Jurisdictional AO cannot issue Section 148 notices under faceless assessment scheme, only NFAC FAO authorized

ITAT Amritsar quashed reassessment proceedings initiated by jurisdictional AO instead of NFAC Faceless Assessing Officer. The tribunal held that Section 151A read with CBDT Scheme dated 29.03.2022 mandates faceless assessment for issuing notices under Section 148. The Scheme covers both notice issuance and subsequent assessment proceedings, requiring automated allocation through risk management strategy. Only FAO can issue Section 148 notices, not JAO. Following Telangana HC precedent in Kankanala Ravindra Reddy case, the tribunal declared the assessment void ab initio for jurisdictional violation. Decision favored assessee.

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Issues:
Validity of assessment under section 147 based on notice issued by jurisdictional AO instead of NFAC.

Analysis:

Issue 1: Validity of assessment under section 147

The appellant challenged the assessment under section 147, arguing that the notice issued by the jurisdictional AO, rather than NFAC, was in violation of Notification No. 18/2022 and Section 151A of the Income Tax Act, 1961. The appellant contended that the jurisdictional AO's assumption of jurisdiction under section 148 was against mandatory conditions. The appellant relied on the case of M/s National Thermal Plant Co. Ltd. v. CIT to support the admission of additional grounds for appeal. The Tribunal admitted the additional grounds for adjudication as they raised legal issues without requiring new facts.

Issue 2: Jurisdictional conflict between FAO and JAO

The Tribunal examined the jurisdictional conflict between the Faceless Assessing Officer (FAO) and Jurisdiction Assessing Officer (JAO) in issuing notices under section 148. The Tribunal noted that the notice in this case was issued by the JAO, Katra, and not by NFAC, as required by the faceless scheme. The Tribunal emphasized that the Scheme dated 29th March 2022 mandated automated allocation for notices under section 148, eliminating the interface between tax authorities and assesses. The Tribunal held that the JAO's issuance of the notice was in violation of the Scheme and Section 151A, leading to the quashing of the assessment under section 147 as void ab initio.

Precedent and Conclusion

The Tribunal referred to the case of Kankanala Ravindra Reddy vs. Income Tax Officer, where the Telangana High Court held that notices issued by JAOs were invalid under Section 151A and the Scheme dated 29th March 2022. Based on this precedent and the legal arguments presented, the Tribunal concluded that the assessment under section 147, based on the notice issued by the JAO, was invalid and quashed. Consequently, the appellant succeeded on the legal issue of the assessment's validity under section 147, leading to the allowance of the appeal.

This detailed analysis highlights the legal intricacies surrounding the validity of assessments under section 147 and the jurisdictional conflict between FAO and JAO in issuing notices under section 148, as addressed in the judgment delivered by the Appellate Tribunal ITAT Amritsar.

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