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

At the outset, the Tribunal condoned a delay of 16 days in filing the appeal after being satisfied with the reasons stated in the affidavit filed by the assessee. The assessee raised a preliminary legal issue challenging the validity of the notice issued under section 148 dated 30.03.2024, contending that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not through the faceless mechanism mandated under section 151A read with the Faceless Reassessment Scheme notified on 29.03.2022.

It was contended that after the notification of the faceless scheme, issuance of notices under sections 148A and 148 must be carried out only through automated allocation and faceless processes. Since the impugned notice was issued by the JAO, the reopening of the assessment was alleged to be contrary to law and violative 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..

The Revenue defended the validity of the notice on the ground that the Jurisdictional Assessing Officer and the Faceless Assessment Unit enjoyed concurrent jurisdiction and that no prejudice was caused to the assessee. Certain High Court decisions in favour of the Revenue were also relied upon.

After considering the rival submissions, the Tribunal observed that although 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 30.03.2024 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 22.01.2025 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/1767848184-prnsmH-1-TO.pdf

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