Central Circle Not Exempt from Faceless Reassessment Regime: ITAT Hyderabad

Prabhakar Reddy Basireddy Vs DCIT (ITAT Hyderabad)

Background & Facts

A search under section 132 was conducted in the case of the assessee on 04.01.2023. Pursuant thereto, the Jurisdictional Assessing Officer (ACIT, Central Circle-1(1), Hyderabad) issued a notice under section 148 on 29.11.2023 and completed reassessment under section 147 on 26.03.2025. The reassessment resulted in estimated additions, including profit estimation on sheep sales and disallowance under section 80C. The CIT(A) upheld the reassessment.

Before the ITAT, the assessee raised an additional legal ground challenging the very jurisdiction of the Assessing Officer to issue notice under section 148, contending that after 01.04.2021 such notices could be issued only through the faceless mechanism as mandated under section 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022.

Core Legal Issue

Whether a notice under section 148 issued by the Jurisdictional Assessing Officer (JAO), instead of a Faceless Assessing Officer (FAO), after 01.04.2021 is valid in law, particularly in cases assigned to Central Circle.

Tribunal’s Analysis

The Tribunal held that:

• After the substitution of reassessment provisions by the Finance Act, 2021, and introduction of section 151A, issuance of notice under section 148 is mandatorily required to be faceless.
• CBDT’s exception for “Central Charges” applies only to passing of assessment orders, and not to issuance of notice under section 148.
• Section 124(3) restricting jurisdictional objections within 30 days applies only to territorial jurisdiction, and not to cases of inherent lack of jurisdiction.
• Jurisdictional defects cannot be cured by waiver, acquiescence, or participation in proceedings.
• Reliance placed on binding jurisdictional precedents including:
  • Kankanala Ravindra Reddy v. ITO (Telangana HC),
  • Kings Pride Infra Projects (P) Ltd. v. DCIT (Telangana HC),
  • Supreme Court rulings in Rajeev Bansal and Kanwar Singh Saini.

The Tribunal distinguished the Supreme Court decision in Kalinga Institute of Industrial Technology, holding that it dealt with territorial jurisdiction and not inherent lack of authority under the faceless regime.