ITO, EXEMPTIONS WARD, TRICHY V. SAPPAHIRE EDUCATIONAL AND CHARITABLE TRUST, THANJAVUR

MA 108/CHNY/2025

AI Insights

The case revolves around a Miscellaneous Application by the Revenue challenging the Tribunal's earlier decision that favored the assessee, Sappahire Educational & Charitable Trust, regarding the issuance of notice under Section 148 of the Income Tax Act. The Tribunal had previously ruled that such notices should be issued by the Faceless Assessing Officer following the faceless assessment scheme introduced by the CBDT. The Revenue's challenge was based on a Single Bench decision of the Madras High Court, which was later reversed by a Division Bench, thereby supporting the Tribunal's original decision. The Tribunal dismissed the Revenue's application, citing the need to adhere to the legal framework established by the faceless assessment scheme and the precedents set by higher judiciary.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775017 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 30-06-2025
• Other Referred Cases: M/s. Mark Studio India Pvt. Ltd. v. ITO, Hexaware Technologies Ltd. v. ACIT, TVS Credit Services v. DCIT, Dadha Pharma LLP v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: N. ARJUN RAJ
• Keywords: Set aside; Charitable institution
• Section: 148

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER Miscellaneous Application No.108/Chny/2025 (in ITA No.2416/Chny/2025) िनधा\u000eरणवष\u000e/Assessment Year: 2018-19 The ITO, Exemptions Ward, Trichy. v. Sappahire Educational & Charitable Trust, 14/4, Arabi Street, Nidur, Mayiladuthurai, Thanjavur-612 101. [PAN: AALTS 1999 P] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Department by : Ms.R. Anita, Addl.CIT Assessee by : Mr.N.Arjun Raj, Advocate सुनवाईक तारीख/Date of Hearing : 18.07.2025 घोषणाक तारीख /Date of Pronouncement : 04.09.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is a Miscellaneous Application preferred by the Revenue against this Tribunal order dated 05.02.2025 in ITA Nos.2416 & 2417/Chny/2024. 2. According to the Revenue, the impugned action of the Tribunal allowing the appeal of the assessee holding that notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) ought to have been issued by the Faceless Assessing Officer [FAO] and not jurisdictional Assessing Officer [JAO] is erroneous. The Revenue is noted to be Printed from counselvise.com MA No.108/Chny/2025 (AY 2018-19) Sappahire Educational & Charitable Trust :: 2 :: aggrieved by the impugned action of this Tribunal since the jurisdictional High Court [Single Bench] in the case of M/s. Mark Studio India Pvt. Ltd. v. ITO reported in [2024] 169 taxmann.com 542 (Madras) has decided in favor of the Revenue by distinguishing the decision of the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd., reported in 464 ITR 430 (Bom.), which decision has been mainly relied upon by the Tribunal for granting relief to the assessee and has filed the following submissions: The Miscellaneous Application filed by the Revenue is on the issue of notice u/s 148 by the Jurisdictional Assessing Officer, the Hon'ble ITAT vide its order dated in ITA.No.2416 & 2417/CHNY/2024, dated 05.02.2025 allowed the appeal of the assessee holding that notice u/s 148 ought to have been issued by the Faceless Assessing Officer and not Jurisdictional Assessing Officer. The department filed the present MA relying on the order of the Single Judge of Hon'ble Jurisdictional High Court in case of M/s. Mark Studio India Pvt. Ltd. vs. ITO [2024] 169 taxmann.com 542(Madras). In this regard, the following submission is made. 2. It is submitted that the above decision of the Hon'ble Madras High Court, has been made after distinguishing the decision of the Hon'ble Bombay High Court in Hexaware Technologies Ltd. ACIT [2024] ITR 430(Bombay). It is to be noted that the subsequent decision of Madras High Court in TVS credit Services vs. DCIT[2025] 174 taxmann.com 1078(Madras) while holding that, \"Having broadly referred to relevant provisions and Schemes framed thereunder in relation to faceless assessment, it appears to me that the legislative intent behind introducing section 151A was to bring assessment of income escaping assessment within the fold of faceless mechanism.\" however, the ld. Single Judge concluded as under: 5.6 \"For all the reasons discussed/dealt with supra, with respect I am unable to concur with the order of the learned Judge in the case of Mark Studio in W.P.No.25223 and 25227 of 2024, while concurring with the view expressed by High Court of Bombay, Telangana and Punjab and Haryana High Courts. 6. In view of the fact that I am unable to concur with the reasoning of the learned Judge, it is only appropriate that the matters to heard by a Davison/Larger Bench after the registry obtains appropriate orders from the Hon'ble Chief Justice.\" 3. Subsequently, the Hon'ble Madras High Court in the case of Dadha Pharma LLP considering the observation of the Single Judge in the case of TVS Credit Services for constituting a Division Bench to consider divergent view, the Court held as follows: Printed from counselvise.com MA No.108/Chny/2025 (AY 2018-19) Sappahire Educational & Charitable Trust :: 3 :: 6. We follow the law as laid down in Hexaware Technologies Ltd(supra), the said judgement was authored by one of us (Chief Justice), that it is mandatory for the FAO to issue the concerned notices issuance thereof by the JAO would make the notice invalid. 8. It is clarified that if the Apex Court reverses the judgement of Hexaware Technologies Ltd. (supra), parties will be governed by the decision of the Apex Courts. 9. 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 this petition, the notice issued in this petition is quashed and set aside. 4. Hence, it is requested that the rights and contention of the Revenue including the liberty to apply before the Tribunal in case the Revenue succeeds before the Apex Court in case of its SLP against Hexaware Technologies Ltd., be also made available while passing a Judgement in this matter. 3. Per contra, the Ld.AR of the assessee, Mr.N.Arjun Raj, Advocate, has brought to our notice the latest development on this legal issue and brought to our notice that the order of the Hon’ble High Court relied upon by the Revenue for preferring this MA i.e. the Hon’ble Single Bench order of the Madras High Court in the case of M/s. Mark Studio India Pvt. Ltd. (supra) has been reversed by the Hon’ble Division Bench of the Madras High Court in W.P.No.25223 & 25227 of 2024 wherein the Hon’ble High Court taking note of the decision of the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. (supra) and thus, there is no error in the impugned action of this Tribunal and prayed for rejection of Miscellaneous Application. 4. Having heard both parties, we note that this Tribunal by passing the impugned order has held that the JAO didn’t has jurisdiction to issue notice u/s.148 of the Act after 29.03.2022 since it offends Section 151/151A of the Act read with Faceless Scheme notified by the CBDT on Printed from counselvise.com MA No.108/Chny/2025 (AY 2018-19) Sappahire Educational & Charitable Trust :: 4 :: 29.03.2022 by relying on the decision of the Hon’ble Bombay High Court in Hexaware Technologies & Other decision of Gauhati & Punjab & Haryana High Court. The Revenue has preferred this Miscellaneous Application pointing out that the Hon’ble jurisdictional High Court (Single Bench) in the case of M/s.Mark Studio India Pvt. Ltd. (supra), has decided in its favour by distinguishing the case decided by the Hon’ble Bombay High Court in Hexaware Technologies & Other (supra). However, it has been brought to our notice that the Division Bench of jurisdictional High Court by order dated 24.06.2025 has reversed the Single Bench Order. It would be gainful to refer to the Hon’ble division bench order in the case of M/s. Mark Studio India Pvt. Ltd., as under: This appeal impugns an order passed by the learned Single Judge. 2. The learned Single Judge was pleased to dismiss the petition on the ground that even if the notice has been issued by Jurisdictional Assessment Officer and not Faceless Assessment Officer, the notice issued under Section 148A/148 of the Income Tax Act will be valid. 3. Ms.Vardhini Karthik submitted that this Court has, in many matters, held, following the judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax', that notice that has to be issued by Faceless Assessment Officer has to be issued Faceless Assessment Office and if issued by Jurisdictional Assessment Officer, the same is not valid. 4. Ms.Premalatha, who takes notice for the Revenue, states that the law as proposed by Ms.Vardini Karthick is correct and therefore, the Court may quash and set aside the notices, but keep open liberty of the Revenue to re-ignite the notices in case the Apex Court interferes with the order and judgment of the Bombay High Court in Hexaware Technologies (supra). 5. Keeping open the Revenue's rights and contentions, as noted above, the impugned notices dated 15.04.2024 are quashed and set aside. The appeal is disposed of. There shall be no order as to costs. Consequently, the interim application is closed. 5. In the light of the Division Bench order in the case of M/s. Mark Studio India Pvt. Ltd. (supra), we find that there is no mistake apparent Printed from counselvise.com MA No.108/Chny/2025 (AY 2018-19) Sappahire Educational & Charitable Trust :: 5 :: on the face of the record in respect of the impugned order passed by the Tribunal. Therefore, we are inclined not to interfere with the order passed by us. 6. Before parting, needless to say that we are bound by the decision of the Hon’ble division bench of the jurisdictional High Court, and the observations made by their Lordships therein will mutatis mutandis applying in this case also. With the aforesaid observations, we dismiss the Miscellaneous Application of the Revenue 7. In the result, Miscellaneous Application filed by the Revenue is dismissed. Order pronounced on the 04th day of September, 2025, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 04th September, 2025. TLN आदेश क \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF Printed from counselvise.com "