POOJA PRABHAKAR,CHENNAI V. INCOME TAX OFFICER, NON CORPORATE WARD 15(1), CHENNAI, CHENNAI

ITA 3049/CHNY/2025

AI Insights

The case involves an appeal by Pooja Prabhakar against the order of the Commissioner of Income Tax (Appeals), which had dismissed her appeal as time-barred. The primary contention in the appeal was the validity of the reassessment notice issued under section 148 of the Income-tax Act, 1961, by the Income Tax Officer, Non-Corporate Ward-15(1), Chennai, which was not in compliance with the faceless assessment scheme mandated by the Central Government. The Tribunal, after considering the legal precedents and the specific provisions of the Income-tax Act, 1961, found that the notice was indeed invalid and quashed the subsequent reassessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825039 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 31-10-2025
• Other Referred Cases: TVS Credit Services Ltd. Vs. DCIT, Hexaware Technologies Ltd Vs ACIT, Kankanala Ravindra Reddy Vs ITO, M/s.Ta Infra Projects Limited Vs The DCIT, Sri Venkatramana Reddy Patloola Vs DCIT, Deepanjan Roy Vs ADIT (Int. Taxn.)-2 Hyd & Anr, Kunhayammed v. State of Kerala, S. Shanmugavel Nadar v. State of Tamil Nadu
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARV SREENIVASAN
• Assessee Lawyers: R. VENKATA RAMAN; VISHWA PADMANABHAN
• Keywords: Condonation of delay; Set aside; Reassessment proceedings; Question of law; Unexplained expenditure; Unexplained investment; Period of limitation; Reopening of assessment; Assessment record
• Section: 148; 144

Judgement Text

" आयकर अपीलीय अधिकरण, ‘डी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI श्री मनु क ुमार गिरर, न्याययक सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य क े समक्ष BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:3049/Chny/2025 ननिाारण वर्ा / Assessment Year: 2018-19 Pooja Prabhakar, 17 Kingston Apartments, M G Ramachandran Road Kalakshetra Colony, Chennai – 600 090. vs. ITO, Non-Corp Ward -15(1), Chennai. [PAN: BCGPP-8061-H] (अपीलाथी/Appellant) (प्रत्यथी/Respondent) अपीलाथी की ओर से/Appellant by : Mr. R. Venkataraman, FCA & Mr. Vishwa Padmanabhan, FCA. प्रत्यथी की ओर से/Respondent by : Shri. ARV Sreenivasan, CIT. सुनवाई की तारीख/Date of Hearing : 16.12.2025 घोर्णा की तारीख/Date of Pronouncement : 29.12.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal preferred by the assessee is directed against the order dated 25.08.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”). The said order emanates from the assessment framed by the National Faceless Assessment Centre (hereinafter referred to as the “AO”) u/s.147 r.w.s 144 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), vide assessment order dated 03.03.2023 (DIN: ITBA/AST/S/147/2022- 23/1050394107(1)), for the Assessment Year 2018-19. Printed from counselvise.com :-2-: ITA. No:3049/Chny/2025 2. The grounds of appeal raised by the assessee are as under: - 1. That the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”] has erred, both in law and on facts, in refusing to condone the delay in filing of the appeal by the appellant, and thereby failed to adjudicate the appeal on its merits. The Ld. CIT(A) ought to have appreciated that the delay, was neither deliberate nor intentional but occurred due to bona fide reasons, and thus deserved to be condoned in the interest of substantial justice. 2. Without prejudice to the above, that the Ld.CIT(A) erred in not appreciating that the assessment order dated 03.03.2023 passed by the National Faceless Assessment Centre [“Assessing Officer”] u/s.147 r.w.s 144 of the Act for the Assessment Year 2018-19 is invalid, void ab initio, and liable to be quashed as being bad in law. 3. That the Ld.CIT(A) erred in not appreciating that the reopening of the assessment is bad in law. 4. That the Ld.CIT(A) ought to have appreciated the fact that the notice u/s.148 of the Act, dated 31.03.2022 issued by the Income Tax Officer, Non Corporate Ward 15(1), Chennai [“JAO”] is in violation of the provisions of Section 151A of the Act and the faceless assessment scheme notified by the Central Government, hence the same is bad in law and consequently the impugned assessment order dated 03.03.2023 framed u/s.147 of the Act is invalid and void ab initio. Without prejudice to the above, on merits the following grounds of appeal are raised. 5. That the Ld.CIT(A) ought to have set aside the assessment to the file of the Assessing Officer for fresh assessment in view of the assessment order framed u/s.144 of the Act. 6. That the Ld.CIT(A) failed to appreciate that the Assessing Officer erred in making an addition of Rs.95,18,253/- towards unexplained money u/s.69A r.w.s 115BBE of the Act. 7. That the Ld.CIT(A) failed to appreciate that the Assessing Officer erred in making an addition of Rs.50,00,000/- on account of unexplained investments u/s.69 r.w.s 115BBE of the Act. 8. That the Ld.CIT(A) failed to appreciate that the Assessing Officer erred in making an addition of Rs.3,152/- towards unexplained expenditure u/s.69C r.w.s 115BBE of the Act. 9. That the Ld.CIT(A) failed to appreciate that the Assessing Officer erred in making an addition of Rs.1,39,030/- towards interest income in the hands of the appellant. 10. That the appellant craves the leave of the Hon’ble Income Tax Appellate Tribunal, Chennai Bench to add/delete/revise/adduce additional grounds in support of its contentions before or during the course of hearing of the appeal. Printed from counselvise.com :-3-: ITA. No:3049/Chny/2025 3. The brief facts of the case, as emanating from the record, are that the assessee did not file her return of income for the assessment year under consideration. Information available on the Insight Portal of the Department revealed that, for the A.Y.2018-19, the assessee had effected a time deposit of Rs.50,00,000/- with HDFC Bank, purchased a motor vehicle valued at Rs.65,34,653/-, and earned interest income aggregating to Rs.1,24,019/-. Based on the said information, a show-cause notice u/s.148A(b) of the Act was issued by the Income Tax Officer, Non-Corporate Ward-15(1), Chennai (hereinafter referred to as “the JAO”) on 21.03.2022. 4. As per the record, no reply was furnished by the assessee in response to the said notice. Thereafter, the JAO passed an order u/s.148A(d) of the Act on 31.03.2022, holding that income chargeable to tax had escaped assessment and that it was a fit case for issuance of notice u/s.148 of the Act. Consequent thereto, notice u/s.148 of the Act was issued by the JAO on 31.03.2022. Subsequently, the case was assigned to the Faceless Assessing Officer (hereinafter referred to as “the FAO”) in terms of the e-assessment scheme. 5. During the course of reassessment proceedings, the AO recorded that the assessee failed to comply with any of the statutory notices issued. The reassessment was, therefore, completed ex-parte u/s.147 r.w.s 144 of the Act vide order dated 03.03.2023, determining the total income of the assessee at Rs.1,46,60,435/-. In doing so, the AO made the following additions:- i. Treated the fixed deposit of Rs.50,00,000/- with HDFC Bank as unexplained investment and made an addition u/s.69 r.w.s 115BBE of the Act; ii. Treated the purchase of motor vehicle amounting to Rs.65,34,653/- as unexplained money u/s.69A r.w.s 115BBE of the Act; iii. Added interest income of Rs.1,39,030/- received from HDFC Bank and State Bank of India under the head “Income from Other Sources”; Printed from counselvise.com :-4-: ITA. No:3049/Chny/2025 iv. Treated cash deposits of Rs.29,83,600/- made in the HDFC Bank account as unexplained money and made an addition u/s.69A r.w.s 115BBE of the Act; and v. Treated credit-card payments of Rs.3,152/- as unexplained expenditure and made an addition u/s.69C r.w.s 115BBE of the Act. 6. Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A), however, vide order dated 25.08.2025, dismissed the appeal in limine on the ground that the same was time-barred and had been filed beyond the period of limitation prescribed under the Act. Being further aggrieved, the assessee has preferred the present appeal before this Tribunal. 7. The Ld.AR appearing on behalf of the assessee, drew our attention to the reasons seeking condonation of delay in preferring the appeal before the Ld.CIT(A). The Ld.AR submitted that the delay had occurred due to circumstances beyond the control of the assessee and was attributable to bona fide reasons. The Ld.AR emphasized that there was neither deliberate negligence nor any mala fide intention on the part of the assessee, and that denial of condonation would result in grave hardship and denial of justice. The Ld.AR therefore prayed that, considering the settled legal position that substantive justice should prevail over technicalities, the delay may kindly be condoned. 8. The Ld.AR further submitted that, consequent upon condonation of delay, various legal grounds raised in the memorandum of appeal which go to the root of the matter deserve to be admitted for consideration and adjudication by this Tribunal. The Ld.AR contended that such grounds are purely legal in nature, do not require fresh investigation of facts, and therefore can validly be considered at this stage in the interest of justice. 9. Per contra, the Ld.DR vehemently opposed the request for condonation of delay. Printed from counselvise.com :-5-: ITA. No:3049/Chny/2025 10. At the threshold, it is noticed that the appeal preferred before the Ld.CIT(A) stood delayed by 259 days beyond the time period prescribed under the Act. The Ld.CIT(A), taking note of such delay, dismissed the appeal in limine, solely on the ground of limitation, without entering into the merits of the case. 11. We have carefully examined the reasons for condonation of delay as well as the explanation tendered by the assessee in support thereof. Upon a comprehensive appraisal of the facts, we find that the delay cannot be attributed either to deliberate inaction or to any lack of bona fides on the part of the assessee. The circumstances explained demonstrate that the default occurred due to reasons beyond the assessee’s control and not on account of any negligence, or want of diligence. In our considered view, therefore, the assessee has satisfactorily established the existence of “sufficient cause” for the delay in preferring the appeal before the first appellate authority. 12. The Hon’ble Supreme Court has, in a catena of decisions, unequivocally laid down that when an explanation regarding delay does not smack of mala fides and is otherwise reasonable, acceptance ought to be the rule and refusal an exception. A hyper-technical or pedantic approach, resulting in the dismissal of matters at the threshold, is discouraged as it may cause irreparable prejudice by foreclosing adjudication on merits. The expression “sufficient cause” occurring in limitation statutes has consistently been interpreted to receive a liberal and justice-oriented construction, so as to advance rather than defeat the cause of substantial justice. 13. In this regard, we may gainfully refer to the judgment of the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471), wherein it was held that the Courts should adopt a liberal approach while considering applications seeking condonation of delay. The Hon’ble Court cautioned that refusal to condone delay may result in meritorious matters being Printed from counselvise.com :-6-: ITA. No:3049/Chny/2025 thrown out at the inception itself, whereas condonation merely facilitates adjudication on merits. It was further observed that there is ordinarily no presumption of deliberate delay and that the judiciary commands respect because of its role in removing injustice rather than perpetuating it on technical grounds. The relevant portion of the said judgement is as under: - “Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. “Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.” 14. Similarly, in Ram Nath Sao @ Ram Nath Sahu & Others v. Gobardhan Sao & Others (2002 AIR 1201), the Hon’ble Supreme Court reiterated that the expression “sufficient cause” occurring under Section 5 of the Limitation Act and analogous provisions must be construed liberally so as to advance substantial justice. The Court emphasized that rejection of condonation applications on trivial or fault-finding grounds should be avoided, particularly where negligence, lack of bona fides, or intentional delay cannot reasonably be attributed to the litigant. Printed from counselvise.com :-7-: ITA. No:3049/Chny/2025 15. Further, we note that the Hon’ble Supreme Court in Vidya Shankar Jaiswal v. Income Tax Officer, Ward-2, Ambikapur (SLP (Civil) Nos. 26310– 26311 of 2024, order dated 31 January 2025), has reiterated that while dealing with applications seeking condonation of delay in filing appeals, the authorities must adopt a liberal and justice-oriented approach, ensuring that technicalities do not overshadow substantive rights. 16. Having regard to the factual matrix of the present case and guided by the above binding precedents of the Hon’ble Supreme Court, we are of the considered opinion that the assessee has successfully demonstrated sufficient cause warranting condonation of the delay of 259 days. Accordingly, the said delay is hereby condoned. 17. Having condoned the delay, we further note that the ground of appeal relating to validity of the notice u/s.148 of the Act issued by the JAO on 31.03.2022 urged before us is predominantly legal in nature and go to the very root of the assessment proceedings. It is a settled proposition of law that where a ground involves a pure question of law arising from the facts already on record, the same may be raised at any stage of the proceedings, including for the first time before the appellate forum. Such admission does not require any fresh investigation of facts nor does it prejudice the interests of the Revenue. 18. In this context, reference may be made to the landmark decision of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (229 ITR 383), wherein it has been held that the Tribunal is empowered to examine a question of law arising from the facts already available on record, even if such question had not been raised earlier. The Hon’ble Supreme Court clarified that the Tribunal’s jurisdiction is not confined merely to the issues dealt with by the lower authorities but extends to all questions of law bearing on the correctness of the assessment. Printed from counselvise.com :-8-: ITA. No:3049/Chny/2025 19. Similarly, the Hon’ble Supreme Court in Jute Corporation of India Ltd. v. CIT (187 ITR 688) recognized the right of an assessee to raise additional legal grounds at the appellate stage, observing that the appellate authorities are vested with wide powers to do substantial justice by determining the correct tax liability in accordance with law. 20. In the present case, the ground pressed before us relate to fundamental legal issues which strike at the validity and sustainability of the impugned assessment. The same arise from the material already available in the assessment records and do not necessitate any further enquiry or verification of extraneous facts. The adjudication of such legal ground is therefore imperative, as failure to do so may result in perpetuation of an illegality. 21. In view of the foregoing legal position, and in the interest of substantial justice, we hold that the legal ground raised by the assessee deserve to be admitted and adjudicated on merits. We accordingly proceed to consider the same in the subsequent part of this order. 22. At the outset, the Ld.AR of the assessee drew our attention to grounds of appeal preferred wherein assessee has raised a legal issue challenging the JAO issuing notice u/s.148/148A(d) of the Act dated 31.03.2022. 23. Ground No.4 is reproduced as under: 4. That the Ld.CIT(A) ought to have appreciated the fact that the notice u/s.148 of the Act, dated 31.03.2022 issued by the Income Tax Officer, Non Corporate Ward 15(1), Chennai [“JAO”] is in violation of the provisions of Section 151A of the Act and the faceless assessment scheme notified by the Central Government, hence the same is bad in law and consequently the impugned assessment order dated 03.03.2023 framed u/s.147 of the Act is invalid and void ab initio. 24. According to the Ld.AR, the impugned notice issued u/s.148 dated 31.03.2022, is invalid and bad in law being issued by the JAO which is not in accordance with Sec.151/151A of the Act read with the faceless Scheme notified by CBDT on 29th March 2022 for assessment, reassessment or re- Printed from counselvise.com :-9-: ITA. No:3049/Chny/2025 computation u/s.147/issuance of notice u/s.148 of the Act or for conducting of inquiry or issuance of show cause notice or passing of order u/s.148A of the Act or sanction for issuance of notice under section 151 of the Act. In this regard, the Ld.AR, explained that in exercise of the powers conferred u/s.151A of the Act, CBDT issued a notification dated 29.03.2022 after laying the same before each House of Parliament and formulated a Scheme called \"the e Assessment of Income Escaping Assessment Scheme, 2022\" (the Scheme). And that the Scheme provides that (a) the assessment, reassessment or re-computation u/s.147 of the Act and (b) the issuance of notice u/s.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. Therefore, according to Ld.AR, since the impugned notice u/s. 148 of the Act dated 31.03.2022 has been issued by JAO and not by the NFAC/FAO, there is per-se contravention of the provisions of the Act, which vitiates the reopening of the assessment and contented that the legal issue raised by it has been answered in favor of the assessee by the Hon’ble Madras High Court in TVS Credit Services Ltd. Vs. DCIT (W.P.No.22402 of 2024 dated 24.06.2025). 25. Per contra, the Ld.DR supported the action of the JAO issuing notice u/s.148 of the Act and submitted that both the NFAC & JAO have got concurrent jurisdiction and therefore, notice is valid and also submitted that there is no prejudice caused to the assessee. 26. We have heard the rival submissions perused the material available on record and CBDT circular and case law cited by the assessee. We find that the CBDT issued a Notification dated 29.03.2022 formulating “the e-assessment of income assessment Scheme, 2022”. The Scheme provides that (a) the assessment/re-assessment are re-computation u/s.147 of the Act and (b) issuance of notice u/s.148 of the Act shall be through automated allocation, in Printed from counselvise.com :-10-: ITA. No:3049/Chny/2025 accordance with risk management strategy formulated by the Board as referred u/s.148 of the Act for issuance of notice and in a faceless manner to the extent providing in Section 144B of the Act with reference to making assessment/re assessment of total income or loss of the assessee. We find that the impugned order u/s.148A(d) of the Act dated 31.03.2022 and the impugned notice u/s.148 of the Act dated 31.03.2022 have been issued by the JAO and not by the NFAC/FAO which is not in accordance with the aforesaid Scheme. We find that the order under Clause (d) to Section 148A of the Act and the notice u/s.148 has been passed after CBDT Notification dated 29.03.2022. Hence, the aforesaid CBDT Notification dated 29.03.2022 is directly applicable in this case. 27. The Hon’ble Telangana High Court in Kankanala Ravindra Reddy Vs ITO (2023) 156 taxmann.com 178 (Telangana) and Hon’ble Bombay High Court in Hexaware Technologies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) has decided the controversy in favour of the assessee. 28. Furthermore, the above view is affirmed by the Hon’ble Telangana High Court in M/s.Ta Infra Projects Limited Vs The DCIT [Writ Petition Nos.26645, 26654, 26667, 28497, 26788 of 2024 and 12437, 9561, 14549, 14664, 14674, 12873 of 2025 dated 14.07.2025], following the judgments of the Hon’ble Telangana High Court in Kankanala Ravindra Reddy Vs ITO (2023) 156 taxmann.com 178 (Telangana) and Hon’ble Bombay High Court in Hexaware Technologies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) has set aside the notices issued u/s.148 by JAO. 29. Further, we take note of the decision of the Hon’ble Telangana High Court in Sri Venkatramana Reddy Patloola Vs DCIT [Writ Petition Nos.13353, 16141 and 16877 of 2024 dated 24.07.2024], following the judgments of the Hon’ble Telangana High Court in Kankanala Ravindra Reddy Vs ITO (2023) 156 taxmann.com 178 (Telangana) and Hon’ble Bombay High Court in Hexaware Technologies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) wherein the notices issued u/s 148 of the Act has been set aside and held as under: Printed from counselvise.com :-11-: ITA. No:3049/Chny/2025 “29. In view of foregoing analysis, it is clear that the respondents have erred in not following the mandatory faceless procedure as prescribed in the scheme dated 29.03.2022. Since notices under Section 148 of the Act were not issued in a faceless manner, the entire further proceeding founded upon it and assessment orders stand vitiated. Thus, the impugned notices under Section 148 of the Act and all consequential assessment orders based thereupon are set aside. Liberty is reserved to the respondents to proceed against the petitioners in accordance with law.” 30. The Hon’ble Telangana High Court in Deepanjan Roy Vs ADIT (Int. Taxn.)-2 Hyd & Anr [Writ Petition No.23573 of 2024 dated 29.08.2024], following the judgment in Writ Petition No.13353 of 2024 and batch dated 24.07.2024 held as under: “In view of the consensus arrived at, this Writ Petition is allowed in terms of order passed in W.P.No.13353 of 2024 and batch. The direction contained in the said order shall apply mutatis mutandis to this case with full force. No costs.” 31. The revenue further filed Special Leave Petition (Civil) before the Hon’ble Supreme Court vide SLP(C) No. 018753 / 2025, Diary No (s).33956/2025 titled ADIT (Int. Taxn.) 2 Hyd & Anr Vs Deepanjan Roy, challenging the judgment of the Hon’ble Telangana High Court passed in Writ Petition No.23573 of 2024 dated 29.08.2024. However, the Hon’ble Supreme Court upon hearing the counsel made the following order 16.07.2025 as under: 1. Delay condoned. 2. Exemption Application is allowed. 3. Having heard the learned counsel appearing for the petitioners – Revenue and having gone through the materials on record, we find no good reason to interfere with the impugned order passed by the High Court. 3. The Special Leave Petition is, accordingly, dismissed. 4. Pending applications, if any, shall also stand disposed of. 32. We further note that the revenue’s SLP(C) No. 021188/ 2024 in the case of Hexaware Technologies Ltd against the judgment of the Hon’ble Bombay High Court in Hexaware Technologies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) is still pending adjudication before the Hon’ble Supreme Court. Printed from counselvise.com :-12-: ITA. No:3049/Chny/2025 33. The Supreme Court in a landmark judgement in the case of Kunhayammed v. State of Kerala [2000] 113 Taxman 470/245 ITR 360 (SC) has summarised the doctrine of merger as follows:- \"Where an appeal or revision is provided before a superior forum against an order passed by a Court, Tribunal or any other authority and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges with the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law\". 34. The Supreme Court in the aforesaid case has concluded as follows:- (i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. (ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. The first stage is upto the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and the special leave petition is converted into an appeal. (iii) The doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter. (iv) An order refusing special leave to appeal may be a non-speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. (v) If the order refusing leave to appeal is a speaking order, i.e., gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being Printed from counselvise.com :-13-: ITA. No:3049/Chny/2025 the Apex Court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. 35. In the case of S. Shanmugavel Nadar v. State of Tamil Nadu [2003] 263 ITR 658 (SC), the Apex Court held that what merges is the operative part i.e. the mandate decree issued by the court which may have been expressed in positive or negative form. The application of the doctrine depends on the nature of the appellate or revisional order, the scope of the statutory provisions conferring jurisdiction and the subject matter of challenge with the following remarks:- \"………..Though loosely an expression \"merger of judgement, order or decision of a Court or forum into the judgement, order or decision of a superior forum\" is often employed, as a general rule, the judgment or order having been dealt with by a superior forum and having resulted in confirmation, reversal or modification, what merges is the operative part, i.e., the mandate or decree issued by the Court which may have been expressed in positive or negative form. For example, take a case where the subordinate forum passes an order and the same, having been dealt with by a superior forum, is confirmed for reasons different from the one assigned by the subordinate forum, what would merge in the order of the superior forum is the operative part of the order and not the reasoning of the subordinate forum, otherwise there would be an apparent contradiction. However, in certain cases, the reasons for the decision can also be said to have merged in the order of the superior Court if the superior Court has, while formulating its own judgment or order, either adopted or reiterated the reasoning, or recorded an express approval of the reasoning, incorporated in the judgment or order of the subordinate forum.\" 36. Hence, in the light of above discussion, simplicitor dismissal of revenue Special Leave Petition (Civil) at admission stage before the Hon’ble Supreme Court vide SLP(C) No.018753/2025, Diary No(s).33956/2025 titled ADIT (Int.Taxn.) 2 Hyd & Anr Vs. Deepanjan Roy, challenging the judgment of the Hon’ble Telangana High Court passed in Writ Petition No.23573 of 2024 dated 29.08.2024 has no declaration of law and binding effect under Article 141 of the Constitution of India. Printed from counselvise.com :-14-: ITA. No:3049/Chny/2025 37. The Hon’ble jurisdictional High Court in the case of TVS Credit Services Ltd. v. DCIT in WP No.22402 of 2024 & WMP No.13336 of 2023 on similar issue 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 Tax'; 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 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. In these petitions, apart from the issue of notices issued by JAO instead of FAO, all or many of the issues which were considered in Hexauxare Technologies Ltd (supra) are involved. 10. To the extent the issues raised in Hexaware Technologies Ltd (supra) are not covered, those are kept open to be raised at the appropriate stage. Printed from counselvise.com :-15-: ITA. No:3049/Chny/2025 11. With the liberty as noted above, all petitions stand disposed of holding in favour of assessees. There will be no order as to costs. Consequently, the interim applications also stand disposed of.” 38. The coordinate bench of this Tribunal has already considered the decision of the Hon’ble jurisdictional High Court in the case of TVS Credit Services Ltd.(supra) and decided the issue in favour of assessee in the identical set of facts and circumstances in the case of Mr.Loganathan Dhandapani Vs.ACIT. ITA No.2240/Chny/2024 dated 14.08.2025, by holding as under: “11. The Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd., (supra) is noted to have has even dealt with the decision rendered by the Hon’ble Calcutta High Court in favour of the Revenue, but concurred with the view of the Hon’ble Telangana High Court in the case of Sri Venkataramana Reddy Patloola v. DCIT reported in [2023] 156 taxmann.com 178 (Telangana) and held that in view of the provisions of Sec.151A of the Act read with Faceless Scheme dated 29.03.2022, notices issued by the JAO u/s.148A(d)/148 of the Act was invalid and bad in law. We further note that aforesaid decision of the Hon’ble Telangana High Court has been followed not only by the Hon’ble Bombay High Court, but also by the Hon’ble Gauhati High Court in the case of Ram Narayan Sah v. Union of India reported in 163 taxmann.com 478, and the Hon’ble Punjab & Haryana High Court in the case of Jatinder Singh Bhangu v. Union of India reported in 165 taxmann.com 115 and other cited cases (supra). And as noted (supra) the Hon’ble jurisdictional High Court (Single Bench) order in the case of Mark Studio India (P.) Ltd. v. Income-tax Officer, held in favour of Revenue, was reversed by the Hon’ble Division Bench by order dated 24.06.2025 by holding 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). Printed from counselvise.com :-16-: ITA. No:3049/Chny/2025 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. 12. In the light of the aforesaid discussion, we find that in the case in hand, the JAO had issued notice u/s.148A(b) of the Act dated 14.03.2022 followed by order u/s.148A(d) of the Act dated 31.03.2022 and followed by notice u/s.148 dated 31.03.2022 which impugned notices have been issued despite faceless scheme was notified by Central Government on 29.03.2022 pursuant to section 151A of the Act, making it mandatory for the issuance of notice u/s.148A(b), 148A(d) as well as 148 of the Act by the Faceless Mechanism, the impugned notices especially issued u/s.148 dated 31.03.2022 is found to be invalid and bad in law, since it has been issued contrary to law and is against the ‘Rule of Law’; which impugned action of the JAO vitiates the reopening of assessment for AY 2018-19 by issuance of impugned notice dated 31.03.2022 u/s.148 of the Act and is therefore held to be illegal and bad in law and therefore, assessment order dated 16.03.2023 is held to be null in eyes of law; and the assessee succeeds, on the legal issue which is held in favour of the assessee and therefore, we are inclined not to go into the merits of the addition made by the NFAC. 13. In the result, appeal filed by the assessee is allowed.” 39. In view of the foregoing discussion, we observe that the JAO passed an order u/s.148A(d) of the Act on 31.03.2022, which was followed by issuance of notice u/s.148 of the Act on the same date. It is an admitted position that, prior thereto, the Central Government had notified the Faceless Scheme on 29.03.2022 in exercise of powers u/s.151A of the Act, thereby mandating that proceedings contemplated under sections 148A(b), 148A(d) as well as issuance of notice u/s.148 of the Act be carried out only through the Faceless Mechanism. 40. The impugned notice issued u/s.148 of the Act dated 31.03.2022 is thus found to be contrary to the statutory mandate and inconsistent with the scheme of law. Such non-compliance, being in violation of the principle of “Rule of Law,” renders the impugned notice invalid and unsustainable in the eyes of law. Consequently, the subsequent assessment order dated 03.03.2023 passed u/s.147 r.w.s 144 of the Act bearing DIN: ITBA/AST/S/147/2022- 23/1050394107(1) also stands vitiated and is, therefore, quashed. Printed from counselvise.com :-17-: ITA. No:3049/Chny/2025 41. In the result, the assessee succeeds on the legal ground. Having so held, we do not deem it necessary to adjudicate upon the merits of the additions made by the AO. 42. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29th December, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार गिरर) (MANU KUMAR GIRI) न्याययक सदस्य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सदस्य/Accountant Member चेन्नई/Chennai, ददनांक/Dated, the 29th December, 2025 jk आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गाडा फाईल/GF Printed from counselvise.com "