PALLAVI DAS,CHENNAI V. ITO, NON CORP. WARD 7(1) CHE, CHENNAI

ITA 1026/CHNY/2025

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The case involves an appeal by Pallavi Das against the reassessment order issued by the Income Tax Officer, Corporate Ward-7(1), Chennai, for the assessment year 2015-16. The primary legal contention was regarding the validity of the notice issued under section 148 of the Income Tax Act, 1961, which was issued by the jurisdictional assessing officer instead of a faceless assessing officer as required by the recent amendments and notifications aimed at faceless assessments. The Tribunal considered the legal framework established by the Income Tax Act and the specific notifications issued by the Central Board of Direct Taxes, along with relevant judicial precedents from the Madras and Bombay High Courts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784303 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 02-04-2025
• Other Referred Cases: Hexaware Technologies Limited vs. Assistant Commissioner of Income Tax, Madras High Court decision dated 24.06.2025 in WP No.22402
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: S. SONALI
• Keywords: Set aside; Invalid notice
• Section: 147; 148

Judgement Text

" आयकर अपीलीय अधिकरण, ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री मनु क ुमार धिरर ,न्याधयक सदस्य एवं माननीय श्री अमिताभ शुक्ला, लेखा सदस्य क े सिक्ष BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1026/Chny/2025 Assessment Years: 2015-16 Pallavi Das, Y Block, No.75, 6th Street, Anna Nagar, Chennai-600 040. [PAN: BPBPP0358F] Income Tax Officer, Corporate Ward-7(1), Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Ms.S.Sonali, Advocate प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 03.09.2025 घोषणा की तारीख /Date of Pronouncement : 13.11.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1074567444(1) dated 17.03.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment year 2015-16. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time. 2.0 At the outset, the Ld.Counsel for the assessee invited our attention to the additional ground filed under Rule-11 of the ITAT rules. Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 2 - of 9 The Ld. Counsel argued that it is assailing the order of Ld.CIT(A) both on legal grounds as well as on the merits of the case. The Ld.Counsel submitted that as the additional ground which is a legal ground and strikes at the very root of the reassessment order u/s. 147 r.w.s. 144B dated 07.04.2022, the same be adjudicated first. Upon consideration we deem it appropriate to adjudicate the legal ground raised by the assessee through its additional ground first. 3.0 Thus, through additional ground of appeal the assessee has challenged the insufficiency of jurisdiction with the Ld.Jurisdictional Assessing Officer to have issued the notice u/s 148 which forms the basis for the reassessment order u/s. 147 r.w.s. 144B dated 04.01.2024. It is the case of the Ld.Counsel for the assessee that as per section 151A of the Act r.w. notification dated 29.03.2022 of Central Board of Direct Taxes, reassessment notice u/s 148 was to be issued by the faceless assessing officer and that issuance of the same by the jurisdictional assessing officer u/s 148 dated 07.04.2022 was unwarranted and not in conformity with statutory conditions governing the matter. It was urged that consequent to notification dated 29th March 2022 issued by the Central Board of Direct Taxes, reassessment u/s 148 can be issued by a faceless assessing officer only. It was urged that in the present case as the notice u/s 148 dated 07.04.2022 was issued by the jurisdictional assessing officer the same was invalid and consequently the assessment Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 3 - of 9 order u/s 147 r.w.s. 144B dated 04.01.2024 also became an order to be deemed as void ab initio. In support of its contentions, the Ld.Counsel for the assessee placed heavy reliance upon the decision of the Hon’ble Madras High Court dated 24.06.2025 in the batch of writ petitions bearing no.22402 of 2024. 4.0 Per contra, the Ld.DR relied upon the order of lower authorities. It was argued that the decision of Hon’ble Bombay High Court in the case of Hexaware Technologies Limited which is the basis of impugned decision of the Hon’ble Madras High Court dated 24.06.2025 (supra) has been contested by the Revenue before the Hon’ble Apex Court and hence no reliance can be placed. 5.0 We have heard rival submissions in the light of material available on records. It is an admitted fact on records that the notice u/s. 148 dated 07.04.2022, upon which the assessment order u/s 147 r.w.s. 144B dated 04.01.2024 is resting, was issued by the jurisdictional assessing officer and not the faceless assessing officer. We have noted the following provisions of section 151A of the Act:- “…..[Faceless assessment of income escaping assessment.97 151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 14898[or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 4 - of 9 specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.]….” The legal prescription thus mandated is that post issuance of notification by the central government, notices u/s. 148 shall be issued by faceless assessing officers. 6.0 We have noted that the Central Board of Direct Taxes has passed a notification dated 29.03.2022 stipulating as under:- “….NOTIFICATION New Delhi, the 29th March, 2022 S.O. 1466(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:- 1. Short title and commencement.—(1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022. (2) It shall come into force with effect from the date of its publication in the Official Gazette. 2. Definitions.––(1) In this Scheme, unless the context otherwise requires, –– (a) ―Act‖ means the Income-tax Act, 1961 (43 of 1961); (b) ―automated allocation‖ means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act. 3. Scope of the Scheme.––For the purpose of this Scheme,–– (a) assessment, reassessment or recomputation under section 147 of the Act, (b) issuance of notice under section 148 of the Act, shall be 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 with reference to making assessment or reassessment of total income or loss of assessee. [Notification No. 18/2022/F. No. 370142/16/2022-TPL(Part1] SHEFALI SINGH, Under Secy….” Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 5 - of 9 Thus through the above notification the Central Government has mandated that w.e.f. 29th March 2022 all the notices u/s 148 of the Act shall be through automated allocation and in a faceless manner for initiating any reassessment of income. It thus alludes that notice u/s 148 shall be issued by a faceless assessing officer. 7.0 We have also noted the decision of Hon’ble Bombay High court in the case of Hexaware Technologies Limited dated 03.05.2024 in WP No.1778 of 2023. The Hon’ble court's decision was , inter alia, based on the newly introduced faceless assessment scheme, established under Section 151A of the Act which mandated that reassessment notices be issued through automated allocation and in a faceless manner, thereby eliminating direct interaction between the taxpayer and the tax authorities. The court interpreted this to mean that the authority to issue reassessment notices under the faceless assessment scheme rests solely with the FAO, not the JAO. The Hon’ble Bombay High Court held the view that allowing concurrent jurisdiction would lead to chaos and undermine the purpose of the faceless assessment scheme. It clarified that the scheme's automated allocation process randomly assigns cases to Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 6 - of 9 assessing officers, and in this case, the JAO was not the designated officer. Therefore, the reassessment notice issued by the JAO was deemed invalid and quashed. The Revenue had argued that both the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) had concurrent jurisdiction in issuing such notices. However, the Hon’ble Bombay High Court disagreed, ruling that the JAO lacked the authority to issue the reassessment notice in this specific instance. While doing so the Hon’ble High Court had distinguished the order of the Hon’ble Calcutta High Court. 8.0 We have also noted with reverence the decision of Hon’ble Madras High Court dated 24.06.2025 in WP No.22402. In the impugned decision the Hon’ble High Court has held as under:- “…..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 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 Tax1; 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 Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 7 - of 9 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…..” 9.0 It is seen that the Hon’ble Madras High Court has through its aforesaid order reaffirmed the decision of Hon’ble Bombay High Court in the case of Hexaware Technologies Limited ruling that post 29.03.2022 i.e after issuance of CBDT notification, notices u/s 148 deserved to be issued by faceless assessing officer only. It goes on to indicate that any notices issued by any jurisdictional assessing officer shall be invalid. Consequently, any assessment order which is resting on any such notice shall also be invalid and void ab initio. We have noted that in the present case the notice u/s 148 was issued on 07.04.2022 by the jurisdictional assessing officer and that the assessment order u/s 147 dated 04.01.2024 is resting upon the same. In respectful compliance to the decision of the Hon’ble Madras High Court (supra) it is held that notice u/s 148 issued on 07.04.2022 by the jurisdictional assessing officer is an Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 8 - of 9 invalid notice and same is therefore quashed. It is trite law that once foundation goes the superstructure is bound to collapse. Accordingly, in the present case the assessment order u/s 147 dated 04.01.2024 shall also not survive. We therefore set aside the order of the lower authorities. The additional ground of appeal raised by the assessee is therefore allowed. 10.0 We have however also noted that the Hon’ble Madras High Court in their impugned decision , in para 7 ruled that “….. 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….” and therefore this order is also subject to the decision of Hon’ble Apex court in response to revenue’s appeal in the case of Hexaware Technologies (supra) . 11.0 As the assessee has succeeded in terms of its additional legal ground of appeal, all other grounds of appeal contesting the merits of the addition have become academic in nature and hence not adjudicated. 12.0 In the result, the appeal of the assessee is allowed. Order pronounced on 13th , November-2025 at Chennai. Sd/- (मनु क ुमार धिरर) (MANU KUMAR GIRI) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 13th , November-2025. KB/- Printed from counselvise.com ITA No.1026 /Chny/2025 Page - 9 - of 9 आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai/Coimbatore/Madurai/Salem. 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF Printed from counselvise.com "