TaxTMI 
TaxTMI 
2025 (12) TMI 1890
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....peal. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal: "1. The order of the learned Commissioner of Income Tax (Appeals)-11, Hyderabad, is not correct either on facts or in law, and is therefore liable to be set aside. 2. In the facts and circumstances of the case, the learned CIT(A) erred in upholding the validity of reassessment proceedings initiated under section 147 of the IT Act, without appreciating that the very notice issued under section 148 is bad in law and void ab initio. 3. The Ld. CIT(A) is not justified in sustaining the reopening without (a) any incriminating material relating to AY 2020-21 found in the search on 04.01.2023, and (b) appreciating the fact that the notice u/s 148 was based only on deemed information under Explanation 2(1) and not on any evidence of income escaping assessment, thereby making the reassessment invalid and without jurisdiction. 4. The Ld. CIT(A) is not justified in sustaining the assessment without appreciating that the Assessing Officer did not furnish the recorded reasons for reopening despite specific request, thereby making the reassessment void as being....
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....eply, the assessee furnished the requisite details, as under: Particulars Amount (Rs) Agriculture receipts 2,94,430 FD, SB Interest 32,551 Sheep sales 17,48,023 Rythu Bandhu 43,250 Cash deposits 8,24,525 Purchase returns 68,400 Misc.credits returned 556 Total 30,11,738 The assessee submitted before the AO that he had, during the subject year, sold sheep for a consideration of Rs. 18,98,023/-, and the mode of receipt of sale consideration by him comprised of viz, (i) through banking channel: Rs. 17,48,023/-; and (ii) cash receipts: Rs. 1,50,000/-. Elaborating further, it was submitted by the assessee that as he had incurred a loss of Rs. 3,87,230/- on the aforesaid transactions of sale of sheep, therefore, for the said reason, he had not disclosed the said transaction in his return of income. Also, the assessee, in his attempt to substantiate his aforesaid claim, had provided certain details to the AO regarding the purchase/sale of sheep. However, the AO observed that as the assessee had failed to substantiate his aforesaid explanation based on any supporting documentary evidence, viz., bills, vouchers, etc., thus, the same co....
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....red 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). 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 "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 Finance Act, 2021 w.e.f 01.04.2021. The Ld. AR had placed on record the judgment of the Hon'ble High Court in the case of Kings Pride Infra Projects (P) Ltd. Vs. DCIT and drawn ....
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....called in question the jurisdiction of the ACIT, Central Circle 1(1), Hyderabad i.e., the JAO, who had issued Notice u/s 148 of the Act, dated 29/11/2023, therefore, he was precluded from assailing the same for the first time before the Tribunal. 14. 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 jurisdiction 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 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 1....
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....e mandate of sub-section (3) of Section 124 is confined to a case where he objects to the assumption of jurisdiction by the A.O, and not otherwise. 17. At this stage, we may herein refer to certain judicial pronouncements that had in the past held the field on the aforesaid issue. The Hon'ble High Court of Bombay in the case of Peter Vaz & Ors. Vs, CIT & Ors. (2021) 436 ITR 616(Bom) and the Hon'ble High Court of Gujarat in the case of Commissioner of Income-tax v. Ramesh D. Patel [2014] 42 taxmann.com 540/225 Taxman 411/362 ITR 492 (Gujarat), had held that as Section 124 of the Act pertains to territorial jurisdiction vested with an AO under sub-section (1) or sub-section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which puts a restriction on an assessee to object to the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and have no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Further, the Hon'ble High Court of Bombay in the case of Bansilal B. Raisoni & Sons v. Assistant Commissioner of....
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....'ble Apex Court that the acquiescence of a party equally should not be permitted to defeat the legislative animation, and the court cannot derive jurisdiction apart from the statute. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Kanwar Singh Saini (supra) are culled out as under: "22. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. (Vide United Commercial Bank Ltd v. Workmen, Nai Bahu v. Lala Ramnarayan, Natraj Studios (P) Ltd. v. Navran....
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....t, Maharashtra Nagpur Bench). There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes v. Onkarmal Nathmal Trust). An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT v. Kelvinator of India Ltd.)" (emphasis supplied by us) 19. We shall now advert to the judgment of the Hon'ble Supreme Court, in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC), that has been relied upon by the Ld. DR to impress upon us that as the assessee in the present case before us, had, within the time allowed by the notice issued u/s 148 of the Act, dated 29/11/2023, i.e., period of 30 days, not called in question the jurisdiction of the ACIT, Central Circle 1(1), Hyderabad, i.e., JAO, based on which the assessment order had been passed under Section 147 of the Act, dated 26/03/2025,....
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....ed with the Income-tax Authorities is classified into four categories, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. The assessee in the present case before us, has not assailed the vesting of jurisdiction with the ACIT, Central Circle 1(1), Hyderabad, i.e., JAO based on either of the aforesaid four categories, but has rather challenged the lack of inherent jurisdiction with the Jurisdictional Assessing Officer (JAO), for issuing the notice under Section 148 of the Act. In our view, as after the introduction of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022", it is only the FAO which can issue the notice under Section 148 of the Act and not the 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 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 Supr....
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.... the notices issued for reassessment being under Section 148A, 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. 36. 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. 37. The preliminary objection raised by the petitioner is 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....
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....evenue 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 defenc....
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....nt 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 :- 1. 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. 2. 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. 3. Scope of the Scheme :- For the purpose of this Scheme,- (a) assessment, reassessment....
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.... ii. Assessment Orders in cases assigned to International Tax Charges." (Emphasis Supplied) 22. 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 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: "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 CB....
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.... 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." 23. 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. 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 ....
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....l 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. 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: ....
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.... 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. 31. As a sequel, miscellaneous petitions pending if any, shall stand closed." 25. We, thus, respectfully follow the aforesaid judgment of the Hon'ble Jurisdictional 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 29/11/2023 by ACIT, Central Circle-1(1), 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 ....