The appeal was filed by the assessee, Shanmugam Palanisamy, against the order passed by the National Faceless Appeal Centre for Assessment Year 2020-21, whereby the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 were upheld.

The assessee raised a preliminary legal objection challenging the validity of the notice issued under section 148 dated 22.03.2024, contending that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not through the faceless mechanism as mandated under section 151A read with the Faceless Reassessment Scheme notified on 29.03.2022.

It was submitted that once the faceless scheme came into force, issuance of notice under sections 148A and 148 was required to be carried out strictly through the faceless process. Since the impugned notice was issued by the JAO, the reopening of assessment was contended to be contrary to law and in violation of the rule of law. Reliance was placed on several judicial precedents, including the jurisdictional Madras High Court (Division Bench) decision in Mark Studio India (P.) Ltd. and the Bombay High Court ruling in Hexaware Technologies Ltd., wherein such notices were held to be invalid.

The Revenue defended the validity of the notice, contending that the Jurisdictional Assessing Officer and the Faceless Assessment Unit had concurrent jurisdiction and that no prejudice was caused to the assessee. Certain High Court decisions supporting the Revenue’s stand were also cited.

After considering the rival submissions, the Tribunal observed that though divergent views existed across different High Courts, the jurisdictional Madras High Court (Division Bench) had conclusively settled the issue in favour of the assessee in Mark Studio India (P.) Ltd., following the ratio laid down by the Bombay High Court in Hexaware Technologies Ltd.. The Tribunal noted that the Division Bench had reversed the earlier contrary view of the Single Bench and held that notices under sections 148A and 148 must be issued only through the faceless mechanism.

Being bound by the decision of the jurisdictional High Court, the Tribunal held that the notice dated 22.03.2024 issued by the Jurisdictional Assessing Officer was invalid and bad in law, having been issued contrary to the mandatory faceless reassessment framework. Consequently, the reassessment proceedings and the assessment order dated 29.01.2025 were held to be null and void. The appeal was accordingly allowed on the legal issue, without examining the merits of the additions.

Source Link- https://itat.gov.in/public/files/upload/1767848245-arahGS-1-TO.pdf

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