The appeal was filed by the assessee, Palanisamy Srilatha, against the order of the National Faceless Appeal Centre for Assessment Year 2015-16, confirming reassessment proceedings initiated under section 147 of the Income-tax Act, 1961.

The assessee raised a preliminary legal challenge to the validity of the notice issued under section 148 dated 11.04.2022, contending that the notice was issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessment Unit, contrary to the statutory scheme prescribed under section 151A read with the Faceless Reassessment Scheme notified on 29.03.2022.

It was submitted that once the faceless scheme became operational, issuance of notice under sections 148A and 148 was required to be carried out strictly through the faceless mechanism. Since the impugned notice was issued by the JAO, the reassessment proceedings were contended to be void ab initio and in violation of the rule of law. Reliance was placed on several High Court decisions, including the jurisdictional Madras High Court (Division Bench) in Mark Studio India (P.) Ltd. and the Bombay High Court in Hexaware Technologies Ltd., wherein similar notices issued by the JAO were held to be invalid.

The Revenue opposed the legal challenge, contending that the Jurisdictional Assessing Officer and the Faceless Assessment Unit enjoyed concurrent jurisdiction and that no prejudice was caused to the assessee. Reliance was placed on certain High Court decisions supporting the Revenue’s stand.

After considering the rival submissions, the Tribunal observed that there were divergent views expressed by various High Courts on the issue. However, the Tribunal noted that the jurisdictional Madras High Court (Division Bench), in Mark Studio India (P.) Ltd., had conclusively held that notices under sections 148A and 148 must be issued only by the Faceless Assessment Officer in terms of section 151A and the notified scheme, and that notices issued by the Jurisdictional Assessing Officer were invalid.

The Tribunal further noted that the Division Bench of the Madras High Court had expressly followed the judgment of the Bombay High Court in Hexaware Technologies Ltd. and reversed the earlier contrary view of the Single Bench. Being bound by the jurisdictional High Court decision, the Tribunal held that the impugned notice dated 11.04.2022 issued by the Jurisdictional Assessing Officer was invalid and bad in law, and consequently, the entire reassessment proceedings stood vitiated.

Accordingly, the reassessment order passed pursuant to the invalid notice was quashed, and the appeal of the assessee was allowed on the legal issue, without adjudicating the merits of the additions.

Source Link- https://itat.gov.in/public/files/upload/1767848513-qsKTGt-1-TO.pdf

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