TaxTMI 
TaxTMI 
2026 (8) TMI 457
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....e Ld. CIT(A) ought to have appreciated that the AO erred in not issuing the notice under section 143(2) of the IT Act, 1961. 3. The Ld. CIT(A) erred in considering the fact that the AO considered the Return of Income (ROI) filed under Section 148 in the assessment order on page A while neglecting to issue the mandatory notice under Section 143(2), which is contrary to the provisions of law. 4. The Ld. CIT(A) erred in upholding the disallowance of expenditure Rs. 16,33,050/- made by the AO without properly considering the submissions made by the assessee. 5. The Ld. CIT(A) has erred by not adjudicating the ground no. 2 by the appellant assailing that the incriminating material in the course of search relating to assessee. 6. The Ld. CIT(A) ought to have adjudicated ground no. 2 by taking into consideration that there was no incriminating material found relating to the assessee on that the assessment and addition made is unsustainable. 7. The Ld. CIT(A) ought to have fairly appreciated the fact that the expenditure of Rs. 16.33,050/- was incurred in the ordinary course of business and should be considered as business expenditure u/s. 37(1)....
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....sessee filed his return of income on 16/01/2025 declaring an income of Rs. 19,20,130/-. As the return of income filed by the assessee in compliance to the notice issued under section 148 of the Act was beyond the stipulated period of 92 days as was provided in the said notice, therefore, the AO while framing the assessment observed that the same was not to be deemed to be a return of income filed under section 139 of the Act. Accordingly, the AO based on his aforesaid observations dispensed with the issuance of notice under section 143(2) of the Act. 6. Thereafter, the AO vide his order passed under section 147 of the Act, dated 06/03/2025 determined the income of the assessee at Rs. 37,03,180/- after making certain additions/disallowances, viz., (i) disallowance of the assessee's claim for deduction under section 80C of the Act: Rs. 1,50,000/-; and (ii) disallowance of the assessee's claim for deduction of expenditure towards earning of commission income: Rs. 16,33,050/-. 7. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Although, the CIT(A) vacated the disallowance of the assessee's claim for deduction under section 80C of Rs. 1,50,000/-, but upheld....
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....4/12/2025. Elaborating further on his contention, the Ld. AR submitted that the issue 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 "Jurisdictional 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 Jurisdictional High Court in the case of Kings Pride Infra Projects (P) Ltd. Vs. DCIT (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 amended provisions brought in by the Finance Act, 2021 w.e.f 01.04.2021. The Ld. AR had placed on record a copy of 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. 11. Per Contra, Shri 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 f....
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....tion 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." 15. 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 jurisdiction 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 147 of the Act, dated 06/03/2025 by the ACIT, Central Circle- 1(1), Hyderabad, based on the Notice u/s. 148 of the Act, dated 29/11/2023 issued by the said Jurisdictional Assessing Officer (JAO) who inherently lacked the jurisdiction for issuing Notice u/s. ....
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....ed to be as per the prescribed faceless mechanism provided under the provisions of Section 144(b) r.w Section 151A of the Act, therefore, the challenge by the assessee to the inherent lack of jurisdiction with the JAO to issue the notice under Section 148 of the Act will not be saved by the judgment of the Hon'ble Supreme Court in Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology (supra), which being distinguishable on facts will not assist the case of the revenue. 18. We have given thoughtful consideration on the issue of validity of the jurisdiction assumed for framing of the assessment vide order passed under Section 147 of the Act, dated 06/03/2025 based on the Notice issued u/s. 148 of the Act, dated 29/11/2023 by the ACIT, Central Circle 1(1), Hyderabad, i.e., the "Jurisdictional Assessing Officer" (JAO). 19. In our view, the issue involved in the present appeal, i.e., the validity of the assessment order passed under Section 147 of the Act, dated 06/03/2025, based on the Notice u/s. 148 of the Act, dated 29/11/2023 issued by the ACIT, Central Circle 1(1), Hyderabad, i.e., the JAO, as on date is squarely covered by the Judgment of the ....
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....s sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, 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. 38. 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)." 18. 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 th....
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....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 assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified auth....
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....ng, 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. 3. 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, 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) 21. 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 assessmen....
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....2 and in very categorical terms held in paragraph Nos.23, 24, 27 and 29 as under: "23. 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. 24. 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 ju....
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....here does not seem to be any exceptions carved out permitting the JAO to issue proceedings under Section 148 of the Act. 24. 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. 25. 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. 26. The Hon'ble Supreme Court in the case of CIT v. G.M. Mittal Stainless Steel (P.) Ltd. [2003] 130 ....
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....able in proceedings drawn under Section 153A and Section 153B. 29. 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, ....
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....e 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(1), Hyderabad under Section 147 of the Act, dated 06/03/2025, for want of a valid assumption of jurisdiction on his part. The ground of appeal No.1 is allowed in terms of our aforesaid observations. 21. As we have quashed the assessment for want of valid assumption of jurisdiction by the ACIT, Central Circle-1(1), Hyderabad for framing the impugned assessment vide his order passed under Section 147 of the Act, dated 06/03/2025, based on the Notice u/s. 148 of the Act, dated 29/11/2023 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. 22. Resultantly, the order passed by the ACIT, Central Circle-1(1), Hyderabad under Section 147 of the Act, dated 06....