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Facts
The assessee, Nalluru Constructions, filed an appeal against the order of the CIT(A) for the assessment year 2015-2016. The Assessing Officer had completed the assessment under Section 147 read with Section 144B of the Income-tax Act, 1961. The assessee raised grounds challenging the validity of the notice issued under Section 148, alleging it was issued without following the National Faceless Assessment Scheme.
Held
The Tribunal noted that the issue regarding the validity of notices issued under Section 148 without following the National Faceless Assessment Scheme has been consistently decided by various High Courts, including the High Court of Andhra Pradesh. The notices were issued by the Jurisdictional Assessing Officer instead of the Faceless Assessment Centre, rendering them invalid. The Tribunal followed the judgments of the High Court of Andhra Pradesh and other High Courts that held such notices to be bad in law.
Key Issues
Whether the notice issued under Section 148 for reopening of assessment was validly issued in accordance with the National Faceless Assessment Scheme prescribed under Section 151A of the Income-tax Act.
Sections Cited
Section 147, Section 144B, Section 250, Section 149(1)(b), Section 148A, Section 130, Section 151A, Section 148, Section 226
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH : VISAKHAPATNAM AT HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI OMKARESHWAR CHIDARA
PER VIJAY PAL RAO, VICE PRESIDENT:
1. This appeal by the Assessee is directed against the Order dated 12.08.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2015-2016.
2 ITA.No.646/Viz./2025
2. The Assessee has raised the following grounds in the instant appeal:
1. “That on the facts and in the circumstances of the case, the learned Assessing Officer erred in completing the assessment under Section 147 read with Section 144B of the Income-tax Act, 1961, determining the total income at Rs14,59,771, which was erroneously upheld by the learned CIT(A) under Section 250. The impugned orders are contrary to the facts of the case and provisions of law.
2. That the learned CIT(A) has grossly erred in upholding the estimation of profit at 8% on the alleged turnover of Rs1.82 crore, without appreciating that the so- called turnover considered by the Assessing Officer included various non- trading and non-revenue items such as fixed deposit receipts (FDR) amounts, capital contributions, cancellation of D.D, reversal of electricity charges, and redeposits of earlier cash withdrawals.
That the learned CIT(A) failed to appreciate that the assessee had furnished complete details and explanations demonstrating that the figure of Rs1.82 crore did not represent the true turnover of the assessee's business, and that the Assessing Officer had erroneously treated such non-revenue items as business receipts for the purpose of estimation of income.
4. That the learned CIT(A), in a casual and summary manner, confirmed the arbitrary action of the Assessing Officer without proper appreciation of the facts and evidence placed on record, and thereby passed an order which is perverse and unsustainable in law.
5. That the learned CIT(A) ought to have held that the turnover declared by the assessee at Rs 66.19 lakh was correct and verifiable, and that the estimation of profit at 8% on such turnover was reasonable and justified in the facts and circumstances of the case.
6. The appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal at the time of hearing.”
3 ITA.No.646/Viz./2025 3. The assessee has also raised additional grounds of appeal under Rule 29 of ITAT Rules, 1963 which read as under:
“The notice issued u/s 148 dt. 03-04-2022 is barred by limitation as per section 149(1)(b) read with the proviso thereto, having been issued beyond the prescribed period of six years. Consequently, the reassessment order passed u/s 147 r.w.s. 144B dt. 24-01-2024 is bad in law, void ab initio, and liable to be quashed.
The reassessment order suffers from jurisdictional infirmities. The notice issued u/s 148A(d) and 148 by the jurisdictional ITO, Circle 1(1), Vijayawada on dt.03.04.2022 are contrary to the provisions of sections 1448, 130, and 151A of the Act and hence are invalid.”
The learned Authorised Representative of the Assessee has pleaded that the issue raised in above additional grounds goes to the root of the matter being foundation of assessment order and for adjudication of the above additional grounds, no fresh material or record or facts are required to be investigated, verified or considered and the same can be adjudicated on the basis of the material and facts already on record. He, therefore, submitted that the additional grounds be admitted and decided on merits. In support of his contention, he relied upon the Judgment of 4 ITA.No.646/Viz./2025 Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT [1998] 229 ITR 383 (SC).
On the other hand, the learned DR has strongly opposed for admission of the additional grounds. She submitted that on identical issue the Department has filed SLP before the Hon’ble Supreme Court in the case of Hexaware Technology Ltd., against the Judgment of Hon’ble Bombay High Court and therefore, pleaded that this may be kept in abeyance till the outcome of the SLP on the same issue pending adjudication before the Hon’ble Supreme Court.
We have heard the learned Authorised Representative of the Assessee and the learned DR on the admission of additional grounds. It is an undisputed fact that the issue raised in additional grounds is purely legal in nature and goes to the root of the matter. It is also pertinent to note that for adjudication of the above additional grounds, no fresh material or record or facts are required to be investigated, verified or considered, but, the same can be adjudicated on the basis of the material and facts already on 5 ITA.No.646/Viz./2025 record. Accordingly, by following the Judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT (supra), we admit the additional grounds raised by the assessee for adjudication.
The learned Authorised Representative of the Assessee at the outset invited the attention of the Bench on the additional ground no.2 raised by the assessee and submitted that the notice issued by the Jurisdictional Assessing Officer [in short “JAO”] u/secs.148(b), 148A(d) and 148 of the Act dated 16.03.2022, 03.04.2022 and 03.04.2022 respectively, are without following the procedure as per National Faceless Assessment Scheme introduced by the Finance Act, 2021 and therefore, the notice issued by the Assessing Officer u/sec.148 of the Act is not valid. He submitted that the notice issued by the JAO, Ward-2(1), Vijayawada u/sec.148 of the Act dated 03.04.2022 and consequent re-assessment order are invalid because the procedure as per the National Faceless Assessment Scheme u/sec.151A of the Act has not been followed and, therefore, the same is required to be set-aside. In support of this 6 ITA.No.646/Viz./2025 contention, the learned Authorised Representative of the Assessee has relied upon the following decisions:
i. Smt. Prameela Pasumarthi vs. DCIT [2025] 180 taxmann.com 131 [Andhra Pradesh] [HC] ii. Order of ITAT, Visakhapatnam in the case of No.368 Kolakaluru Primary Agricultural Cooperative Credit Society Limited, Tenali vs. ITO, Ward-1, Tenali in ITA.No.456/Viz./2025, dated 05.12.2025. iii. Order of Jurisdictional Andhra Pradesh High Court in WP.No.34685/2025 Dated 15.12.2025.
On the other hand, the learned DR has relied upon the Orders of the authorities below and submitted that the issue is pending adjudication before the Hon’ble Supreme Court in the case of Hexaware Technology Ltd., in the SLP filed by the Department against the Judgment of Hon’ble High Court of Bombay and, therefore, the same may be kept in abeyance till the outcome of the SLP filed by the Department before the Hon’ble Supreme Court.
We have heard the learned Authorised Representative of the Assessee as well as the learned DR and 7 ITA.No.646/Viz./2025 considered the relevant material on record. At the outset, it is noted that the ITO, Ward-2(1), Vijayawada has issued notice u/sec.148 of the Act dated 03.04.2022 as under :
Thus, it is clear that the notices u/sec.148A(b), Order u/sec.148A(d) and notice u/sec.148 for reopening of the assessment were issued by the Jurisdictional Assessing Officer, without following the 8 ITA.No.646/Viz./2025 procedure as per the National Faceless Assessment Scheme prescribed u/sec.151A of the Act. An identical issue has been considered by the Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of Smt. Prameela Pasumarthi vs. DCIT [2025] 180 taxmann.com 131 (Andhra Pradesh) in Para Nos.7 and 8 as under:
9 ITA.No.646/Viz./2025
10 ITA.No.646/Viz./2025
The Hon’ble Jurisdictional High Court of Andhra Pradesh again considered and decided this issue in the case of GG Constructons, Visakhapatnam vs. NFAC, Delhi & Another in WP.No.34685/2025 vide Order dated 15.12.2025 as under:
11 ITA.No.646/Viz./2025 12 ITA.No.646/Viz./2025 13 ITA.No.646/Viz./2025
14 ITA.No.646/Viz./2025 12. Thus, it is clear that the Hon’ble Jurisdictional High Court of State of Andhra Pradesh has taken a consistent view on this point and held that the notice issued u/sec.148 of the Act by the JAO without following the National Faceless Assessment Scheme as per Sec.151A of the Act and notified by the CBDT vide Notification dated 29.03.2022 is invalid and liable to be set aside. Accordingly, respectfully following the Judgment of Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of Smt. Prameela Pasumarthi vs. DCIT (supra) as well as in the case of GG Constructions vs. NFAC, Delhi & another (supra), we set aside the notice issued by the JAO, Ward-2(1), Vijayawada issued u/sec.148 of the Act dated 03.04.2022 being in contravention of the Faceless Assessment Scheme Notified by the CBDT dated 29.03.2022 and also without following the procedure provided u/sec.151A of the Act. Though the matter is pending before Hon’ble Supreme Court in the SLP filed by the Revenue against the decision of Hon’ble Bombay
15 ITA.No.646/Viz./2025 High Court in the case of Hexsware Technologies Ltd., (supra), however, we are bound by the Judgment of Hon’ble Jurisdictional High Court of Andhra Pradesh. Since we have quashed the notice issued by the JAO u/sec.148 of the Act and consequent assessment order also got vitiated therefore, the other issues raised by the assessee are not taken up for adjudication as the learned Authorised Representative of the Assessee has restricted his arguments only on the legal issue. We Order accordingly.
In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court on 30.01.2026.