KASHYAP CONSTRUCTIONS & DEVELOPERS,PATNA V. ACIT, CIR-4, PATNA, PATNA

ITA 716/PAT/2024

AI Insights

Kashyap Constructions & Developers appealed against the order of the National Faceless Appeal Centre, Delhi, which had confirmed an assessment made by the NFAC. The assessment was based on notices issued under sections 142(1) and 147 of the Income Tax Act, 1961, for the assessment year 2015-16. The primary legal contention was that the NFAC did not have the jurisdiction to issue these notices before the formal notification of the faceless assessment scheme on 30.03.2022. The Tribunal found merit in the assessee's argument, referencing a similar case (Nabiul Industrial Metal Pvt. Ltd. Vs. ITO) where it was held that the NFAC's actions were invalid without the requisite jurisdictional authority at the time the notices were issued.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474236 (ITAT-PATNA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Other Referred Cases: Nabiul Industrial Metal Pvt. Ltd. Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RINKU SINGH
• Assessee Lawyers: S. K. TULSIYAN
• Section: 147; 148; 144; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA (Through Virtual hearing at Kolkata) BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.716/PAT/2024 (Assessment Year: 2015-16) Kashyap Constructions & Developers 503, Hariom Commercial Complex, New Dak Bunglow Road, Patna-800001, Bihar Vs. ACIT, CIR-4 Patna-800001, Bihar (Appellant) (Respondent) PAN No. AALFK2264K Assessee by : Shri S.K. Tulsiyan, AR Revenue by : Shri Rinku Singh, DR Date of hearing: 11.03.2025 Date of pronouncement : 02.04.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 21.11.2024 for the AY 2015-16. 02. The issue raised in ground no.1 is as under:- “1. That the order passed u/s 147 r.ws. 144 r.w.s. 144B of the II Act, 1961 on 27.03.2022 by National Faceless Assessment Centre is without jurisdiction in as much as the impugned provision of section 151A investing jurisdiction to the National Faceless Assessment Centre came with effect from 29.03.2022 vide Notification No. 18/2022/F.No. 370142/16/2022-TP1. only.” 03. The facts in brief are that the assessee is a partnership firm engaged in the business of real estate development and renting of immovable properties. During the year the firm had undertaken the construction Page | 2 ITA No.716/PAT/2024 Kashyap Constructions & Developers; A.Y. 2015-16 and development of residential project called Jasmati Complex having an area of 15,800 sq. feet comprising of 12 units at Mohalla-Aparna Colony, Mauza-Jalalpur, Survey Thana-Danapur, at present P.S. Rupsapur-1 in the town and Disrict of Patna, bearing Survey Plot No.217/, Khata No.04, Thana-22, Danapur, Patna. The assessee was following Project Completion Method (PCM) for the purpose of ascertaining its income. Though the assessee has filed its returns of income for A.Y. 2013-14 and 2014-15, however, in A.Y. 2015-16, due to feud amongst partners there was complete deadlock and the operations of the firm were heavily and severely affected with the result no accounts were prepared and finalized and consequently no return of income was filed for the impugned assessment year. The ld. AO issued notice u/s 148 of the Act on 31.03.2021, and thereafter notice u/s 142(1) of the Act was also issued and served upon the assessee, however, there was no compliance on the part of the assessee. The ld. AO finally completed the assessment u/s 144 of the Act by making an addition of ₹3,44,15,000/- to the income of the assessee. 04. Thereafter the assessee filed the appeal before the ld. CIT (A) with a delay of 4 and half months for which a condonation petition with supporting affidavit of the partner was filed. However, the ld. CIT (A) dismissed the appeal. Now, the assessee has raised legal issue before us that order passed u/s 147 read with section 144B of the Act dated 27.03.2022, by National Faceless Assessment Centre, is without jurisdiction as provisions of Section 151A of the Act as the the e- assessment of Income escaping assessment scheme, 2022 was notified on 29.03.2022 vide notification No.18/2022/F.No.370142/16/2022-TPL for assessment. Page | 3 ITA No.716/PAT/2024 Kashyap Constructions & Developers; A.Y. 2015-16 05. After hearing the rival contentions and perusing the materials available on record, we find that the notice u/s 142(1) was issued on 16.12.2021, by National Faceless Assessment Centre (NFAC), when there was no power vested with the said NFAC to issue such notice. We note that there is a separate section of 142B of the Act which was inserted w.e.f. 01.11.2020 for faceless enquiry and valuation and we further note that the faceless enquiry and valuation scheme 2022, was duly notified on 30.03.2022 vide notification no. 19/2022 F.No.370142/15/2022-TPI for issuing notice u/s 142(1) of the Act in a faceless manner through automated allocation in accordance with and to the extent provided in Section 144B of the Act with reference to making faceless assessment of total income or loss of assessee. We also note that Section 144B of the Act was substituted by Finance Act, 2022 w.e.f. 01.04.2022 to include provision of issuance of notice u/s 142(1) of the Act vide clause (iii) of Section 144B of the Act. We further note that Section 151A of the Act was inserted w.e.f. 01.11.2020 for faceless assessment of income escaping assessment u/s 147 of the Act and u/s 151A of the Act, e-assessment of income escaping assessment scheme, 2022 was duly notified on 29.03.2022 vide notification no. 18/2022/F.No/370142/16/2022-TPL for assessment, reassessment or recomputation under section 147 of the Act 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. Therefore, it is apparent from the above that the NFeAC had no jurisdiction to issue notice u/s 142(1) of the Act prior to 30.03.2022, because the scheme of faceless enquiry u/s 142B of the Act for issuance of notice u/s 142(1) of the Act by NFeAC was notified on 30.03.2022 vide Page | 4 ITA No.716/PAT/2024 Kashyap Constructions & Developers; A.Y. 2015-16 Notification no. 19/2022 and vide notification no. 18/2022, dated 29.03.2022 u/s 151A of the Act , NFeAC was vested with power to make assessment u/s 147 of the Act. 06. The ld. CIT DR also filed a detailed submissions dated 04.03.2025, controverting the augments taken by the ld. Counsel for the assessee, however, we find that the arguments and submissions made by the ld. DR is devoid of any merit. 07. The case of the assessee find support from the decision of the co- ordinate bench in the case of Nabiul Industrial Metal Pvt. Ltd. Vs. ITO in ITA no. 1328/KOL/2024, wherein the co-ordinate Bench vide Para 2.1 to 2.3, allowed the appeal of the assessee by holding that the assumption of jurisdiction by the NFAC is invalid as there is no power with NFAC to issue notice u/s 142(1) of the Act prior to 29.03.2022 because the scheme of faceless enquiry u/s 142B of the Act for issuance of notice u/s 142(1) of the Act by NFAC was notified on 30.03.2022 vide Notification no. 19/2022 though it was inserted on the statute book w.e.f. 1.11.2020 for faceless enquiry and valuation. Further u/s 151A of the Act, e-assessment of income escaping assessment scheme, 2022 was duly notified on 29.03.2022 vide notification no. 18/2022/F.No/370142/16/2022-TPL for assessment, reassessment or recomputation under section 147 of the Act 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. Therefore prior to 29.3.2022, the NFeAC has no jurisdiction to make assessment u/a 147 of the Act or to issue notice 142(1) of the Act vide notification no. 18/2022, dated Page | 5 ITA No.716/PAT/2024 Kashyap Constructions & Developers; A.Y. 2015-16 29.03.2022 u/s 151A of the Act. Accordingly the ground no. 1 of the appeal of the assessee is allowed. 08. The other grounds raised on merits are not being adjudicated and are left open to be decided at later stage if need arises for the same. 09. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 02.04.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 02.04.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Patna "