ADHIMOOLAM VARADHAM MURUGAN,TIRUVALLUR V. ITO, NCW-5(1), CHENNAI

ITA 2755/CHNY/2025

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The case involves Adhimoolam Varadham Murugan, the appellant, who did not file a return of income for the Assessment Year 2015-16. The Income Tax Officer (ITO) received information about substantial cash deposits made by the appellant during the demonetization period. Subsequently, the ITO issued a notice under Section 148 of the Income Tax Act, 1961, which was later challenged by the appellant on the grounds of jurisdictional validity. The Commissioner of Income Tax (Appeals) dismissed the appellant's appeal ex-parte due to non-submission of required details. The Tribunal, however, focused on the legal contention regarding the jurisdiction of the officer who issued the notice and found it to be invalid based on the applicable legal framework and precedents.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827489 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 06-10-2025
• Other Referred Cases: TVS Credit Service Ltd vs DCIT, Hexaware Technologies Ltd vs. Assistant Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LATCHANA
• Assessee Lawyers: H. YESHWANTH KUMAR; C.A
• Keywords: Set aside
• Section: 147; 148; 144

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ ा यपीठ, चे\u0012ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0015ी यस यस िव\u0018ने\u001a रिव, ा ियक सद एवं सु\u0015ी प ा वित यस, लेखा सद क े सम$ BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND MS. PADMAVATHY.S, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2755/Chny/2025 िनधा %रण वष% /Assessment Year: 2015-16 Adhimoolam Varadham Murugan, No.41, AVM Palace, SP Koilmelandai Street, Periyathoppu, Manali, Tiruvallur – 600 068. PAN: AOVPM 8592C Vs. The Income Tax Officer, Non Corporate Ward-5(1), Chennai. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थ( की ओर से/ Assessee by : Mr. H.Yeshwanth Kumar, C.A *+थ( की ओर से /Respondent by : Ms. Latchana, CIT सुनवा ई की ता रीख/Date of Hearing : 16.12.2025 घोषणा की ता रीख /Date of Pronouncement : 07.01.2026 आदेश / O R D E R PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short \"CIT(A)\") passed u/s. 250 of the Income Tax Act, 1961 ( in short \"the Act\") dated 19.08.2025 for Assessment Year (AY) 2015-16. 2. The assessee is an individual and did not file a return of income for A.Y 2015-16. The A.O received information that the assessee has deposited cash to the tune of Rs. 1,01,11,300/- in two bank accounts during the Printed from counselvise.com ITA No.2755/Chny/2025 Adhimoolam Varadham Murugan :- 2 -: demonetization period. The Income Tax Officer Non-Corporate ward – 5(1) Chennai (JAO) passed order u/s.148A(d) and issued the notice u/s. 148 on 04.04.2022. The assessee filed the return in response declaring income of Rs.4,99,550/-. Subsequently the A.O issued notices calling on the assessee to furnish details pertaining to the cash deposit. Since, the assessee did not appear nor responded to the notices issued by the A.O, the A.O completed the assessment u/s. 147 r.w.s 144 of the Act, treating the entire cash deposit as unexplained money u/s.69A of the Act. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) dismissed the appeal ex-parte for the reason that the assessee did not file any details or supporting documents. The assessee is in appeal before the Tribunal against the order of the CIT(A). The assessee raised various grounds contending the impugned addition on merits and vide ground no.3 to 12 the assessee has raised the legal contention that the notice issued by JAO is without jurisdiction. The ld AR during the course of hearing submitted that if the legal ground is considered and allowed in favour of the assessee the rest of the grounds would become academic. Accordingly we will first proceed to adjudicate the legal grounds raised by the assessee. 3. We have heard the both the parities, perused the material available on record. We notice that the issue of notice u/s.148 reopening the assessment being issued by JAO instead of FAO after CBDT Notification dated 29.03.2022 is not valid is considered by the Hon'ble Madras High Court in the case of TVS Credit Service Ltd vs DCIT in WP No 22402 of 2024 & WMP No 13336 of 2023 where it is held that – “2. Learned Single Judge in order dated 20.12.2024 in WP Nos.25223 of 2024 held that it does not matter if the Jurisdictional Assessing Officer (JAO) issues the notice and it is not mandatory Printed from counselvise.com ITA No.2755/Chny/2025 Adhimoolam Varadham Murugan :- 3 -: that it should be issued by the Faceless Assessment Officer (FAO). Another learned Single Judge in order dated 21.04.2025 in WP No.22402 of 2024 and batch cases, followed what was held by the Bombay High Court in Hexaware Technologies Ltd vs. Assistant Commissioner of Income Tax'; and opined that it was mandatory for the FAO to issue notice and issuance of notice by JAO would make the notice invalid. 3. Learned Single Judge thereafter directed the matter to be placed before the Chief Justice for constituting a Division Bench to consider the divergent views. It is, therefore, all these matters were listed before us today. 4. We follow the law as laid down in Hexaware Technologies Ltd (supra), the said judgment was authored by one of us (Chief Justice), that it is mandatory for the FAO to issue the concerned notices and issuance thereof by the JAO would make the notice invalid. 5. Counsels for assessees are ad idem that the law as laid down in Hexaware Technologies Ltd (supra) will apply. Learned Additional Solicitor-General, however, submits that the Revenue does not accept the law as laid down in Hexaware Technologies Ltd (supra); and that there is a special leave petition filed against the order and judgment in Hexaware Technologies Ltd (supra) and the same is expected to be taken up after the Supreme Court reopens. 6. Admittedly, learned Additional Solicitor-General, in fairness, states that there is no stay. Therefore, the law as laid down by Hexaware Technologies Ltd (supra) applies. 7. It is clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court. 8. Keeping open all rights and contentions of parties, including liberty to apply to this Court, in case the Revenue succeeds before the Apex Court, for revival of these petitions, the notices issued in these petitions are quashed and set aside. 9. In these petitions, apart from the issue of notices issued by JAO instead of FAO, all or many of the issues which were considered in Hexauxare Technologies Ltd (supra) are involved. Printed from counselvise.com ITA No.2755/Chny/2025 Adhimoolam Varadham Murugan :- 4 -: 10. To the extent the issues raised in Hexaware Technologies Ltd (supra) are not covered, those are kept open to be raised at the appropriate stage. 11. With the liberty as noted above, all petitions stand disposed of holding in favour of assessees. There will be no order as to costs. Consequently, the interim applications also stand disposed of.” 4. We note that the CBDT, vide Notification dated 29.03.2022, notified the “e-Assessment of Income-tax Assessment Scheme, 2022”. The said Scheme, inter alia, provides that the assessment, re-assessment, or re- computation of income shall be carried out under Section 147 of the Act. It further provides that the issuance of notice under Section 148 of the Act shall be through automated allocation, in accordance with the risk management strategy formulated by the Board as referred to in Section 148 of the Act. The Scheme also mandates that such proceedings shall be conducted in a faceless manner, to the extent provided under Section 144B of the Act, while making the assessment, re-assessment, or re-computation of the total income or loss of the assessee. In the present case we notice that the notice u/s.148 dated 04.04.2022 is issued by JAO and not by NFAC beyond the date notified by the CBDT. Accordingly we see merit in the argument that the ratio laid down by the Hon'ble High Court in the above case applicable to the present case. Therefore, respectfully following the decision of the Hon’ble jurisdictional High Court in the case of TVS Credit Services Ltd. (supra), we set aside the impugned notice issued under Section 148 of the Act along with all consequential proceedings. However, in view of paragraph 8 of the said judgment, we keep open the right and contention of parties, with liberty to approach the Tribunal in the event the Revenue succeeds before the Hon’ble Supreme Court and the appeal is revived. In such an event, the assessee shall be entitled to raise and argue all the grounds taken in the present appeal. Printed from counselvise.com ITA No.2755/Chny/2025 Adhimoolam Varadham Murugan :- 5 -: 5. Since we have allowed the legal contentions of the assessee, the grounds on merits have become academic not warranting any adjudication. 6. In the result, the appeal of the assessee is allowed. Order pronounced on 07th day of January, 2026 at Chennai. Sd/- Sd/- (यस यस िव\u0018ने\u001a रिव) (SS Viswanethra Ravi) \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / Judicial Member (प ा वित यस) (Padmavathy.S) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 07th January, 2026. EDN, Sr. P.S आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF Printed from counselvise.com "