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Facts
The Assessing Officer (AO) reopened the assessment for AY 2013-14 based on information of significant transactions made by the assessee, who had not filed a return. The AO completed the assessment, which was later quashed by the CIT(A) as non-est due to procedural issues related to faceless assessment norms.
Held
The Tribunal held that a CBDT circular provided an exception allowing jurisdictional AO to complete assessments due by 31-3-2022 even with procedural constraints under Section 144B. Therefore, the CIT(A)'s decision to quash the assessment as non-est was incorrect.
Key Issues
Whether the assessment order was non-est due to non-compliance with faceless assessment procedures under Section 144B, and if the CIT(A) was justified in quashing it.
Sections Cited
143(3), 147, 148, 133(6), 144, 144B, 139, 142(1), 119, 194B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “DB”: AGRA
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in for AY , arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‗ld. NFAC‘, in short] dated against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‗the Act‘) dated by the Assessing Officer, Agra (hereinafter referred to as ‗ld. AO‘).
2. At the outset, I find that there is a delay in filing of appeal by the revenue before us by 846 days. Considering the reasons adduced in the condonation petition, I am inclined to condone the delay in the interest of substantial justice and admit the appeal of the revenue for adjudication.
3. The only issue to be decided in this appeal is as to whether the Learned NFAC was justified in treating the assessment order framed by the Learned Jurisdictional Assessing Officer (JAO) as non-est in the facts and circumstances of the instant case.
4. We have heard the rival submissions and perused the materials available on record. The Assessee had not filed his return of income for the assessment year 2013-14. The Learned AO received the information that Assessee had made the following transactions during the year under consideration:- a) Cash deposit in savings bank account – Rs. 1,06,86,000/- b) Payments made through credit card – Rs. 2,99,309/- c) Sale of immovable property – Rs. 1,71,97,600/- d) Income from lottery / crossword puzzle in terms of section 194B based on the TDS return – Rs. 50,024
Since the aforesaid transactions were above the maximum amount not chargeable to tax, the Learned AO proceeded to reopen the assessment under section 147 of the Act after obtaining necessary approval of the competent authority. Accordingly, notice under section 148 of the Act stood issued to the Assessee on 30-3-2021, which was duly served on the Assessee on 30-3-2021. In response to the said notice, no return was filed by the Assessee. Based on the various information gathered from various sources vide issuance of notices under section 133(6) of the Act, a final show-cause notice enclosing the draft assessment order was issued to the Assessee on 24-03-2022. In response to the show-cause notice, the Assessee filed his written reply on 26-03-2022 filing his objections to the proposed additions thereon. The Learned JAO, after taking into account all the objections of the Assessee, proceeded to determine the total income of the Assessee at Rs. 3,81,69,080/- and completed the assessment under section 144 read with section 147 of the Act on 30-3- 2022. This assessment was framed by the Learned JAO, Income Tax Officer, Ashok Nagar. It is pertinent to note that both the notice under section 148 of the Act was issued by the Learned JAO and reassessment was framed by the Learned JAO.
The Assessee filed detailed submissions before the Learned CITA, both on law as well as on facts. The Learned CITA obtained a remand report from the Learned AO. The Learned CITA, after due consideration of the remand report and rejoinder to the remand report, quashed the assessment as non-est by observing as under:-
―4.3. Even admitting the fact that the notice u/s 148 is served on or before 31.03.2012; then also the other ground of the assessee, that the AO has no jurisdiction over the case still holds the ground. It becomes the fact that, because of the re-opening, assessment stands pending as on 01.04.2021. Under these circumstances, the re-opened assessment has to be completed u/s 144B (i.e. Faceless assessment system) as per Boards instruction F. No. 187/3/2020-ITA-I, dated 31.03.2021. 4.4. The relevant instruction is as follows. ― In pursuance of sub-section (2) of Section 144B of the Income-tax Act, 1961, the Central Board of Direct Taxes has specified that all the assessment proceedings pending as on 31.03.2021 and the assessment proceedings initiated on or after 01.04.2021 (other than those in the Central Charges and International Taxation charges), which fall under the following class of cases shall be completed in a faceless manner u/s 144B of the Act: (a) where the notice u/s 143(2) of the Act was issued by the (erstwhile) NeAC or by the NaFAC; (b) where the assessee has furnished her/his return of income u/s 139 or in response to a notice issued u/s 142(1) or section 148(1); and a notice u/s 143(2) of the Act, has been issued by the Assessing Officer or the prescribed Income-tax Authority, as the case may be; (c) where the assessee has not furnished her/his return of income in response to a notice issued u/s 142(1) by the Assessing Officer; (d) where the assessee has not furnished her/his return of income u/s 148(1) of the Act and a notice u/s 142(1) of the Act has been issued by the Assessing Officer.
This order shall come into force with effect from 1st day of April, 2021.‖ 4.5. From the above, it is clear that the As per F. No. 187/3/2020-ITA-I, dated 31.03.2021, all pending assessments as on 01.04.2021 will be carried out as per the provisions of Section 144B of the Act. Further assessment made u/s 143(2) or u/s 144 in the cases referred to in sub-section (2) [other than the cases transferred under sub-section (8)], on or after 1.4.2021, shall be non est if such assessment is not made in accordance with the procedure laid down u/s 144B of the Act. 4.6. In order to provide an adequate opportunity to the AO in this regard, the submissions of the appellant and the grounds are sent to the AO and a remand report is called as under: ―In the grounds of appeal, the appellant argues that the AO had completed the assessment without jurisdiction because the pending assessment as on 01.04.2021 has to be mandatorily completed by face- less assessment u/s 144B as per F. No. 187/3/2020-ITA-I, dated 31.03.2021 and therefore the order dated 30.03.2022 by JAO is non est. Your are requested to give a detailed explanation with supporting evidences , that under what circumstances the assessment was completed the JAO and is there any CBDT approval for change of jurisdiction from NFAC to JAO as per sub clause 8 of section 144B. The relevant documents/Screen shots are required to be attached with the remand report. ― 4.7. However in spite of adequate opportunity of being heard, the AO had not responded by way of any communication or remand report in this issue. It can be concluded that the AO has nothing to say in this matter. 4.8. It is once again reiterated that in the instant case, the assessment is pending as on 01.04.2021 and the case is not shifted to faceless assessment unit. Instead it is completed by the jurisdictional assessing officer [ITO-Ashok Nagar]. There is nothing on record that the Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of National Faceless Assessment Centre may, at any stage of the assessment, if (had) considered necessary, (and) transferred the above case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board.(sub section 8 of 144B) 5.0. This is the gross violation of CBDT instructions and the mandate of 144B of the Act by the AO. In view of the above, the impugned assessment order dated 30.03.2022 has to be considered as non-est as well as void ab initio. This ground of the appellant is hereby allowed. As the ground regarding the jurisdiction itself is allowed in the favour of the appellant, the other grounds are not adjudicated as discussing it will be, only of academic in nature.‖
The Learned DR before us placed on record the Circular issued by CBDT in F.No. 187/3/2020-ITA-1 dated 17-3-2022. For the sake of convenience, the said Circular is reproduced hereunder:-
SECTION 119, READ WITH SECTION 144B OF THE INCOME-TAX ACT, 1961 - INSTRUCTIONS TO SUBORDINATE AUTHORITIES - EXCLUSION TO SECTION 144B- CASES IN WHICH PERIOD OF LIMITATION EXPIRES ON 31-3-2022 ORDER F. NO. 187/3/2020-ITA-1, DATED 17-3-2022 In partial modification of Order under section 119 of the Income-tax Act, 1961 (the Act) by F.No.187/3/2020-ITA-1, dated 31st March, 2021 as modified by orders of even number, dated 6th September 2021, 22nd September, 2021 and 16th December, 2021, the Central Board of Direct Taxes (the Board) in exercise of powers under section 119 of the Act, hereby directs that in addition to the exceptions as provided in the said orders, the following exception is hereby added as under:— vi. Assessment orders in all cases for which the time limit for completion expires on 31-3-2022 pending with the jurisdictional Assessing Officer as on 15-3-2022 or thereafter, which cannot be completed as per the procedure laid down under Section 144B of the Act due to technical/ procedural constraints in the given period of limitation.
Accordingly, the Board clarifies that assessment in cases at (vi) above shall be completed by the jurisdictional Assessing Officer.
The Board further reiterates that the exception at (vi) above is applicable only to the cases for which the time limit for completion expires on 31-3-2022.
This order shall come into effect immediately. Sourabh Jain Under Secretary (ITA-1) 8. Hence in view of the aforesaid Circular of the CBDT, the Board had given relaxation to the Learned JAO to complete the re-assessment that were due by 31-3-2022 by providing an exception to non-following of procedure laid down in section 144B of the Act. In view of the same, we hold that the assessment declared as non-est by the Learned NFAC is not in order. Since the Learned NFAC had erroneously quashed the assessment as non-est and since the other grounds raised by the Assessee were not adjudicated by the Learned NFAC on merits, we deem it fit and appropriate, in the interest of justice and fair play, to restore the appeal to the file of the Learned NFAC for denovo adjudication in accordance with law for the limited purpose of adjudication of other grounds. The Assessee is also given liberty to file additional evidences, if any, and raise additional grounds, if any, in support of his contentions before the Learned NFAC. We make it clear that the ground on which the Learned NFAC had quashed the assessment as non-est shall not be relooked into by the Learned NFAC. However, the Learned NFAC is free to look into any other legal issue raised by the Assessee. The Assessee is directed to co-operate with the Learned NFAC for expeditious disposal of the appeal by not taking unwarranted adjournment except due to exceptional or bonafide circumstances. With these observations, the appeal of the revenue is allowed for statistical purposes.
In the result, the appeal of the revenue is allowed for statistical purposes.
Order pronounced in the open court on 04/12/2025.