YADIKI PACS,ANANTAPUR V. INCOME TAX OFFICER, WARD-1, ANANTAPUR

ITA 926/HYD/2025

AI Insights

The case involves Yadiki PACS, a Primary Agricultural Credit Society, which did not file its income tax return for the assessment year 2019-20. The Income Tax Department initiated reassessment proceedings based on substantial cash deposits in the society's bank account, which were alleged to be unexplained. The society contested the reassessment and the subsequent denial of deductions under Section 80P, arguing that the reassessment was improperly conducted under the faceless assessment scheme. The Tribunal's decision to quash the assessment order was based on procedural irregularities in issuing the notice under Section 148, which was not in accordance with the faceless assessment scheme as required by the law.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826941 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: misc
• Appeal Filed On: 28-05-2025
• Other Referred Cases: Yashnu Yasavi Polucherla Vs. ITO, Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ISSUING NOTICES
• Keywords: Opportunity of being heard; Invalid notice; Reassessment proceedings; Corroborative evidences; Principle of natural justice; Competent authority
• Section: 147; 148; 142(1); 139; 119(2)(b)

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘बी’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad “B” Bench, Hyderabad श्री मंजूनाथ जी, माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.926/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2019-20) Yadiki PACS, Yadiki Vil Pa, Yadiki Mandal, Anantapur. PAN : AAATY3013H. Vs. The Income Tax Officer, Ward – 1, Anantapur. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Ms. Lavanya, C.A. (Appeared through Hybrid Mode) राजस्व का प्रतततितित्व/ Department Represented by : Shri K. Vinoth Kannan, Sr.A.R. सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 07.01.2026 घोर्णध की तधरीख/ Date of Pronouncement : 09.01.2026 O R D E R PER MANJUNATHA G., A.M : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Printed from counselvise.com 2 ITA No.926/Hyd/2025 Yadiki PACS Faceless Appeal Centre [in short “NFAC”], Delhi, dated 05.03.2025 pertaining to the assessment year 2019-20. 2. The grounds raised by the assessee read as under : “1. The order of the Learned Commissioner of Income Tax (Appeals) is contrary to the law, facts and circumstances of the case. 2. For that the Learned Commissioner of Income Tax (Appeals) had erred in upholding the re-opening of the assessment u/s 147 of the Act that is bad in law. 3. For that the Learned Commissioner of Income Tax (Appeais) had erred in upholding the assessment order passed u/s 147 of the Act that is null and void in that the said order is passed in violation of 'Faceless Jurisdiction of Income-tax Authorities Scheme, 2022' and 'e-Assessment of Income Escaping Assessment Scheme, 2022 for the assessment was reopened by the Jurisdictional Assessing Officer. Without prejudice to the above: 4. For that the Learned Commissioner of Income Tax (Appeals) had erred in confirming the denial of deduction claimed u/s 80P of the Act amounting to Rs. 1,08,08,087/- 5. For that the Learned Commissioner of Income Tax (Appeals) had erred in confirming the denial of deduction claimed u/s 80P of the Act amounting to Rs. 1,08,08,087/- for non-compliance with the provisions of Section 80AC of the Act without providing the appellant an opportunity of being heard against the same which is in violation of the principles of natural justice. 6. For that the Learned Commissioner of Income Tax (Appeals) had failed to appreciate the fact that the Writ Petition filed before the Andhra Pradesh High Court against the Order of the Chief Commissioner of Income Tax, Hyderabad rejecting the appellant's application filed u/s 119(2)(b) of the Act to condone the delay in filing the Income Tax Return for the subject AY 2019-20 is pending for disposal as on date. 7. For that the Learned Commissioner of Income Tax (Appeals) had erred in confirming the levy of interest u/s 234A of the Act in consequence to the above.” Printed from counselvise.com 3 ITA No.926/Hyd/2025 Yadiki PACS 3. The brief facts of the case are that, the assessee is a Trust, has not filed its return of income under Section 139 of the Income Tax Act, 1961 (for short “the Act”) for the A.Y. 2019-20. As per the information available with the Department through the Insight Portal under the Risk Management Strategy (RMS), it was noticed that, during the Financial Year 2018-19, the assessee had made cash deposits aggregating to Rs. 4,08,95,292/- in its bank account maintained with The Anantapur District Co-operative Central Bank Ltd. Since the assessee had not filed its return of income, the nature and source of the said cash deposits remained unexplained. Accordingly, after following the procedure prescribed under Section 148A, an order under Section 148A(d) was passed on 28.03.2023, and thereafter, notice under Section 148 was issued to the assessee on the same date for the relevant assessment year, with the prior approval of the competent authority. In response thereto, the assessee filed its return of income under Section 148 on 27.04.2023, declaring total income nil and claimed deduction under Section 80P amounting to Rs. 1,08,08,087/-. Printed from counselvise.com 4 ITA No.926/Hyd/2025 Yadiki PACS 4. During the course of reassessment proceedings, several opportunities were provided to the assessee by issuing notices under Sections 142(1) and 143(2). Though the assessee filed partial replies along with certain details on 10.09.2023, it failed to furnish sufficient documentary evidence to substantiate the nature and source of the cash deposits as well as the eligibility for deduction claimed under Section 80P. Further, the assessee did not submit the registration certificate of society or any other supporting evidence to justify the deduction claimed. A show- cause notice proposing variation was issued on 23.01.2024, granting an opportunity of personal hearing including through video conferencing; however, the assessee failed to file any response. In the absence of necessary documentary evidence and due to continued non-compliance, the Assessing Officer disallowed the deduction claimed under Section 80P and completed the reassessment by determining the total income at Rs. 1,08,08,087/- under Section 147 r.w.s. 144B of the Act. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee contended that it is a Primary Agricultural Credit Society Printed from counselvise.com 5 ITA No.926/Hyd/2025 Yadiki PACS registered under the Andhra Pradesh Co-operative Societies Act, 1964 and had not filed its return of income under Section 139 for A.Y. 2019-20. It was submitted that the reassessment proceedings were initiated on the basis of information relating to cash deposits of Rs.4,08,95,292/- in its bank account, which according to the assessee represented repayment of loans by its members and not unexplained cash deposits. The assessee further submitted that the deduction claimed under Section 80P was wrongly disallowed merely for non-submission of registration certificate during assessment proceedings and that the assessment was completed without properly appreciating the nature of its activities. The assessee also challenged the validity of the reopening under Section 147 on the ground that the notice under Section 148 was issued by the jurisdictional Assessing Officer in violation of the faceless reassessment scheme prescribed under Section 144B r.w.s. 151A of the Act. 6. The Ld. CIT(A), after considering the submissions of the assessee and examining the material available on record, observed that although the assessee subsequently produced evidence to establish its status as a co-operative society, the claim of Printed from counselvise.com 6 ITA No.926/Hyd/2025 Yadiki PACS deduction under Section 80P was hit by the provisions of Section 80AC, since the return of income was not filed within the due date prescribed under Section 139(1). The Ld. CIT(A) further held that the objection regarding lack of jurisdiction could not be entertained at the appellate stage in view of Section 124(3) of the Act and conflicting judicial precedents on the issue of faceless reassessment. Accordingly, the Ld. CIT(A) upheld the disallowance of deduction under Section 80P and dismissed the appeal filed by the assessee. 7. Aggrieved with the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal. 8. The learned counsel for the assessee, Ms. Lavanya, C.A. submitted that, the Ld. CIT(A) erred in confirming the action of the JAO issuing notice under Section 148 of the Act, without having proper power to do so in view of the decision of the Hon'ble Telangana High Court in the case of Yashnu Yasavi Polucherla Vs. ITO, 179 taxmann.com 470, dated 16.10.2025, and the decision in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit, 178 taxmann.com 781. Therefore, she submitted that, the Printed from counselvise.com 7 ITA No.926/Hyd/2025 Yadiki PACS assessment order passed by the A.O. under Section 147 r.w.s. 144B of the Act, consequent to the invalid notice issued by the JAO is bad in law and liable to be quashed. Therefore, he submitted that, the assessment order passed by the A.O. should be quashed. 9. The learned Senior A.R. for the Revenue, Shri K. Vinoth Kannan, on the other hand, fairly agreed that, the issue is now settled by the decision of Hon'ble High Court of Telangana in number of cases, including the decision relied upon by the learned counsel for the assessee. However, he further submitted that, the issue is now sub judice before the Hon'ble Supreme Court in SLPs, and the matter is pending for adjudication. Therefore, he submitted that, the Bench may decide the issue in accordance with the law, however the liberty may be given to the Revenue or the assessee to revive the appeal in case, the issue is settled in favour of the Revenue/assessee to decide the issues involved in the appeal on merits. 10. We have heard both parties, perused the material available on record, and had gone through the orders of the authorities Printed from counselvise.com 8 ITA No.926/Hyd/2025 Yadiki PACS below. We have also carefully considered the relevant case laws relied upon by the learned counsel for the assessee in support of his arguments. We find that, the Hon'ble High Court of Telangana in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit (supra) has considered an identical issue of notice issued by the JAO instead of the Faceless Assessing Officer (FAO), and after considering the relevant provisions of the Act, and also various notifications issued by the CBDT as per Section 151A of the Act, held that, any notice issued under Section 148 of the Act, after 28.03.2023 by the JAO is without jurisdiction and consequently, the assessment order passed in pursuant to the said notice is illegal and cannot be sustained. A similar view has been taken by the Hon'ble High Court of Telangana in the case of Yashnu Yasavi Polucherla Vs. ITO (supra), where the Hon'ble High Court, by following its earlier decision in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit (supra) held that, the JAO does not have the power to issue notice under Section 148 after the introduction of the Faceless Assessment Scheme. Printed from counselvise.com 9 ITA No.926/Hyd/2025 Yadiki PACS 11. In the present case, as per the facts available on record, the Jurisdictional Assessing Officer issued a show-cause notice under Section 148A(b) of the Act dated 28.02.2023, which was followed by an order under Section 148A(d) of the Act dated 28.03.2023, and thereafter issued notice under Section 148 of the Act on 28.03.2023. Since the notice under Section 148 was issued by the Jurisdictional Assessing Officer and not by the Faceless Assessing Officer, the assessment order passed consequent thereto under Section 147 r.w.s. 144B of the Income-tax Act, 1961 is without jurisdiction and cannot be sustained. Since the issue is covered by the jurisdictional High Court in the case of Yashnu Yasavi Polucherla Vs. ITO (supra) in our considered view, the assessment order passed by the JAO under Section 147 r.w.s. 144B of the Income-tax Act dated 20.02.2024, consequent to the notice under Section 148 of the Act, dated 28.03.2023 issued by the JAO, is without jurisdiction and cannot be sustained. Thus, we quash the order passed by the A.O. under Section 147 r.w.s. 144B of the Income-tax Act, 1961, dated 20.02.2024. Printed from counselvise.com 10 ITA No.926/Hyd/2025 Yadiki PACS 12. We further note that, although the issue is now settled by the decisions of the jurisdictional High Court of Telangana in a number of cases, the fact remains that the said issue is pending adjudication before the Hon’ble Supreme Court in multiple SLPs filed by the Revenue against orders of various High Courts. Both the parties, namely, the learned counsel for the assessee and the learned Senior A.R. for the Revenue, fairly agreed that the decision rendered by the Hon’ble Supreme Court shall be binding on them and that liberty may be granted to either party to seek revival of the appeal, if necessary, for adjudication on merits. Accordingly, the other grounds raised by the assessee on merits are kept open. The A.O. is directed to give effect to the decision of the Hon’ble Supreme Court, as and when delivered, and pass consequential orders, if need arises. It is clarified that both parties are at liberty to restore the appeal, if required, in the event the decision of the Hon’ble Supreme Court warrants adjudication of the issues on merits. With these observations, the appeal filed by the assessee is allowed. Printed from counselvise.com 11 ITA No.926/Hyd/2025 Yadiki PACS 13. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Open Court on 9th January, 2026. Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्याययक सदस्य/JUDICIAL MEMBER Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Hyderabad, dated 09.01.2026. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Yadiki PACS, Yadiki Vil Pa, Yadiki Mandal, Anantapur – 515400, Andhra Pradesh, India - 515400. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward – 1, Anantapur. 3. The Principal Commissioner of Income Tax, Kurnool. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "