MD MAHIMUD SK,MALDA V. I.T.O., WARD - 3(1), MALDA

ITA 2229/KOL/2024

AI Insights

The case involves appeals by MD Mahimud SK against the orders of the National Faceless Assessment Centre (NFAC), Delhi, for the assessment years 2015-16 and 2017-18. The primary legal issue was the jurisdiction of the NFAC to conduct assessments under the faceless assessment scheme before the provisions of Section 151A of the Income Tax Act, 1961, were notified on 29.03.2022. The assessee challenged the jurisdictional validity of the NFAC's actions, arguing that the assessments were conducted before the legal framework allowing such faceless assessments was in effect. The Tribunal agreed with the assessee, citing precedents and legal provisions that supported the view that the NFAC acted beyond its jurisdiction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473859 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Jute Corporation of India Ltd. Vs CIT, National Thermal Power Co. Ltd v. CIT, Nabiul Industrial Metal Pvt. Ltd., Paschim Medinipur VS. I.T.O.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABHAKAR PRAKASH RANJAN
• Assessee Lawyers: S. K. TULSIYAN
• Keywords: Unexplained cash credit
• Section: 147; 148; 142(1); 143(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI SONJOY SARMA, JM ITA Nos. 2230 & 2229/KOL/2024 (Assessment Years:2015-16 & 2017-18) MD Mahimud SK S/o Abdul Razzak, Village-Kismat narayanpur P.O. Sirampur, SD-English Bazar, Malda, West Bengal 732216 Vs. ITO, Ward 3(1) Income Tax Office, Netaji Market complex, Rathbari, Malda, West Bengal 732101 (Appellant) (Respondent) PAN No. BQYPS8209L Assessee by : Shri S.K. Tulsiyan, AR Revenue by : Shri Prabhakar Prakash Ranjan, DR Date of hearing: 21.01.2025 Date of pronouncement : 04.03.2025 O R D E R Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] even dated 25.09.2024 for the AY 2015-15 and 2017-18 respectively. 02. The assessee has challenged the appellate order passed by the ld. CIT (A) on various grounds of appeal as mentioned in the memorandum of appeal, besides the assessee has raised additional ground challenging the jurisdiction of national faceless assessment center u/s 151 read with section 144B of the Act when it did not have any power under any notification. First of all we shall adjudicate the additional ground raised in A.Y. 2015-16 which is extracted below:- “1. That, on the facts and in the circumstances of the case, the National Faceless Assessment Centre (NFAC) erred in having assumed jurisdiction u/s 151A r.w.s. 144B Page | 2 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 of the I.T. Act, 1961 from 09/02/2022 when they were not empowered under any Notification about the applicability of the faceless scheme for making assessment in faceless manner prior to 29.03.2022\" 03. The ld. Counsel for the assessee vehemently submitted before us that the provisions of Section 151A of the Act came on the statute book on 01.11.2020 and the same was notified on 29.03.2022, vide notification no.18/2022 on the e-Assessment of Income Escaping Assessment Scheme, 2022. The ld. AR submitted that in the instant case the migration of assessment proceedings for A.Y. 2015-16 was communicated to the assessee vide issue of notice u/s 142(1) of the Act dated 09.02.022 under DIN: ITBA/AST/F/142(1)/2021- 22/1039573181(1). The ld. AR submitted that this notice was followed by SCN dated 17.03.2022 under DIN:ITBA/AST/F/147(SCN)2021- 22/1040949460(1). The ld. AR therefore submitted that it is evident from the above that assumption of jurisdiction to the impugned assessment under faceless assessment scheme was all prior to 29.03.2022, when the provisions of Sec. 151A of the Act had not come into operation. Thus, the assumption of jurisdiction by NFAC is without jurisdiction and consequently, the whole assessment is without jurisdiction and unsustainable in the eyes of the law. The ld. AR therefore, prayed that the additional ground arises out of the assessment order passed by the assessment unit, IT department NFAC Delhi dated 23.03.2022, as well as the appellate order of the ld. CIT (A) NFAC Delhi dated 25.09.2024. The ld. AR submitted that the additional ground raised by the assessee is purely a legal issue and no further verification or any clarification on facts is required from any quarter whatsoever as all the facts and notices in relation to the assessment proceeding as well as the appellate proceedings were already available on records. The ld. AR therefore, prayed that the said ground may kindly be admitted for adjudication by relying on the Page | 3 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 decision of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688(SC) and National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 (SC). 04. The ld. DR on the other hand opposed the admission of the additional ground for the reason that it was never raised before the authorities below by the assessee. Therefore, at this stage the assessee should be pre-concluded from raking up this legal issue. 05. After hearing the rival contentions and perusing the materials available on record, we find that the additional ground raised by the assessee is purely on the legal issue of wrong assumption of jurisdiction by the NFAC u/s 151A read with section 144B of the Act, prior to 27.03.2022. In our opinion, the issue involved does not require any verification from any end whatsoever and all the facts in relation to the assessment proceedings as well as appellate proceedings were in appeal folder. Therefore, by relying on the decision of the Hon'ble Apex Court in the case of CIT Vs. National Thermal Power Co. Ltd. Vs. CIT (Supra), we are inclined to admit the same for adjudication. 06. The facts in brief are that credible information was received that the assessee had an aggregate credits of ₹ 16.99 lacs and aggregate debits of ₹16.99 lacs during the period commencing from 01.04.2014 to 31.03.2015 in the bank account maintained with the bank of Baroda accountant number 006975. Accordingly, the AO initiated the proceedings u/s 147 of the Act after recording the reasons to belief and after obtaining the prior approval of the PCIT. Notice u/s 148 of the Act was issued on 31.03.2021 and was served through email requiring the assessee to file the return of income within 30 days. In compliance ,the assessee filed the return of income on 28.04.2021, Page | 4 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 declaring total income of ₹ 2,25,800/-. Finally, the addition of ₹21,06,182/- was made to the income of the assessee on account of unexplained credit in the books of account as discussed by the ld. AO in Para 5 in the assessment framed u/s 147 read with section 144B of the Act dated 23.03.2022. 07. In the appellate proceedings, the ld. CIT (A) dismissed the appeal in limine by not condoning the delay of 183 days for which the assessee filed the affidavit before us explaining the delay, the reasons for the delay in filing of the appeal. 08. The ld. Counsel for the assessee vehemently submitted before us that the assessment framed by the ld. AO u/s 147 read with section 144B of the Act dated 23.03.2022, is without jurisdiction and required to be quashed. The ld. AR submitted that the notice u/s 142(1) of the Act dated 09.02.2022, was issued by National faceless assessment centre, Delhi under DIN No. DIN: ITBA/AST/F/142(1)/2021- 22/1039573181(1), meaning thereby that the migration of assessment proceedings for A.Y. 2015-16 was communicated by this notice. Thereafter, the assessee was issued a show cause notice on 17.03.2022 by NFAC with DIN:ITBA/AST/F/147(SCN)2021- 22/1040949460(1). The ld. AR submitted that the assumption of jurisdiction of National faceless assessment centre, Delhi prior to 29.03.2022, was invalid as the provisions of Section 151A of the Act were not operational prior to 29.03.2022. The ld. AR submitted that the provisions of Section 151A of the Act, were brought on the statute book from 01.11.2020 and the same were notified on 29.03.2022 vide notification no. 18/2022 on e-assessment of income escaping income of 2022. The ld. Counsel therefore submitted that the Page | 5 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 assumption of jurisdiction is invalid and so is the assessment framed by the National Faceless Assessment Centre. 09. The ld. DR on the other hand submitted that the proceeding under the NFAC was a continuous proceeding and there was nothing wrong in it and therefore, the legal issue raised before the Bench by the assessee may kindly be dismissed. 010. After hearing the rival contentions and perusing the materials available on record, we find that the notice to the assessee was issued u/s 148 of the Act on 31.03.2021, through e-mail after the case was reopened u/s 147 of the Act. Notice u/s 143(2) read with section 147 of the Act was issued on 29.06.2021 and thereafter , the proceedings would taken over by National Faceless Centre, Delhi and notice u/s 142(1) dated 09.02.2022, was issued and thereafter show cause was issued to assessee by the NFAC on 17.03.2022. Finally, the assessment was framed u/s 147 read with section 144B of the Act vide order dated 23.03.2022. 011. We have perused the section of Section 151A of the Act, which deals with the faceless assessment of income escaping assessment and was brought on the statute book by taxation and other law (realization and amendment of certain provisions) Act, 2020, with effect from 01.11.2020 which was notified on 29.03.2022 vide notification no.18/2022/F. No. 370142/16/2022-TPL(Part)]. Therefore, the assessment proceedings were taken by the National Faceless Assessment Centre, Delhi by issuing notice u/s 142(1) dated 09.02.2022 and thereafter the assessment was framed accordingly after issuing show cause notice which in our opinion is without jurisdiction. The provisionw of Section 151A of the Act were brought Page | 6 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 on the statute book with effect from 01.11.2020. However, the same were made effective and applicable with effect from 29.03.2022 vide notification no. when the CBDT notified the new scheme for assessment of income escaping assessment scheme, 2022. In our considered view the assessment framed is without jurisdiction and cannot be sustained. The case of the assessee find force from the decision of Nabiul Industrial Metal Pvt. Ltd., Paschim Medinipur VS. I.T.O., in ITA no. 1328/KOL/2024 for A.Y. 2017-18, the order dated 15.10.2024, wherein a similar issue has been decided in favor of the assessee. For the sake of ready reference, the notice issued u/s 142(1) dated 09.02.2022 and show cause notice dated 17.03.2022, are extracted below:- Page | 7 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 Page | 8 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 Page | 9 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 012. Considering the above facts and legal position, we are of the considered opinion that the order passed by the NFAC, Delhi is without jurisdiction and is hereby quashed. The appeal of the assessee is allowed. 013. The additional ground raised in ITA No. 2230/Kol/2024 A.Y.2017-18 is similar to one as decided by us in ITA No. 2229/Kol/2024 A.Y. 2015-16. Therefore, our decision would, mutatis mutandis, apply to this appeal as well. The appeal of the assessee is allowed. 014. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 04.03.2025. Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:04.03.2025 Sudip Sarkar, Sr.PS Page | 10 ITA Nos. 2229 & 2230/KOL/2024 MD. Mahimud SK; A.Y. 15-16 & 2017-18 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, Kolkata "