ALL ONE KNIT YARNS TRADERS,TIRUPPUR V. ITO, WARD-1(1), TIRUPPUR

ITA 2789/CHNY/2025

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The case involves All One Knit Yarns Traders, the appellant, contesting an assessment order issued by the NFAC for the assessment year 2019-20. The primary contention was the procedural validity of the notices issued under sections 148A(d) and 148 of the Income Tax Act, 1961. The appellant argued that the notices were improperly issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO), leading to a violation of prescribed law and procedure. The Tribunal referenced a decision by the Hon'ble High Court of Madras, which supported the appellant's position, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824489 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Appeal Filed On: 10-10-2025
• Other Referred Cases: TVS Credit Services Ltd. v. DCIT, Hexaware Technologies Ltd. V. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LATCHANA
• Assessee Lawyers: S. GIRISH KUMAR
• Keywords: Unexplained expenditure
• Section: 147; 148; 69C

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं सुŵी एस.पȧावती,, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Ms. S. Padmavathy, Accountant Member आयकर अपील सं./I.T.A. No.2789/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2019-20 All One Knit Yarns Traders, 63/B, Ground Floor, S.V. Colony East, 6th Street, Tirupur 641 602. [PAN: AAYFA8941J] Vs. The Income Tax Officer, Ward 1(1), Tiruppur. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri S. Girish Kumar, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. Latchana, JCIT सुनवाई की तारीख/ Date of hearing : 17.12.2025 घोषणा की तारीख /Date of Pronouncement : 31.12.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 06.10.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2019-20. 2. In ground Nos. 2 to 6, the assessee challenged that the NFAC, Delhi failed to appreciate that the passing of the order under section 148A(d) of the Act by the JAO as against the passing the such order by Printed from counselvise.com I.T.A. No.2789/Chny/25 2 the FAO would completely defy the prescription of law/procedure in relation thereto and hence ought to have appreciated that in the absence of valid foundation for issuance of notice under section 148 of the Act in view of issuance of such notice by JAO instead of FAO, the consequential reassessment should be considered as nullity in law. 3. The Assessing Officer noted that in the FY 2018-19 relevant to AY 2019-20, the assessee made cash withdrawals of ₹.3,27,62,725/- from the current account maintained with ICICI Bank Ltd and the purpose of heavy withdrawals could not be verified and remained unexplained due to non-filing of return of income for AY 2019-20. Accordingly, the Jurisdictional Assessing Officer issued notice under section 148A(b) of the Income Tax Act, 1961 [“Act” in short] on 27.02.2023 show-causing the assessee for issuing notice under section 148 of the Act. In response, the assessee furnished his submissions and the same is reflected in page 2 of the assessment order. With regard to ROI, the assessee has submitted that there was no business during the FY 2018-19 relevant to AY 2019-20 and hence the liability to file the return of income does not arise. Since the withdrawals could not be verified, the Jurisdictional Assessing Officer passed order under section 148A(d) of the Act and issued notice under Printed from counselvise.com I.T.A. No.2789/Chny/25 3 section 148 of the Act dated 30.03.2023. Since the assessee furnished part details and could not furnish complete details, the assessment unit of NFAC completed the assessment under section 147 r.w.s. 144B of the Act dated 07.03.2024 assessing total income/loss of the assessee at ₹.3,27,62,725/-, inter alia, making addition towards unexplained expenditure under section 69C of the Act. The ld. CIT(A) confirmed the addition made by the assessment unit of NFAC. 4. The ld. AR Shri S. Girish Kumar, Advocate drew our attention to pages 1 & 5 of the paper book and submits that the order under section 148A(d) of the Act and notice under section 148 of the Act dated 30.04.2023 respectively were issued by the jurisdictional Assessing Officer. Further, he drew our attention to the assessment order dated 07.03.2024 passed under section 147 r.w.s. 144B of the Act by the Faceless Assessing Officer. The ld. AR vehemently argued that the assessment order passed by the Faceless mechanism [Assessing Officer] is bad in law in terms of the decision of the Hon’ble High Court of Madras in the case of TVS Credit Services Ltd. v. DCIT in W.P. No. 22402 of 2024 & WMP No. 13336 of 2023 dated 24.06.2025 placed on record and prayed to quash the assessment Printed from counselvise.com I.T.A. No.2789/Chny/25 4 order passed by the NFAC without issuing notice under section 148A(d) of the Act. 5. The ld. DR Ms. Latchana, JCIT supported the order passed the Assessing Officer. 6. We have heard both the parties and perused the material available on record. In this case, we note that the assessment order under section 147 r.w.s. 144B of the Act was passed by the assessment unit of NFAC. Further, we note that the notice under section 148 of the Act was issued by the Jurisdictional Assessing Officer and also passed order under section 148A(d) of the Act. On perusal of the decision of the Hon’ble High Court of Madras in the case of TVS Credit Services Ltd. v. DCIT (supra), we note that the Hon’ble High Court was pleased to hold that the assessment made by the assessment unit of NFAC is not valid if the order and notice under section 148A(d)/148 of the Act issued by the Jurisdictional Assessing Officer, but, however, liberty was given to the Revenue to re-ignite the notice in case the Hon’ble Supreme Court interferes with the order of the Hon’ble High Court of Bombay in the case of Hexaware Technologies Ltd. V. ACIT 464 ITR 430 (Bombay). Accordingly, we Printed from counselvise.com I.T.A. No.2789/Chny/25 5 hold that the assessment order dated 07.03.2024 passed by the assessment unit of NFAC is bad in law and it is quashed. Accordingly, the ground Nos. 2 to 6 raised by the assessee are allowed and remaining ground Nos.7 to 13 become infructuous. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on 31st December, 2025 at Chennai. Sd/- Sd/- (S. PADMAVATHY) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 31.12.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. Printed from counselvise.com "