Case Law Details
Sushanta Ghosh Vs ITO (ITAT Kolkata)
The Income Tax Appellate Tribunal, Kolkata Bench, quashed a reassessment order framed by the National Faceless Assessment Centre (NFAC) on the ground of lack of jurisdiction. The assessee, engaged in trading of paddy and allied products, had filed a return declaring income of ₹4,80,200. Based on information that ₹12.16 crore was credited in the assessee’s bank account and allegedly not reflected in the books, reassessment proceedings were initiated under Sections 147 and 148 of the Income-tax Act, 1961. In the absence of compliance, the Assessing Officer added ₹12.16 crore and assessed total income at ₹12.20 crore, which was confirmed by the CIT(A). Before the Tribunal, the assessee challenged the jurisdiction of the faceless assessment. The Tribunal held that the assessment dated 22.03.2022 was invalid because the faceless reassessment framework under Section 151A was notified only on 29.03.2022. Since the procedural mechanism enabling faceless reassessment was not in force on the date of the order, the assessment was held void and quashed.
Core Issue:-The core issue before the Tribunal was the jurisdictional validity of an assessment framed by the National Faceless Assessment Centre (NFAC) under Section 147 of the Income-tax Act, 1961, when the statutory framework under Section 151A enabling faceless assessments had not yet been notified on the date the assessment order was passed.
Brief Facts:-The assessee, engaged in trading of paddy and allied products, filed his return of income under Section 139(1) on 03.07.2014 declaring income of ₹4,80,200.
The department received information that ₹12,16,00,000 had been credited in the assessee’s bank account with United Bank of India, Arambagh Branch, which was allegedly not reflected in the books of account.
Accordingly:
- Reassessment proceedings were initiated under Section 147.
- Notice under Section 148 was issued on 27.03.2021.
- Notices under Section 142(1) were also issued.
- In absence of compliance, the AO completed assessment making addition of ₹12,16,00,000 and assessed total income at ₹12,20,80,200.
- The Ld. CIT(A) confirmed the addition.
- Before the ITAT, the assessee pressed only the legal ground challenging jurisdiction, contending that the assessment framed by the National Faceless Assessment Centre on 22.03.2022 was void ab initio.
Statutory Provisions Involved
- Section 147 – Income escaping assessment (Reassessment).
- Section 148 – Issue of notice for reassessment.
- Section 151A – Provides for faceless assessment, reassessment, or recomputation under the Act in a manner prescribed by the Central Government.
Although Section 151A was inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.11.2020, its operational mechanism required notification.
Notification and Implementation:-The Central Government issued Notification No. 18/2022/F. No. 370142/16/2022-TPL (Part) on 29.03.2022, prescribing the faceless assessment scheme under Section 151A.
However, the impugned assessment order was passed earlier on 22.03.2022.
Thus, on the date of passing the assessment order:
The statutory provision existed in the Act.
But the procedural framework enabling faceless reassessment under Section 151A had not yet been notified.
This created a jurisdictional defect.
ITAT Findings
The Tribunal held that:
The assessment was framed by the National Faceless Assessment Centre on 22.03.2022.
Section 151A enabling faceless assessment was notified only on 29.03.2022.
Therefore, on the date of passing the order, the faceless authority had no valid jurisdiction.
The Tribunal relied upon earlier judicial precedents including:
- MD Mahimud SK vs ITO
- Kankanala Ravindra Reddy vs ITO
- Triton Overseas (P) Ltd vs Union of India
- Samp Furniture (P) Ltd vs ITO
All these decisions consistently held that faceless reassessment proceedings conducted prior to notification under Section 151A are without jurisdiction and void.
Accordingly, the ITAT concluded that the assessment framed by NFAC was null and void ab initio.
Outcome: The assessment order dated 22.03.2022 was quashed on jurisdictional grounds.
The appeal of the assessee was allowed.
The Tribunal did not adjudicate on merits, as the assessment itself was held to be invalid.
Practical Significance
This decision reinforces the principle that:
Even if a provision exists in the statute book, it cannot be operationalized unless the prescribed procedure or notification is brought into force.
It confirms that jurisdictional defects in faceless reassessment proceedings are fatal, and such assessments are liable to be quashed in toto.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 07.10.2025 for the AY 2014-15.
2. At the time of hearing, the ld. Counsel for the assessee pressed only one issue which is against the invalid assessment framed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] vide order dated 22.03.2022, which is without jurisdiction and is accordingly, invalid.
3. The facts in brief are that the assessee engaged in the business of trading of paddy and allied products. The assessee filed the return of income u/s 139(1) of the Income-tax Act, 1961 on 03.07.2014, declaring total income at ₹4,80,200/-. Department was in possession of the information that during the year ₹12,16,00,000/- was credited into assessee’s bank account maintained with United bank of India, Arambagh Branch and has not taken into account the transactions in the books of account maintained as appearing in the said bank account. Accordingly, the income to that extent has escaped assessment. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 27.03.2021, which was not complied with by the assessee. Thereafter, to finalize the assessment, notices u/s 142(1) of the Act were issued along with questionnaire, which were not complied with by the assessee. Thereafter, in absence of any explanation the ld. AO added ₹12,16,00,000/- to the income of the assessee by assessing the total income at ₹12,20,80,200/-.
4. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. Assessing Officer.
5. After hearing the rival contentions and perusing the materials available on record, we find that the assessment has been framed by the National Faceless Assessment Centre vide order dated 22.03.2022, which in our opinion, is without jurisdiction as the Provisions of Section 151A of the Act which provides for faceless assessment were notified from 29.03.2022 vide notification no. 18/2022/F. No. 370142/16/2022-TPL(Part) though the same were brought on statute book by the Taxation and Other Law (realization and amendment of certain provisions) Act, 2020 with effect from 01.11.2020. Considering these facts, the assessment framed by the National Faceless Appeal Centre is null and void as the same is without jurisdiction and cannot be sustained. The case of the assessee find support from the decision of the co-ordinate Bench in case MD Mahimud SK Vs ITO ITA No. 2230 & 2229/Kol/2024 order dated 4.3.2025. Similarly, the Telangana High Court in case of Kankanala Ravindra Reddy vs. Income-tax Officer [2023] 156 taxmann.com 178 (TELANGANA)/[2023] 295 Taxman 652 (TELANGANA)[14-09-2023], Hon’ble Jurisdictional High Court in case of Triton Overseas (P.) Ltd. vs. Union of India [2023] 156 taxmann.com 318 (Calcutta)[13-09-2023] and Hon’ble Bombay High court in Samp Furniture (P.) Ltd. vs. Income-tax Officer [2025] 477 ITR 187 (Bombay)[05-08-2024] decided the identical issue in favour of the assessee. Therefore, respectfully following the above decisions , we quash the assessment framed by the ld. AO.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.02.2026.
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