The ITAT rejected the reassessment notice issued by the AO
Swarn Singh v. ITO [I.T.A. No. 160/Asr/2024]
The appellant had appealed against the ex-parte decision of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi, which was not admitted due to a violation of section 249(4) of the Act. The appeal was in relation to the Assessment Order dated 29.12.2023 issued by the NFAC (Delhi) under section 147 read with section 144 of the Act for the Assessment Year 2016-17.
The ld. counsel for the assessee argued that the appellant’s additional grounds were legally based on the invalidity of the assessment u/s 147 due to lack of notice on the registered e-mail id and the jurisdictional AO issuing notice under section 148, contrary to the Income Tax Act, 1961. He emphasized that this legal ground for appeal should be admitted without the need for new facts.
The ld. counsel further argued that the CIT(A) erred in confirming the addition by the AO, violating mandatory jurisdictional conditions as stipulated in Notification No 18/2022 dated 29th March 2022. The Ld. AR contended that the order u/s 148A(d) was passed and the notice issued by Jurisdictional AO was bad in law.
The Ld. DR failed to rebut the contention of the Ld. AR but submitted compilation on faceless scheme of assessment for consideration.
The Hon’ble Tribunal ruled that the notice issued by ITO Ward, Katra, was not issued by NFAC, which would have resulted in chaos and redundant proceedings. The ITAT also noted that when notices were issued by the Faceless Assessing Officer (FAO), it is not contemplated in the Act that an assessee can submit before the Jurisdiction Assessing Officer (JAO), and vice versa. Therefore, there was no question of concurrent jurisdiction between the FAO and the JAO regarding the issuance of notice u/s 148 of the Act.
The notification 18/2022 dated 29th March 2022 mandates the issuance of notice through automated allocation, which is mandatory and requires the Department to follow. Automated allocation is defined as an algorithm for randomized allocation of cases using technological tools like artificial intelligence and machine learning to optimize resource use. The case can be allocated to any officer with jurisdiction to issue the notice u/s 148 of the Act.
Section 151A of the Act allowed the formulation of a Scheme for assessment, reassessment, or re-computation u/s 147 and for issuance of notice u/s 148. The CBDT’s Scheme, which covers both aspects, was not applicable for the issuance of notice u/s 148. Instead, it was only the FAO that can issue notice u/s 148 of the Act, not the JAO.
Clause no 3(b) addresses the issue of notice u/s 148 in a faceless manner, and the provisions of Section 144B of the Act apply for assessment or reassessment. The term “to the extent provided in Section 144B of the Act” was not relevant for issuing notice, as the notification 18/2022 provides automated allocation of notice in accordance with the Board’s risk management strategy.
The phrase “to the extent provided in Section 144B of the Act” also applies to the Scheme, including restrictions like keeping the International Tax Jurisdiction or Central Circle Jurisdiction out of the Act’s ambit.
The Telangana High Court had ruled in the case of Kankanala Ravindra Reddy vs. Income Tax Officer 14, that the notices issued by JAOs are invalid and bad in law, as per Section 151A of Act 14 (2023) and the notification 18/2022 dated 29th March 2022.
In the above view, the Hon’ble Tribunal held that the assessment framed u/s 147 based on the notice issued u/s 148 by the JAO is bad in law and the same to be quashed as void ab initio.
The ITAT rejected the reassessment notice issued by the AO:
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