforming addition of Rs.7.44,800/- as unexplained cash credit u/s. 69 made by the Ld. Assessing Officer 2. a) The Learned First Appellate Authority, in the facts and circumstances of the case, is not justified in not appreciating the appellant's claim that he has not paid any cash for purchase of shops. b) The Learned First Appellate Authority, is not justified in confirming the action of the Ld. Assessing Officer in making the addition of Rs.7,44,800/- u/s.69 of the 1.T Act and bringing the same to tax u/s. 115BBE of the I.T Act. Ankit Jain vs. ACIT/DCIT
The Ld. CIT(A) erred in confirming the addition of Rs. 7,44,800/ under Section 69 based solely on a pen drive and statements of employees of M/s. Rubberwala Group seized from a third party, and without bringing any independent corroborative evidence.
The Ld. CIT(A) erred in relying on the presumption under Section 292C though the seized documents were not found in the possession or control of the appellant, making the addition unsustainable and in violation of the principles of natural justice.
Since the notice u/s 148 was issued by the juri iction assessing officer and not in face less assessment manner the proceedings u/s 147 are bad in law and further proceedings are equally bad in law.
The appellant reserves his right to add, amend, delete or substitute any ground or grounds during the course of the hearing.”
Succinctly stated, the assessee has filed his return of income for the AY 2019-20 on 30/08/2019, declaring an income of Rs.12,79,670/-. Thereafter, the AO based on specific information flagged in the case of the assessee as per Risk Management Strategy formulated by CBDT through Insight under the head ‘High Risk CRIU/VRU Cases’, observed that the assessee had during the subject year and the immediately succeeding year carried out substantial financial transactions with Rubberwala Group of companies towards purchase of property, viz., shops in Mumbai, which involved payment of on money, initiated proceedings under section 148A(b) of the Act. As the assessee failed to avail the opportunity afforded under section 148A(b) of the Act, dated 28/03/2023, therefore, the AO based on the information available on record passed an order under section 148A(d) of the Act, dated 11/04/2023. Further, the Dy. Commissioner of Income Tax, Central Circle-1(2), Hyderabad, i.e., Juri ictional Assessing Officer (JAO) Ankit Jain vs. ACIT/DCIT issued notice under section 148 of the Act, dated 11/04/2023. However, the assessee failed to furnish his return of income in compliance to the notice issued under section 148 of the Act.
During the course of the assessment proceedings, the AO observed that a perusal of certain incriminating material that was found and seized in the course of the search proceedings conducted on Rubberwala group of cases, Pen Drive and an excel sheet, viz., “consolidated 1 2 3 balance”, inter alia, revealed that the assessee had purchased two shops bearing numbers 121 on 1st floor and 234 on 3rd floor which involved unaccounted cash payments made during the subject year amounting to Rs.7.44 lakhs. On being queried, the assessee denied of having made any cash payments towards purchase of the aforesaid shops. However, the AO did not find favour with the explanation of the assessee made an addition of Rs. 7,44,800/- as his unexplained investment under section 69 of the Act. Accordingly, the AO vide his order under section 143(3) r.w.s 147 of the Act, dated 11/12/2024 determined the income of the assessee at Rs.20,24,470/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. Ankit Jain vs. ACIT/DCIT
Shri KA Sai Prasad, Chartered Accountant, Learned Authorized Representative (for short, “Ld. AR”) for the assessee at the threshold of hearing of the appeal fairly submitted that as the grounds of appeal No. 3,4 & 5 were not raised before the CIT(A), therefore, an application has been filed seeking admission of the same as additional grounds of appeal before the Tribunal. The Ld. AR had drawn our attention to the application filed by the assessee seeking admission of the grounds of appeal No.3,4 & 5 as additional grounds of appeal.
Per contra, Shri Aluru Venkata Rao, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) objected to the admission of the aforementioned additional grounds of appeal.
We have given a thoughtful consideration to the additional grounds of appeal raised by the assessee before us, viz., (i) grounds of appeal No.3,4 & 5 (forming part of the grounds of appeal). In our view, as the assessee has by raising the aforesaid grounds of appeal sought our indulgence for adjudicating certain issues which would not require looking beyond the facts available on record, therefore, the same merits to be admitted. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Ankit Jain vs. ACIT/DCIT
We have heard the Ld. Authorised Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions
Sri K.A. Sai Prasad, CA, the Learned Authorised Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the Notice U/s 148 of the Act, dated 11/04/2023 issued by the Juri ictional Assessing Officer (JAO), i.e., outside the faceless mechanism as provided under the provisions of Section 144(b) read with Section 151A and the "E- Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151A of the Act, is bad and illegal. Summing up his contention, the Ld. AR submitted that after the introduction of the "Faceless Juri iction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022", it is only the “Faceless Assessing Officer” (FAO) who can issue the notice under Section 148 of the Act and not the “Juri ictional Assessing Officer” (JAO), and the assessments are statutorily required to be as per the prescribed faceless mechanism provided under the provisions of Section 144(b) r.w Section 151A of Ankit Jain vs. ACIT/DCIT the Act. Elaborating further on his contention, the Ld. AR submitted that as the AO had invalidly assumed juri iction and framed the impugned assessment, therefore, the same cannot be sustained and is liable to be struck down for want of a valid assumption of juri iction on his part. The Ld. AR submitted that the subject issue is squarely covered by the judgments of the Hon’ble High Court of Telangana in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others, Writ Petition Nos 25903 of 2023, dated 14.09.2023 and Kings Pride Infra Projects (P) Ltd. Vs. Deputy Commissioner of Income-tax (2025) 176 taxmann.com 704 (Telangana). The Ld. AR further relied upon the judgment of the Tribunal in the case of Prabhakar Reddy Basireddy vs. DCIT, ITA No.1591/Hyd/2025, dated 24/12/2025. Elaborating further on his contention, the Ld. AR submitted that the issue that as to whether or not in a case assigned to “Central Circle” the notice under Section 148 of the Act could be issued by the “Juri ictional Assessing Officer” (JAO) or it ought to have been as per the amendment carried out w.e.f 01.04.2021 in a faceless manner, has been answered by the Hon’ble Juri ictional (supra). The Ld. AR submitted that the Hon’ble High Court has held that the reassessment notice under Section 148, in case assigned to “Central Circle”, cannot be issued by JAO and has to be issued in a faceless manner as per the amended provisions brought in by Ankit Jain vs. ACIT/DCIT Finance Act, 2021 w.e.f 01.04.2021. The Ld. AR had placed on record the ITAT order in the case of Prabhakar Reddy Basireddy vs. DCIT (supra), wherein reliance was placed upon the judgment of the Hon’ble High Court in the case of Kings Pride Infra Projects (P) Ltd. Vs. DCIT.
Per Contra, Sri Aluru Venkata Rao, the Ld. Senior Departmental Representative (for short, “Sr. DR”), fairly admitted that the issue involved in the present appeal is covered in favour of the assessee by the judgments of the Hon’ble High Court of Telangana. However, the Ld. Sr. DR submitted that as the assessee within the specified time period contemplated under sub-section (3) of Section 124 of the Act, i.e. within a period of one month from the date on which the said notice was served upon him had not called in question the juri iction of the DCIT, Central Circle 1(2), Hyderabad (JAO) who had issued Notice under Section 148 of the Act, dated 11/04/2023, therefore, he was precluded from assailing the same for the first time before the Tribunal.
We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both parties regarding the validity of the order passed under Section 143(3) r.w.s 147 of the Act, dated 11/12/2024, based on the Notice issued under Section 148 of the Act, Ankit Jain vs. ACIT/DCIT dated 11/04/2023 by the DCIT, Central Circle 1(2), Hyderabad (copy placed on record).
We shall first deal with the Ld. DR’s contention that as the assessee has within the specified time period contemplated under sub- section (3) of Section 124 of the Act, i.e., within a period of one month from the date on which the said notice was served upon him not called in question the juri iction of the DCIT, Central Circle 1(2), Hyderabad i.e., the JAO, who had issued Notice u/s 148 of the Act, dated 11/04/2023, therefore, he was precluded from assailing the same for the first time before the Tribunal.
Before proceeding further, it would be relevant to cull out Section 124(3) of the Act, which reads as under:
"124 (1) xxxxxxxx
(2) xxxxxxx
(3) No person shall be entitled to call in question the juri iction of an Assessing Officer— (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under subsection (1) of section 142 or sub-section (2) of section 115WE or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier;
(b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or subsection (1) of section 142 or under sub-section (1) of section Ankit Jain vs. ACIT/DCIT 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; (c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub- section (2) of section 153C or after the completion of the assessment, whichever is earlier.”
Having given a thoughtful consideration to the aforesaid claim of the ld. DR in the backdrop of the mandate of Sub-section (3) of Section 124 of the Act, we are unable to fathom that as to how the restriction therein contemplated, which is confined to questioning the juri iction of an Assessing Officer, can have any bearing on the claim of the present assessee before us, who has assailed the validity of the assessment order passed under Section 143(3) r.w.s 147 of the Act, dated 11/12/2024 by the ACIT, Central Circle- 1(2), Hyderabad, based on the Notice u/s 148 of the Act, dated 11/04/2023 issued by the said Juri ictional Assessing Officer (JAO) who inherently lacked the juri iction for issuing Notice u/s 148 of the Act.
Before dealing with the subject issue, we deem it apposite to look into the fabric of Section 124 of the Act. On a careful perusal of Section 124 of the Act, it transpires that the same apparently deals with the issue of "territorial juri iction" of an Assessing Officer. Ostensibly, sub- section (1) of Section 124 contemplates vesting with the AO of Ankit Jain vs. ACIT/DCIT juri iction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. Sub-section (2) of Section 124 contemplates the manner in which any controversy regarding the territorial juri iction of an AO is to be resolved. Apropos sub-section (3) of Section 124 of the Act, the same places a restriction upon an assessee to call in question the juri iction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or Section 148 or sub-section (1) of Section 153A or sub-section (2) of Section 153C. To sum up, the obligation cast upon an assessee to call in question the juri iction of the A.O as per the mandate of sub-section (3) of Section 124 is confined to a case where he objects to the assumption of juri iction by the A.O, and not otherwise.
We have given thoughtful consideration on the issue of validity of the juri iction assumed for framing of the assessment vide order passed under Section 143(3) r.w.s 147 of the Act, dated 11/12/2024 based on the Notice issued U/s 148 of the Act, dated 11/04/2023 by the DCIT, Central Circle 1(2), Hyderabad, i.e., the “Juri ictional Assessing Officer” (JAO).
In our view, the issue involved in the present appeal, i.e., the validity of the assessment order passed under Section 143(3) r.w.s 147 Ankit Jain vs. ACIT/DCIT of the Act, dated 11/12/2024, based on the Notice u/s 148 of the Act, dated 11/04/2023 issued by the DCIT, Central Circle 1(2), Hyderabad, i.e., the JAO, as on date is squarely covered by the Judgment of the Hon’ble High Court of Telangana in the case of Kings Pride Infra Projects (P) Ltd. Vs. Deputy Commissioner of Income-tax (2025) 176 taxmann.com 704 (Telangana). The Hon’ble Juri ictional High Court, in its aforesaid order, was seized of the following question of law:
"Whether in cases assigned to "central charges" the notice issued under Section 148 of the Act could have been issued by JAO or it ought to have been as per the amendment carried out w.e.f. 01.04.2021 in a faceless manner?"
The Hon’ble High Court, based on its exhaustive deliberations, observed that the reassessment notice under. Section 148 of the Act, in case assigned to “Central Charges”, cannot be issued by the Juri ictional Assessing Officer” (JAO) and has to be issued in a faceless manner as per the amended provisions brought in by the Finance Act, 2021 w.e.f 01.04.2021. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble High Court, as under:
“17. Having heard the learned counsel for the parties, particularly the learned Additional Solicitor General extensively, it would be necessary at this juncture to take note of the decision rendered in the case of Kankanala Ravindra Reddy (supra) wherein the Division Bench of this High Court in a batch of writ petitions, has held in paragraph Nos.35 to 38 as under:
"
In view of the aforesaid discussions, it is by now very clear that the procedure to be followed by the respondent Department upon treating the notices issued for reassessment being under Section 148A, Ankit Jain vs. ACIT/DCIT the subsequent proceedings was mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent-Department is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention to the directives issued by the Hon'ble Supreme Court in the case of Ashish Agarwal, supra.
For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed.
The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very juri ictional issue. Since the impugned notices and orders are getting quashed on the point of juri iction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.
Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal (1 supra) as a one-time measure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal (1 supra)."
From the aforesaid judgment and the principles of which have been reiterated in a large number of writ petitions subsequently filed, it would be evidently clear that the view of this High Court and the ratio laid down was that on and after coming into force of the Finance Act, 2021 w.e.f. 01.04.2021, and with the introduction of the amendment to Section 148 of the Act wherein it was envisaged that the assessments have to be done by way of an automated faceless mechanism, all proceedings of assessment drawn subsequently have to be by following the same mechanism. Further, the Hon'ble Supreme Court in the case of UOI v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/ 444 ITR 1 (SC)/2022 SCC OnLine SC 543, in very categorical terms has held as under: "Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after April 1, 2021. Ankit Jain vs. ACIT/DCIT We are in complete agreement with the view taken by the various High Courts in holding so. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections
The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bona fide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced with effect from April 1, 2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the Income-tax Act as per the Finance Act, 2021. There appears to be genuine non-application of the amendments as the officers of the Revenue may have been under a bona fide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provisions of the Income-tax Act as those deemed to have been issued under section 148A of the Income-tax Act as per the new provisions of section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the Income-tax Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the Income-tax Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under: (i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the Income-tax Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b). The respective Assessing Officers shall within thirty days from today provide to the asseessees the information and material relied upon by the Revenue so that the asseessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A9(a) be dispensed with as a onetime measure vis-avis those notices which have been issued under section 148 of the unamended Act from April 1, Ankit Jain vs. ACIT/DCIT (iii) The Assessing Officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees" ;"
Following the aforesaid judgment of the Hon'ble Supreme Court in Ashish Agarwal (supra), it has been emphatically held by the Division Bench of this High Court in the case of Ravindra Reddy (supra) that there is no further dispute to be adjudicated so far as what is the mechanism which has to be applied for assessment / reassessment even if it is for assessment of previous years if the proceedings have been initiated on or after 01.04.2021. It has to be only through automated faceless mechanism and no other way.
Hence, the question of law as framed in the earlier paragraph of this order is "whether in the case of central charges, could the aforementioned principles of law be deviated and whether the proceedings drawn under the central charges could be by the JAO or it too has to be in a faceless manner?"
The CBDT in respect of the same had issued a notification dated 29.03.2022 in exercise of its powers under Sub-Section (1) and (2) of Section 151A of the Act and, framed a scheme, which for ready reference is reproduced hereunder: MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 29th March, 2022 S.O. 1466(E):— In exercise of the powers conferred by subsections (1) and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:-
Short title and commencement:— (1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022. (2) It shall come into force with effect from the date of its publication in the Official Gazette.
Definitions:— (1) In this Scheme, unless the context otherwise requires, — (a) "Act" means the Income-tax Act, 1961 (43 of 1961); (b) "automated allocation" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act.
Scope of the Scheme:— For the purpose of this Scheme,— (a) assessment, reassessment or recomputation under section 147 of the Act, (b) issuance of notice under section 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, Ankit Jain vs. ACIT/DCIT to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. (Emphasis supplied)
Similarly, the CBDT earlier also vide order dated 06.09.2021, in exercise of its powers under Section 119 of the Act introduced certain exceptions / exclusions to Section 144B of the Act. The said order dated 06.09.2021, for ready reference is again reproduced hereunder: Section 144B(2) of the Income Tax Act, 1961 144B. Faceless Assessment: (1). (2) The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board. (Emphasis Supplied) CBDT's Order dated 06.09.2021: F.No.187/3/2020-ITA-I Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) North Block, New Delhi Dated, the 6th September, 2021. ORDER Subject:- Order under section 119 of the Income-tax Act, 1961 (the Act) providing exclusions to section 144B of the Act. The Faceless Assessment Scheme, 2019 (the Scheme) has been incorporated in the Act vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 144B of the Act pertaining to Faceless Assessment has been inserted by the said amendment w.e.f. 01.04.2021. 2. The Central Board of Direct Taxes vide Order F.No.187/3/2020-ITA-I dated 13th August, 2020 (the Order) read with order under section 119 of the Act regarding mutatis mutandis application of Orders, Circulars etc., issued in order to implement the Scheme to Faceless Assessment u/s 144B of the Act, F.No.187/3/2020-ITA-I dated 31st March, 2021 directed that all the Assessment Orders shall be passed by the National Facelss Assessment Centre (NaFAC) u/s 144B of the Act except as under:- i. Assessment orders in cases assigned to Central Charges. ii. Assessment Orders in cases assigned to International Tax Charges." (Emphasis Supplied)
A plain reading of the aforesaid order dated 06.09.2021 conjointly with the notification dated 29.03.2022 would go to show that the CBDT has in fact carved out two exceptions so far as implementing the scheme of faceless assessment. Those two exceptions are (i) assessment orders in cases assigned to central charges; and (ii) assessment orders in cases assigned to international tax charges. So far as the Ankit Jain vs. ACIT/DCIT assessment orders in cases assigned to international tax charges, recently the said exception was under challenge in a batch of writ petitions before this High Court in the case of Sri Venkataramana Reddy Patloola (supra). While deciding the said batch of writ petitions, the Hon'ble Division Bench hearing the said writ petitions took note of the order dated 06.09.2021 and notification dated 29.03.2022 and in very categorical terms held in paragraph Nos.23, 24, 27 and 29 as under:
"
It is noteworthy that the order of CBDT dated 06.09.2021 deals with "assessment orders". The said order is passed in exercise of power under Section 144B of the Act. The order of CBDT is clear that direction was issued about passing of "assessment orders" by the National Faceless Assessment Centre under Section 144B of the Act except in two situations, one of which is passing of assessment orders in cases assigned to International Tax Charges.
Thus, there is no cavil of doubt that Section 144B of the Act and order of CBDT dated 06.09.2021 give exemption from following the mandatory faceless procedure only in relation to passing of assessment orders in cases of central charges and international tax charges. Any other interpretation would amount to doing violence with the language employed in the scheme/notification dated 29.03.2022, Section 144B(2) of the Act and order dated 06.09.2021. Since in our view, the plain and unambiguous language used in the scheme and order dated 06.09.2021 shows that the notice under Section 148 does not fall within the 'exception', the judgments cited by the learned Senior Standing Counsel for Income Tax Department are of no assistance. The Taxpayer is nowhere distinguished between NRIs and Indian Citizens. The notice issued under Section 148 must comply with the requirement of the Scheme whether or not the Taxpayer is NRI/Indian Citizen. Thus, the second limb of argument of the learned Senior Standing Counsel for Income Tax Department deserves to be rejected.
We are in respectful agreement with the view taken by the Bombay High Court and are of the opinion that the aforesaid underlined expression used in clause 3(b) of the scheme dated 29.03.2022 does not preclude the mandatory faceless procedure for issuance of notice under Section 148 of the Act. Any other interpretation, in our humble view, will not only cause violence to the language used, but will also defeat the object for which a transparent 'faceless procedure' was introduced. Hence, we are unable to persuade ourselves to accept a different meaning than the literal meaning flowing and conveyed from the provisions.
In view of foregoing analysis, it is clear that the respondents have erred in not following the mandatory faceless procedure as prescribed in the scheme dated 29.03.2022. Since notices under Section 148 of the Act were not issued in a faceless manner, the entire further proceeding founded upon it and assessment orders stand vitiated. Thus, the impugned notices under Section 148 of the Act and all consequential assessment orders based thereupon are set aside. Liberty is reserved to the respondents to proceed against the petitioners in accordance with law." Ankit Jain vs. ACIT/DCIT
A plain reading of paragraph Nos.23 and 24 would make the picture very clear so far as the fact that even though the batch of writ petitions in the case Sri Venkataramana Reddy Patloola (supra) were primarily pertaining to assessment orders in cases assigned to international tax charges, but the Division Bench has also dealt with the aspect of the assessment orders in cases assigned to central charges as well holding that it would not make any difference whether it is cases assigned to central charges or cases assigned to international tax charges. What was held was that, once when the statute substantially mandate having the assessment proceedings drawn through automated scheme allocation in a faceless manner, subsequently there does not seem to be any exceptions carved out permitting the JAO to issue proceedings under Section 148 of the Act.
In view of the said view expressed by the Division Bench of this High Court in the case of Sri Venkataramana Reddy Patloola (supra), we are of the considered opinion that, if at all if we accept the analogy canvassed by the Income Tax Department, that by itself would be diluting the mandate of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra) and at the same time it would also water down the series of writ petitions where the proceedings were issued by JAO and this High Court while allowing the writ petitions had set aside those proceedings.
The entire basis of the learned Additional Solicitor General seems to be the judgment of the Delhi High Court in the case of T.K.S. Builders (P.) Ltd. (supra). However, since there is an authoritative decision on the said issue by this very High Court, the judicial propriety requires for this Bench to honor the view taken by the Division Bench of this High Court itself.
The Hon'ble Supreme Court in the case of CIT v. G.M. Mittal Stainless Steel (P.) Ltd. [2003] 130 Taxman 67/263 ITR 255 (SC)/2003 11 Supreme Court Cases 441, dealing with an issue of not following the judgment of the juri ictional High Court, held at paragraph No.9 as under:
"
Apart from the language of Section 263 of the Income Tax Act, if we were to accept the submission of the appellant that the Revenue Authorities within the State could refuse to follow the juri ictional High Court's decision on the ground that the decision of some other High Court was pending disposal by this Court, it would lead to an anarchic situation within the State. If at the time when the power under Section 263 was exercised the decision of the juri ictional High Court had not been set aside by this Court or at least had not been appealed from, it would not be open to the Commissioner to have proceeded on the basis that the High Court was erroneous and that the assessing officer who had acted in terms of the High Court's decision had acted erroneously."
Apart from the effect of judicial propriety, we are of the considered opinion that plain reading of the judgment of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra) seems to be more convincing and logical as compared to the judgment heavily relied upon by the learned Additional Solicitor General i.e. the judgment of the Delhi High Court in the case of T.K.S. Builders (P.) Ltd. (supra). Ankit Jain vs. ACIT/DCIT
So far as the ground raised by the learned Additional Solicitor General that unless the notices in cases pertaining to central charges are issued by JAO it would be difficult to enforce the requirement as is otherwise required under Section 153D of the Act is concerned, we need to look into the provisions of Section 153D as to what it speaks for. For ready reference, the relevant portion of Section 153D is reproduced hereunder: "153D. Prior approval necessary for assessment in cases or requisition. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153-B, except with the prior approval of the Joint Commissioner." A plain reading of the aforesaid Section would show that the provisions of Section 153D would be applicable in proceedings drawn under Section 153A and Section 153B.
Section 153A of the Act speaks of how assessment in a case of search and seizure or requisition is to be made. For ready reference, the relevant portion of Section 153A is also reproduced hereunder: "153A. Assessment in case of search or requisition. (1)Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years." A plain reading of the aforesaid Section would clearly indicate that though Section 153A is a non-obstante clause, but nowhere does the said Section speaks of an exception carved out from Section 151A, which in itself was brought in by way of amendment to the Finance Act, 2021 w.e.f. 01.04.2021. This in other words means that until and unless there is a specific exception carved out from the applicability of Ankit Jain vs. ACIT/DCIT Section 151A every assessment proceedings initiated even if it be after a search and seizure proceedings, even if it be under central charges or international tax charges, the provisions of Section 151A is what has to be adhered to for the purpose of initiating a proceeding of assessment / re-assessment. Section 151A also does not anywhere say that the said provision of law shall not be applicable in a given situation or under any other provision of law.
In view of the same, we are of the considered opinion that the present batch of writ petitions also deserve to be and are accordingly allowed quashing the impugned orders under challenge as they are in violation of the provisions enacted by way of Finance Act, 2021 which came into force w.e.f. 01.04.2021. Accordingly, we hold that the question of law framed, as to "whether in cases assigned to central charges and the notices issued therein for reassessment could be issued by the JAO or it has to be in a faceless manner" stands decided in favour of the petitioners holding that it can be in a faceless manner alone and the question of law thus stands answered against the Revenue. No costs.
As a sequel, miscellaneous petitions pending if any, shall stand closed.”
We, thus, respectfully follow the aforesaid judgment of the Hon’ble Juri ictional High Court in the case of King Pride Infra Projects (P) Ltd. Vs. Deputy Commissioner of Income-tax (2025) 176 taxmann.com 704 (Telangana), and on the same terms hold the impugned notice issued U/sec. 148 of the Act, dated 11/04/2023 by DCIT, Central Circle-1(2), Hyderabad, i.e., outside the faceless mechanism as provided in Section 144(b) r.w Section 151A and the "E- Assessment Scheme of Income Escaping Assessment Scheme, 2022" notified by the Government of India on 29.03.2022 under Section 151A of the Act, as bad and illegal. Consequent thereto, we herein set aside the order passed by the CIT(A), and quash the impugned assessment order passed by the ACIT, Central Circle-1(2), Hyderabad under Ankit Jain vs. ACIT/DCIT Section 143(3) r.w.s 147 of the Act, dated 11/12/2024, for want of a valid assumption of juri iction on his part.
As we have quashed the assessment for want of valid assumption of juri iction by the ACIT, Central Circle-1(2), Hyderabad for framing the impugned assessment vide his order passed under Section 143(3) r.w.s 147 of the Act, dated 11/12/2024, based on the Notice u/s 148 of the Act, dated 11/04/2023 issued by him, i.e., JAO, therefore, we refrain from adverting to the other grounds based on which the assessee has assailed the impugned order of the CIT(A) before us, which, thus, are left open.
Resultantly, the order passed by the ACIT, Central Circle-1(2), Hyderabad under Section 143(3) r.w.s 147 of the Act, dated 11/12/2024, is quashed for want of a valid assumption of juri iction by him.
Before parting, we may herein observe that the Hon’ble Juri ictional High Court, while disposing of the appeal in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others (supra), had observed that since the Hon'ble Supreme Court in the case of Ashish Agarwal, supra, as a one-time measure exercised the powers under Article 142 of the Constitution of India, and permitted the Revenue to proceed under the substituted provisions, therefore, on the same terms as the petitions before them were being allowed only on the procedural Ankit Jain vs. ACIT/DCIT flaw, hence right conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Hon’ble Supreme Court in the case of Ashish Agarwal, supra. We, thus, respectfully follow the aforesaid observation of the Hon’ble High Court and, on the same terms, allow the same liberty to the revenue regarding the present appeal.
We would further observe that the Hon’ble High Court of Juri iction in its order in the case of Yashnu Yasasvi Polucherla Vs. Income-tax Officer (2025) 179 taxmann.com 470 (Telangana), has held that as its earlier order in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others (supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, therefore, the allowing of the writ petition in the case before them is subject to the outcome of the aforesaid SLP preferred by the Revenue against its decision in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others (supra). Thus, the Hon’ble High Court had allowed liberty to either of the parties, if they so want, to move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending “Special Leave Petition” (SLP) on the very same issue. We, thus, respectfully follow the aforesaid observation of the Hon’ble Juri ictional High Court and, thus, on the same terms, allow liberty to either of the Ankit Jain vs. ACIT/DCIT parties before us to seek revival of the matter in light of the decision of the Hon’ble Supreme Court in the aforesaid SLP.
Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
AY: 2020-21 ITA 1545/Hyd/2025
We shall now deal with the appeal filed by the assessee for AY 2020-21 in ITA No.1545/Hyd/2025. 26. Shri KA Sai Prasad, Chartered Accountant, Learned Authorized Representative (for short, “Ld. AR”) for the assessee at the threshold of hearing of the appeal fairly submitted that as the grounds of appeal No. 4,5 & 8 were not raised before the CIT(A), therefore, an application has been filed seeking admission of the same as additional grounds of appeal before the Tribunal. The Ld. AR had drawn our attention to the application filed by the assessee seeking admission of the grounds of appeal No. 4,5 & 8 as additional grounds of appeal.
Per contra, Shri Aluru Venkata Rao, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) objected to the admission of the aforementioned grounds of appeal.
We have given a thoughtful consideration to the additional grounds of appeal raised by the assessee before us, viz., (i) grounds of Ankit Jain vs. ACIT/DCIT appeal No. 4,5 & 8 (forming part of the grounds of appeal). In our view, as the assessee has by raising the aforesaid additional grounds of appeal sought our indulgence for adjudicating certain issues which would not require looking beyond the facts available on record, therefore, the same merits to be admitted. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of National 2019-20, i.e., ITA No.1544/Hyd/2025, therefore, the order therein passed shall apply mutatis mutandis for the purpose of disposing of the present appeal.
Accordingly, we in terms of our observations recorded while disposing off the assessee’s appeal for AY 2019-20 in ITA No. 1544/Hyd/2025, set aside the order passed by the CIT(A), and quash the impugned assessment order passed by the DCIT, Central Circle- 1(2), Hyderabad under Section 147 of the Act, dated 18/12/2024, for want of a valid assumption of juri iction on his part.
In the result, both the appeals filed by the assessee in ITA Nos. 1544/Hyd/2025 and 1545/Hyd/2025 for AY 2019-20 & AY 2020-21 are allowed in terms of our aforesaid observations. Ankit Jain vs. ACIT/DCIT
Order pronounced in the open court on 30th January, 2026. S - - (मधुसूदन साव"डया) (रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखासद"य/ACCOUNTANT MEMBER "या"यकसद"य/JUDICIAL MEMBER d/- Hyderabad, dated: 30/01/2026. OKK/sps आदेशक"""त"ल"पअ"े"षत/ Copy of the order forwarded to:-
"नधा"रती/The : Ankit Jain, C/o. Katrapati & Associates, 1-1- 298/2/B/3, Sowbhagya Avenue Apts, 1st Floor, Ashok Assessee Nagar, Street No.1, Hyderabad, Telangana-500020. 2. राज"व/ The Revenue : (i) Asst. Commissioner of Income Tax, Central Circle-1(2), Aayakar Bhavan, Basheerbagh, Opp. LB Stadium, Hyderabad, Telangana-500004. (ii) Dy. Commissioner of Income Tax, Central Circle-1(2), Aayakar Bhavan, Basheerbagh, Opp. LB Stadium, Hyderabad, Telangana.
The Principal Commissioner of Income Tax, Central Circle, Hyderabad.
"वभागीय""त"न"ध, आयकरअपील"यअ"धकरण /DR,ITAT, Hyderabad.
The Commissioner of Income Tax 6. गाड"फ़ाईल / Guard file
आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Hyderabad.
