Bangalore ITAT Condones 367-Day Delay and Rejects Challenge to NFAC Jurisdiction in Reassessment Case

AgaraPasala Reddy Prasanna Vs ACIT (ITAT Bangalore)

Bangalore ITAT Condones 367-Day Delay and Rejects Challenge to NFAC Jurisdiction in Reassessment Case

The Bangalore ITAT, in the case of AgaraPasala Reddy Prasanna v. ACIT (AY 2017-18), condoned a 367-day delay in filing the appeal after accepting the assessee’s explanation that he was unaware of the CIT(A)’s ex parte order and came to know of it only upon receiving a demand-related communication. The Tribunal held that the delay was supported by sufficient cause and that the appeal was filed promptly once the assessee became aware of the appellate order.

On the legal issue, the assessee argued that the reassessment order dated 26.03.2022 passed by the National Faceless Assessment Centre (NFAC) was invalid because the notification relating to the faceless reassessment scheme came into effect only on 29.03.2022. Reliance was placed on several decisions of the Kolkata, Cuttack and Patna Benches that had quashed similar reassessment orders. However, the Bangalore ITAT undertook an extensive analysis of the statutory provisions of Sections 144B and 151A and observed that the earlier decisions had primarily focused on the notification without adequately examining the underlying statutory framework.

The Tribunal further noted that the Finance Act, 2026 had inserted Section 147A retrospectively from 01.04.2021, clarifying the jurisdictional position in reassessment matters. It therefore rejected the assessee’s contention that the reassessment order was invalid merely because it had been passed by NFAC before the issuance of the notification relied upon by the assessee. The Tribunal also rejected the argument that only the jurisdictional Assessing Officer could have completed the reassessment

AUTHORS COMMENTS

The Bangalore ITAT has taken a view contrary to certain earlier Tribunal rulings and upheld the validity of reassessment proceedings conducted through the faceless mechanism, while also adopting a liberal approach in condoning substantial delay where a bona fide explanation exists. The issue of validity of retrospective insertion of section 147A is sub-judice as the Honourable Apex Court in its common order in Diary No. 2196/2026  disposed a large batch of civil appeals (popularly referred to as the JAO–FAO batch) arising from reassessment proceedings under sections 147–151 of the Income-tax Act, 1961 (the Act). The impugned High Court decisions had set aside orders passed under section 148A(d) of the Act and consequential notices issued under section 148 of the Act on the ground that they were issued by Jurisdictional Assessing Officer(s) (JAO), rather than through the prescribed faceless mechanism or competent Faceless Assessment Officer(s) (FAO), while certain other High Courts had upheld the authority of the JAOs. The Supreme Court has remitted the matters to the respective High Courts for fresh adjudication in light of the retrospective insertion of section 147A by the Finance Act, 2026 (FA 2026).

FULL TEXT OF THE ORDER OF ITAT BANGALORE

1. ITA No. 1952/Bang/2025 is filed by AgaraPasala Reddy Prasanna for Assessment Year2017-18 (the Assessee/Appellant) against the Appellate Order passed by the National Faceless Appeal Centre (the Ld. CIT(A)) on 03.06.2024 wherein the Appeal filed by the Assessee against the reassessment Order passed u/s. 147r.w.s. 144 r.w.s. 144B of the Act by the National Faceless Assessment Centre was dismissed.

2. Amongst other, Assessee challenges that the reassessment order passed on 26/3/2022 is before introduction of scheme of reassessment and thus assessment order is invalid relying on the several decision of Kolkata, Patna and Cuttack benches.

3. The Assessee is aggrieved with the same and is in appeal before us raising following grounds of appeal: –

i. Grounds on addition of Rs.2,25,00,000/- towards purchase of property:

a. The learned assessing officer has failed to appreciate that the source for purchase of property is from bank loans, rental income, past savings, internal accruals, thus, the additions made deserve to be deleted, on the facts and circumstances of the case.

b. The additions made under section 69 of the Act are not warranted as the source for purchase of property stands explained, on the facts and circumstances of the case.

ii. Grounds on addition of Rs.18,30,500/- u/s 69 of the Act towards cash deposits:

a. The learned assessing officer has failed to appreciate that the cash deposits are from rental income, past savings and the addition made under section 69 of the Act deserves to be deleted on the facts and circumstances of the case.

b. The additions made under section 69 of the Act are not warranted as the nature and source of cash deposits are explained on the facts and circumstances of the case.

4. The only issue in this Appeal is addition of Rs. 2,25,00,000/- towards purchase of property and further an addition of Rs. 18,30,500/- u/s. 69 of the Act towards cash deposit.

5. Briefly stated the facts of the case show that the Assessee is an individual who was issued a notice u/s. 148 of the Act on 31.03.2021. Subsequently, various notices were issued the Assessee has not submitted any reply and therefore a show cause notice was issued on 08.03.2022. In response to the show’s cause notice the Assessee replied and submitted the statement of income declaring total income as per 26AS and paid self-assessment tax. However, the Assessee did not file any return of income. The Assessee has declared income from house property being rent received on Rs. 12,43,865/-as well as business income u/s. 44AD at Rs. 1,60,000/-. Thus, Assessee has declared income of Rs. 12,87,780/- as per 26AS, the Ld. Assessing Officer has accepted the same. However, the Ld. Assessing Officer further noted that the Assessee has entered a transaction of property for Rs. 2,25,00,000/- and further cash deposit of Rs. 18,30,500/- in Chartered Sahakari Bank, Niyamitha, Kormangala Branch, Bengaluru which was questioned to the Assessee. But Assessee did not reply. Therefore, the Ld. Assessing Officer passed an order u/s. 144 of the Act by making the above addition. Total income of the Assessee was assessed at Rs. 2,56,18,280/-.

6. The Assessee preferred an Appeal before the Ld. CIT(A). The Assessee was issued 2 notices, but Assessee did not reply and therefore on the merits the Ld. CIT(A) confirmed the addition of Rs. 2,43,30,500/-. The Appeal of the Assessee was dismissed. Now the Assessee is aggrieved and is in appeal before us.

7.  It was found that this Appeal is barred by limitation by 367 days. The Assessee was in receipt of the order dated 03.06.2024 only on 13.03.2025 against which the Appeal was filed on 07.09.2025 and thereby there is a delay in filing of the Appeal. In the application for condonation of delay, the Assessee has made an application dated 21.03.2026 along with the affidavit which reads as follows: –

1. The appellant is an Individual, earning income from house property, business income offered presumptively u/s 44AD and other sources and has declared income of Rs.12,87,780/-.

2. The appellant case was selected by information obtained from the AIR regarding purchase of the immovable property amounting to Rs 2.25 cr and cash deposits in Chartered Sahakari Bank, Niyamitha, at Koramangala Branch, Account No.1001010740, Karnataka.

3. The appellant submits that appellant had filed statement of income as per 26AS and the learned Assessing officer passed assessment order on 26/03/2022 by making addition to the total income of the appellant as unexplained investment u/s 69. Therefore, addition of Rs.2,43,30,500/- was made as unexplained Income.

4. The appellant being aggrieved by the assessment order preferred an appeal before Commissioner of Income-Tax (Appeal). The appellant had provided the appellant’s mail id in form apprasanna771@gmail.com and also the email of the Chartered accountant for issuance of notices.

5. The learned CIT(A) issued only two notices i.e. on 24.08.2022 and on 22.05.2024.The first notice issued on 24.08.2022 was sent to the Chartered Accountant on his mail-id com@gmail.com and cc on appellant’s mail id i.e. apprasanna771@gmail.com.

6. The appellant submits that he was under presumption that the Chartered Accountant would handle the appeal proceedings. The second notice dt:22.05.2024 was sent to appellant’s mail id i.e apprasanna771@gmail.com and appellant was unaware that the email has not been delivered to the email of the Chartered accountant.

7. The appellant submits that on 13.03.2025, he has received and email regarding the outstanding demand. The appellant on the premise that the Chartered Accountant has also received the same and would take necessary action, has Inadvertently not mentioned the same to the Chartered Accountant.

8. The appellant has during the last week of August 2025, the appellant has approached the chartered accountant to prepare the return of income for the AY 2025-26, has made enquiries with the Chartered Accountant as to the status of the appeal. The Chartered Accountant has logged in and realised that the learned CIT(A) without providing sufficient opportunity dismissed the case as ex-parte on 03.06.2024.

9. The appellant has informed the chartered accountant that has received email in March 2025 and the same email would have been served upon the Chartered accountant. However, upon verification, it has been ascertained that the email has not been served upon the Chartered accountant and the Chartered accountant was unaware of the notices issued to the appellant.

10. The appellant has thereafter provided access to the Chartered accountant to open his email and verify if notices have been served upon the appellant. It was ascertained that the email has been sent only to the appellant, however, no email was served upon the Chartered accountant.

11. The chartered accountant has informed the appellant that an appeal is required to be preferred against the order of the CIT(A) and has referred the appellant to the present counsel. The appellant approached the present counsel immediately and sought assistance of the counsel. The counsel advised the appellant to file an appeal before the Income Tax Appellate Tribunal, Bangalore and sought for various documents.

12. The appellant provided the documents as sought by the present counsel and accordingly the appeal was filed before the Honourable Tribunal on 02.09.2025, though the due date was 01.09.2024, resulting in a delay of 364 days for the reasons mentioned above.

13. The appellant submits that the date mention in the form 36 is 13/03/2025, on which date the email has been served. However, the appellant does not access his email and for this reason the email of his chartered accountant was provided for the purpose of communication.

14. The true knowledge of the passing of the order of the CIT(A) was brought to the knowledge of the appellant in the last week of August 2025 and the appeal has been filed within a week thereafter.

15. The appellant humbly prays that this Hon’ble Tribunal considering the facts of the present case takes a lenient and compassionate view and may be pleased to condone the delay in filing the present appeal against the order passed by the learned first appellate authority.

16. The appellant places reliance on the decision of the Hon’ble Jurisdictional High Court in the case of CIT & Another Vs. ISRO Satellite Center, in ITA No. 532 of 2008 and other batch of appeal order dated 28/10/2011 has condoned the delay of 5 years in filing the appeal before the CIT[A], the relevant observation is at para 28 page 72 of the order.

17. The appellant places reliance on the decision of this Hon’ble Tribunal in the case of Smt. Shakuntala Hegde, Legal Heir of Mr. Ramakrishna Hegde Vs. ACIT, in ITA No. 2785/Bang/2004 order dated 25/04/2006 wherein the Hon’ble Tribunal has condoned the delay of 1,331 days i.e. 3 Years, 8 Months and 22 days in filing the appeal by the assessee.

18. The appellant places reliance on the decision of the Hon’ble High Court of Madras in the case of Commissioner of Income-tax Vs. K.S.P. Shanmugavel Nadar (1987) 30 Taxmann 133 (Madras).

19. The appellant places reliance on the decision of the Hon’ble Tribunal in the case of M/s. Midas Polymer Compounds Pvt Ltd Vs. ACIT in IΤΑ No.288/Coch/2017 dated 25.06.2018.

20. The appellant places reliance on the decision of the Hon’ble High Court of Bombay in the case of Anatek Services Put Ltd Vs. Asst. Commissioner of Income-tax-10(1) in ITA No.102 of 2018 dated 11.02.2022.

21. It is humbly submitted that if this application for condonation of delay in filing the appeal is not allowed, the Appellant would be put to great hardship and irreparable injury per contra no hardship or injury would be caused to the Respondent if this application of Condonation of delay is allowed. Reliance is placed on the decision of the Hon’ble Apex Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others (1987) 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd., Vs Smt. Nirmala Devi and Others 118 ITR 507. Further the Appellant relies on another decision of the Hon’ble Apex Court in the case of Radha Krishna Rai Vs. Allahabad Bank & Others [2000] 9 Supreme Court Cases 733 and Commissioner of Income-tax Vs. West Bengal Infrastructure Development Finance Corporation Limited (2011) 334 ITR 269 (SC).

22. The appellant craves leave of this Hon’ble Tribunal to file additional submissions at the time of hearing of this appeal.

23. It is humbly prayed that this Hon’ble Tribunal takes a lenient and compassionate view and condone the delay of 364 days in filing the present appeal against the order of the learned first appellate authority dated 01.09.2024 before this Hon’ble Tribunal and hear the same on merits for the advancement of substantial cause of justice

8. The Ld. Advocate vehemently submitted that the delay is for sufficient cause, for bonafide reasons deserves to be condoned.

9. The Ld. Joint Commissioner of Income Tax, Shri N. Balusamy vehemently stated that delay is not for sufficient cause and therefore it cannot be condoned. He submits that Assessee has stated that on 13.03.2025 he received an e-mail regarding the outstanding amount. However, there is no evidence placed before the Bench that Assessee did not receive the Appellate Order in time. He referred to the system of ITBA stating that there is an SMS alert and the orders are placed in ITBA portal as soon as it is announced.

Therefore, it cannot be believed that the Assessee received order on 13.03.2025 which was passed on 03.06.2024.

10. We have carefully considered the rival submissions, perused the orders of the lower authorities, and examined the assessee’s petition for condonation of delay. The learned CIT(A)’s order was passed on 3 June 2024. The assessee states that he became aware of it only on 13 March 2025, upon receiving an email from the Income Tax Department regarding the outstanding demand, which indicated that his appeal had already been disposed of. Even treating 13 March 2025 as the date of receipt, the appeal was filed on 2 September 2025, and the intervening delay must be explained. The assessee submits that, in the last week of August 2025, while consulting his Chartered Accountant for preparation of the return for Assessment Year 2025–26, he enquired about the status of the appeal. The Chartered Accountant then checked the portal and found that the appellate order had been passed. The assessee obtained a copy from the Income Tax portal in the last week of August 2025 and filed the appeal immediately thereafter, on 2 September 2025. In these circumstances, we are satisfied that sufficient cause has been shown for the delay. Accordingly, the delay is condoned and the appeal is admitted.

11. During the course of hearing, the Ld. Authorized Representative Shri Ravi Shankar S V, Advocate made an additional ground of Appeal stating that Assessment Order passed u/s. 147 of the Act is without jurisdiction and therefore deserves to be quashed and further the Assessment Order ought to have been passed by the jurisdictional Assessing Officer and not by the Faceless Assessment Officer.

12. He further raised an issue that the Faceless Assessment were notified on 29.03.2022 whereas the Assessment Order was passed by the NFAC on 26.03.2022 and therefore it is invalid. To support his case he relied on the decision of the Coordinate Bench in ITA No. 358/Patna/2025 for Assessment Year 2013-14 wherein that Coordinate Bench relying on the decision of the Kolkata Bench in case of Md. Mahimud SK in ITA No. 2230 & 2229/Kol/2024 dated 04.03.2025 wherein the decision of the Cuttack Bench in case of Nand Kumar Choudhury in ITA No. 420/Ctk/2025 dated 22.09.2025 was relied upon. He further submitted and referred to para no. 5 of the order stating that the Assessment Order is dated 26.03.2022 whereas the notification for NFAC came into effect w.e.f. 29.03.2022 and therefore as on that date NFAC did not have any jurisdiction to pass the Assessment Order. He therefore submits that the decision of the Coordinate Benches binds this bench and therefore the order deserves to be quashed.

13. Regarding the argument of the learned authorized representative that the order should have been passed by the faceless assessing officer instead of the jurisdictional assessing officer, we find that The Finance Act, 2026 inserted a new Section 147A into the Income-tax Act, 1961. The provision states — notwithstanding any court judgment, Section 151A, or any scheme framed there under — that the Assessing Officer for purposes of Sections 148 and 148A shall mean, and shall always be deemed to have meant, an officer other than NFAC or any assessment unit under Section 144B(3). This takes effect retrospectively from April 1, 2021. Thus, this argument does not hold any water anymore and is dismissed.

14. The second argument raised by the learned authorized representative is that in case assessment is passed national faceless assessment Centre on 26^th of March 2022 whereas the notification for which the National faceless assessment Centre to pass the assessment order came into effect from 29^th of March 2022 and therefore the order passed is invalid.

15. The authorized representative relied upon the several judicial precedents of the coordinate benches starting from Kalawati Enterprises Pvt. Ltd Vs DCIT/NFAC (ITAT Patna) 358/PAT/2025,Nand Kumar Choudhury, passed in ITA No.420/CTK/2025, order dated 22.09.2025, 2025 (9) TMI 1744 – ITAT CUTTACK, Md. Mahimud SK in ITA Nos.2230&2229/Kol/2024 pronounced on 04.03.2025 2025 (3) TMI 1593 – ITAT KOLKATA, Jemamani Mohanta Versus ITO, Ward-1, Baripada 2025 (12) TMI 1816 – ITAT CUTTACK and Nabiul Industrial Metal Pvt. Ltd [2024 (10) TMI 1649 – ITAT KOLKATA]. The ld AR vehemently submits that these decisions of the coordinate bench bind this bench and no different view can be taken.

16. The ld DR vehemently referred to the provisions of section 144B of the Act, New introduction of that section and further notifications relied up on by these decisions. He further submitted that there should be some commonsense prevailing in these judgements to show that how if the scheme is notified later and orders are passed earlier,it could not have happened. The reason being that none of the decisions refers to the act but to one notification. The courts had they referred to the act such a glaring error could not have happened. He submits that all these decisions are relying on one decision which only referred to the notification and quashed the order without any reference to the act and later on all the decisions subsequently rendered did not care to look at the law but blindly followed that decisions without looking at the law. He submits that if carefully law is read, all these decisions are not in accordance with law and does not bind the bench, but the Income tax Act binds this bench.

17. We have carefully considered the rival contentions and perused the orders of the learned lower authorities and also all these decisions with utmost respect.

18. We consider that the first decision rendered by the coordinate benches were in case of 2024 (10) TMI 1649 – ITAT KOLKATA Nabiul Industrial Metal Pvt. Ltd Versus ITO, IT Department, NFAC, Delhi where in the coordinate bench holding that hat assumption of jurisdiction prior to 29.03.2022 by the ld. AO is to be held to be without jurisdiction. The bench was shown only a) Notification of Ministry of Finance dated 29.03.2022, b) Notice issued u/s 142(1) of the Act and c) Show cause notice dated 28.03.2022. Based on this the order was quashed where in the facts pointed out were those provisions of Section 151A of the Act came in the statute on 01.11.2021 but it was notified with effect from 29.03.2022. But in the present case, assessment proceedings to the NFAC started on 29.11.2021 which is evident from the notice u/s 142(1) of the Act.

19. Subsequently in 2025 (3) TMI 1593 – ITAT KOLKATA MD Mahimud SK Versus ITO, Ward 3 (1), West Bengal the above decision was followed. Further in 2025 (9) TMI 1744 – ITAT CUTTACK Nand Kumar Choudhury Rengalapali Camp Versus ITO, Ward- Bargarh, Bargarh both these above two decisions of Kolkatta bench were followed. Later on,patna bench in 2026 (2) TMI 250 – ITAT PATNA Kalawati Enterprises Pvt. Ltd., Patna Versus DCIT/NFAC, Delhi also followed these decisions. All these subsequent decisions neither looked at the logic or the provisions of law in the case of the first two decision of Kolkatta bench.

20. Prior to the Insertion of new section 144B with effect from 1/4/2022 this section Inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 1-4-2021 reads as under: –

“(1) Notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub-section (3) of section 143 or under section 144, in the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:-

(i) the National Faceless Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143;

(ii) the assessee may, within fifteen days from the date of receipt of notice referred to in clause (i), file his response to the National Faceless Assessment Centre;

(iii) where the assessee-

(a) has furnished his return of income under section 139 or in response to a notice issued under sub-section (1) of section 142 or under sub-section (1) of section 148, and a notice under sub­section (2) of section 143 has been issued by the Assessing Officer or the prescribed income-tax authority, as the case may be; or

(b) has not furnished his return of income in response to a notice issued under sub-section (1) of section 142 by the Assessing Officer; or

(c) has not furnished his return of income under sub-section (1) of section 148 and a notice under sub-section (1) of section 142 has been issued by the Assessing Officer, the National Faceless Assessment Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section;

(iv) the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit in any one Regional Faceless Assessment Centre through an automated allocation system;

(v) where a case is assigned to the assessment unit, it may make a request to the National Faceless Assessment Centre for-

(a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify;

(b) conducting of certain enquiry or verification by verification unit; and

(c) seeking technical assistance from the technical unit;

(vi) where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the National Faceless Assessment Centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit;

(vii) the assessee or any other person, as the case may be, shall file his response to the notice referred to in clause (vi), within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National Faceless Assessment Centre;

(viii) where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a verification unit in any one Regional Faceless Assessment Centre through an automated allocation system;

(ix) where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a technical unit in any one Regional Faceless Assessment Centre through an automated allocation system;

(x) the National Faceless Assessment Centre shall send the report received from the verification unit or the technical unit, based on the request referred to in clause (viii) or clause (ix) to the concerned assessment unit;

(xi) where the assessee fails to comply with the notice referred to in clause (vi) or notice issued under sub-section (1) of section 142 or with a direction issued under sub-section (2A) of section 142, the National Faceless Assessment Centre shall serve upon such assessee a notice under section 144 giving him an opportunity to show-cause, on a date and time to be specified in the notice, why the assessment in his case should not be completed to the best of its judgment;

(xii) the assessee shall, within the time specified in the notice referred to in clause (xi) or such time as may be extended on the basis of an application in this regard, file his response to the National Faceless Assessment Centre;

(xiii) where the assessee fails to file response to the notice referred to in clause (xi) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit;

(xiv) the assessment unit shall, after taking into account all the relevant material available on the record make in writing, a draft assessment order or, in a case where intimation referred to in clause (xiii) is received from the National Faceless Assessment Centre, make in writing, a draft assessment order to the best of its judgment, either accepting the income or sum payable by, or sum refundable to, the assessee as per his return or making variation to the said income or sum, and send a copy of such order to the National Faceless Assessment Centre;

(xv) the assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any;

(xvi) the National Faceless Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to-

(a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or

(b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made; or

(c) assign the draft assessment order to a review unit in any one Regional Faceless Assessment Centre, through an automated allocation system, for conducting review of such order;

(xvii) the review unit shall conduct review of the draft assessment order referred to it by the National Faceless Assessment Centre whereupon it may decide to-

(a) concur with the draft assessment order and intimate the National Faceless Assessment Centre about such concurrence; or

(b) suggest such variation, as it may deem fit, in the draft assessment order and send its suggestions to the National Faceless Assessment Centre;

(xviii) the National Faceless Assessment Centre shall, upon receiving concurrence of the review unit, follow the procedure laid down in-

(a) sub-clause (a) of clause (xvi); or

(b) sub-clause (b) of clause (xvi);

(xix) the National Faceless Assessment Centre shall, upon receiving suggestions for variation from the review unit, assign the case to an assessment unit, other than the assessment unit which has made the draft assessment order, through an automated allocation system;

(xx) the assessment unit shall, after considering the variations suggested by the review unit, send the final draft assessment order to the National Faceless Assessment Centre;

(xxi) the National Faceless Assessment Centre shall, upon receiving final draft assessment order follow the procedure laid down in-

(a) sub-clause (a) of clause (xvi); or

(c) sub-clause (b) of clause (xvi);

(xxii) the assessee may, in a case where show-cause notice has been served upon him as per the procedure laid down in sub-clause (b) of clause (xvi), furnish his response to the National Faceless Assessment Centre on or before the date and time specified in the notice or within the extended time, if any;

(xxiii) the National Faceless Assessment Centre shall,-

(a) where no response to the show-cause notice is received as per clause (xxii),-

(A) in a case where the draft assessment order or the final draft assessment order is in respect of an eligible assessee and proposes to make any variation which is prejudicial to the interest of said assessee, forward the draft assessment order or final draft assessment order to such assessee; or

(B) in any other case, finalise the assessment as per the draft assessment order or the final draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(b) in any other case, send the response received from the assessee to the assessment unit;

(xxiv) the assessment unit shall, after taking into account the response furnished by the assessee, make a revised draft assessment order and send it to the National Faceless Assessment Centre;

(xxv) the National Faceless Assessment Centre shall, upon receiving the revised draft assessment order,-

(a) in case the variations proposed in the revised draft assessment order are not prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, and-

(A) in case the revised draft assessment order is in respect of an eligible assessee and there is any variation prejudicial to the interest of the assessee proposed in draft assessment order or the final draft assessment order, forward the said revised draft assessment order to such assessee;

(B) in any other case, finalise the assessment as per the revised draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(b) in case the variations proposed in the revised draft assessment order are prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, provide an opportunity to the assessee, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made;

(xxvi) the procedure laid down in clauses (xxiii), (xxiv) and (xxv) shall apply mutatis mutandis to the notice referred to in sub-clause (b) of clause (xxv);

(xxvii) where the draft assessment order or final draft assessment order or revised draft assessment order is forwarded to the eligible assessee as per item (A) of sub-clause (a) of clause (xxiii) or item (A) of sub-clause (a) of clause (xxv), such assessee shall, within the period specified in sub-section (2) of section 144C, file his acceptance of the variations to the National Faceless Assessment Centre;

(xxviii) the National Faceless Assessment Centre shall,-

(a) upon receipt of acceptance as per clause (xxvii); or

(b) if no objections are received from the eligible assessee within the period specified in sub-section (2) of section 144C, finalise the assessment within the time allowed under sub­section (4) of section 144C and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(xxix) where the eligible assessee files his objections with the Dispute Resolution Panel, the National Faceless Assessment Centre shall upon receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, forward such directions to the concerned assessment unit;

(xxx) the assessment unit shall in conformity of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, prepare a draft assessment order in accordance with sub­section (13) of section 144C and send a copy of such order to the National Faceless Assessment Centre;

(xxxi) the National Faceless Assessment Centre shall, upon receipt of draft assessment order referred to in clause (xxx), finalise the assessment within the time allowed under sub-section (13) of section 144C and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(xxxii) The National Faceless Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Act.

2) The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.

3) The Board may, for the purposes of faceless assessment, set up the following Centres and units and specify their respective jurisdiction, namely:-

(i) a National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner, which shall be vested with the jurisdiction to make faceless assessment;

(ii) Regional Faceless Assessment Centres, as it may deem necessary, to facilitate the conduct of faceless assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make faceless assessment;

(iii) assessment units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of making assessment, which includes identification of points or issues material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making faceless assessment;

(iv) verification units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of account, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification;

(v) technical units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter which may be required in a particular case or a class of cases, under this section; and

(vi) review units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of review of the draft assessment order, which includes checking whether the relevant and material evidence has been brought on record, whether the relevant points of fact and law have been duly incorporated in the draft order, whether the issues on which addition or disallowance should be made have been discussed in the draft order, whether the applicable judicial decisions have been considered and dealt with in the draft order, checking for arithmetical correctness of variations proposed, if any, and such other functions as may be required for the purposes of review.

4) The assessment unit, verification unit, technical unit and the review unit shall have the following authorities, namely:-

(a) Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may be;

(b) Deputy Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax Officer, as the case may be;

(c) such other income-tax authority, ministerial staff, executive or consultant, as considered necessary by the Board.

5) All communication among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre.

6) All communications between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and all internal communications between the National Faceless Assessment Centre, Regional Faceless Assessment Centres and various units shall be exchanged exclusively by electronic mode:

Provided that the provisions of this sub-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances referred to in sub-clause (g) of clause (xii) of sub-section (7).

7) For the purposes of faceless assessment-

(i) an electronic record shall be authenticated by-

(a) the National Faceless Assessment Centre by affixing its digital signature;

(b) assessee or any other person, by affixing his digital signature if he is required to furnish his return of income under digital signature, and in any other case, by affixing his digital signature or under electronic verification code in the prescribed manner;

(ii) every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of-

(a) placing an authenticated copy thereof in the assessee’s registered account; or

(b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or

(c) uploading an authenticated copy on the assessee’s Mobile App, and followed by a real time alert;

(iii) every notice or order or any other electronic communication shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert;

(iv) the assessee shall file his response to any notice or order or any other electronic communication, through his registered account, and once an acknowledgement is sent by the National Faceless Assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated;

(v) the time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000);

(vi) a person shall not be required to appear either personally or through authorised representative in connection with any proceedings before the income-tax authority at the National Faceless Assessment Centre or Regional Faceless Assessment Centre or any unit set up under this sub-section;

(vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the such draft or final draft or revised draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit;

(viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii);

(ix) where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, such hearing shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board;

(x) subject to the proviso to sub-section (6), any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony in accordance with the procedure laid down by the Board;

(xi) the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end;

(xii) the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centres and the unit set up, in an automated and mechanised environment, including format, mode, procedure and processes in respect of the following, namely:-

(a) service of the notice, order or any other communication;

(b) receipt of any information or documents from the person in response to the notice, order or any other communication;

(c) issue of acknowledgement of the response furnished by the person;

(d) provision of “e-proceeding” facility including login account facility, tracking status of assessment, display of relevant details, and facility of download;

(e) accessing, verification and authentication of information and response including documents submitted during the assessment proceedings;

(f) receipt, storage and retrieval of information or documents in a centralised manner;

(g) circumstances in which proviso to sub-section (6) shall apply;

(h) circumstances in which personal hearing referred to clause (viii) shall be approved;

(i) general administration and grievance redressal mechanism in the respective Centres and units.

8) Notwithstanding anything contained in sub-section (1) or sub-section (2), the Principal Chief Commissioner or the Principal Director General in charge of National Faceless Assessment Centre may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board

21. Simultaneously provision of section 151 A was also introduced by Inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 1-11-2020 which reads as under: –

Faceless assessment of income escaping assessment.

151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 [or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by—

(a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible.

(b) optimising utilisation of the resources through economies of scale and functional specialisation.

(c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.

(2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:

Provided that no direction shall be issued after the 31st day of March 2022.

(3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.]

22. With effect from 1/4/2022,section 144B was replaced with a new section which reads as under: –

****] ²[Faceless assessment.

144B. ³[(1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144  or under section 147, as the case may be, with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:-

i. the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit through an automated allocation system.

ii. the National Faceless Assessment Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section.

iii. a notice shall be served on the assessee, through the National Faceless Assessment Centre, under sub-section (2) of section 143 or under sub-section (1) of section 142 and the assessee may file his response to such notice within the date specified therein, to the National Faceless Assessment Centre which shall forward the same to the assessment unit;

iv. where a case is assigned to the assessment unit, under clause (i), it may make a request through the National Faceless Assessment Centre for-

(a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify;

(b) conducting of enquiry or verification by verification unit;

(c) seeking technical assistance in respect of determination of arm’s length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter by referring to the technical unit;

v. where a request under sub-clause (a) of clause (iv) has been initiated by the assessment unit, the National Faceless Assessment Centre shall serve appropriate notice or requisition on the assessee or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit and the assessee or any other person, as the case may be, shall file his response to such notice within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National Faceless Assessment Centre which shall forward the reply to the assessment unit;

vi. where a request,-

(a) for conducting of enquiry or verification by the verification unit has been made by the assessment unit under sub-clause (b) of clause (iv), the request shall be assigned by the National Faceless Assessment Centre to a verification unit through an automated allocation system; or

(b) for reference to the technical unit has been made by the assessment unit under sub-clause (c) of clause (iv), the request shall be assigned by the National Faceless Assessment Centre to a technical unit through an automated allocation system;

vii. the National Faceless Assessment Centre shall send the report received from the verification unit or the technical unit, as the case may be, based on the request referred to in clause (vi) to the concerned assessment unit;

viii. where the assessee fails to comply with the notice served under clause (v) or notice issued under sub-section (1) of section 142 or the terms of notice issued under sub-section (2) of section 143, the National Faceless Assessment Centre shall intimate such failure to the assessment unit;

ix. the assessment unit shall serve upon such assessee, as referred to in clause (viii), a notice, through the National Faceless Assessment Centre, under section 144, giving him an opportunity to show-cause on a date and time as specified in such notice as to why the assessment in his case should not be completed to the best of its judgment;

x. the assessee shall, within the time specified in the notice referred to in clause (ix) or such time as may be extended on the basis of an application in this regard, file his response to the National Faceless Assessment Centre which shall forward the same to the assessment unit;

xi. where the assessee fails to file response to the notice served under clause (ix) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit;

xii. the assessment unit shall, after taking into account all the relevant material available on the record, prepare, in writing,-

(a) an income or loss determination proposal, where no variation prejudicial to assessee is proposed and send a copy of such income or loss determination proposal to the National Faceless Assessment Centre; or

(b) in any other case, a show cause notice stating the variations prejudicial to the interest of assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice, on the assessee, through the National Faceless Assessment Centre;

xiii. the assessee shall file his reply to the show cause notice served under sub-clause (b) of clause (xii) on a date and time as specified therein or such time as may be extended on the basis of an application made in this regard, to the National Faceless Assessment Centre, which shall forward the reply to the assessment unit;

xiv. where the assessee fails to file response to the notice served under sub-clause (b) of clause (xii) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit;

xv. the assessment unit shall, after considering the response received under clause (xiii) or after receipt of intimation under clause (xiv), as the case may be, and taking into account all relevant material available on record, prepare an income or loss determination proposal and send the same to the National Faceless Assessment Centre;

xvi. upon receipt of the income or loss determination proposal, as referred to in sub-clause (a) of clause (xii) or clause (xv), as the case may be, the National Faceless Assessment Centre may, on the basis of guidelines issued by the Board,-

(a) convey to the assessment unit to prepare draft order in accordance with the income or loss determination proposal, which shall thereafter prepare a draft order; or

(b) assign the income or loss determination proposal to a review unit through an automated allocation system, for conducting review of such proposal;

xvii. the review unit shall conduct review of the income or loss determination proposal assigned to it by the National Faceless Assessment Centre, under sub-clause (b) of clause (xvi), whereupon it shall prepare a review report and send the same to the National Faceless Assessment Centre;

xviii. the National Faceless Assessment Centre shall, upon receiving the review report under clause (xvii), forward the same to the assessment unit which had proposed the income or loss determination proposal;

xix. the assessment unit shall, after considering such review report, accept or reject some or all of the modifications proposed therein and after recording reasons in case of rejection of such modifications, prepare a draft order;

xx. the assessment unit shall send such draft order prepared under sub-clause (a) of clause (xvi) or under clause (xix) to the National Faceless Assessment Centre;

xxi. in case of an eligible assessee, where there is a proposal to make any variation which is prejudicial to the interest of such assessee, as mentioned in sub-section (1) under section 144C, the National Faceless Assessment Centre shall serve the draft order referred to in clause (xx) on the assessee;

xxii. in any case other than that referred to in clause (xxi), the National Faceless Assessment Centre shall convey to the assessment unit to pass the final assessment order in accordance with such draft order, which shall thereafter pass the final assessment order and initiate penalty proceedings, if any, and send it to the National Faceless Assessment Centre;

xxiii. upon receiving the final assessment order as per clause (xxii), the National Faceless Assessment Centre shall serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

xxiv. where a draft order is served on the assessee as referred to in clause (xxi), such assessee shall,-

(a) file his acceptance of the variations proposed in such draft order to the National Faceless Assessment Centre; or

(b) file his objections, if any, to such variations, with-

(I) the Dispute Resolution Panel, and

(II) the National Faceless Assessment Centre,

within the period specified in the sub-section (2) of section 144C;

xxv. the National Faceless Assessment Centre shall,-

(a) upon receipt of acceptance from the eligible assessee; or

(b) if no objections are received from the eligible assessee, within the period specified in sub-section (2) of section 144C, intimate the assessment unit to complete the assessment on the basis of the draft order;

xxvi. the assessment unit shall, upon receipt of intimation under clause (xxv), pass the assessment order, in accordance with the relevant draft order, within the time allowed under sub-section (4) of section 144C and initiate penalty proceedings, if any, and send the order to the National Faceless Assessment Centre;

xxvii. where the eligible assessee files objections with the Dispute Resolution Panel, under sub-clause (b) of clause (xxiv), the National Faceless Assessment Centre shall send such intimation along with a copy of objections filed to the assessment unit;

xxviii. the National Faceless Assessment Centre shall, in a case referred to in clause (xxvii), upon receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, forward such directions to the assessment unit;

xxix. the assessment unit shall, in conformity with the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, complete the assessment within the time allowed in sub-section (13) of section 144C and initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre;

xxx. the National Faceless Assessment Centre shall, upon receipt of the assessment order referred to in clause (xxvi) or clause (xxix), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment;

xxxi. the National Faceless Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the provisions of this Act;

xxxii. if at any stage of the proceedings before it, the assessment unit having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary to do so, it may, upon recording its reasons in writing, refer the case to the National Faceless Assessment Centre stating that the provisions of sub-section (2A) of section 142 may be invoked and such case shall be dealt with in accordance with the provisions of sub-section (7).

2.The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.

3. The Board may, for the purposes of faceless assessment, set up the following Centre and units and specify their functions and jurisdiction, namely:-

i. a National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner;

ii. such assessment units, as it may deem necessary to conduct the faceless assessment, to perform the function of making assessment, which includes identification of points or issues material for the determination of any liability (including refund) under this Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making faceless assessment, and the term ―assessment unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board;

iii. such verification units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of account, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification and the term ―verification unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board:

Provided that the function of verification unit under this section may also be performed by a verification unit located in any other faceless centre set up under the provisions of this Act or under any scheme notified under the provisions of this Act; and the request for verification may also be assigned through the National Faceless Assessment Centre to such verification unit;

iv. such technical units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter under this Act or an agreement entered into under section 90 or 90A, which may be required in a particular case or a class of cases, under this section and the term ―technical unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board;

v. such review units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of review of the income determination proposal assigned under sub-clause (b) of clause (xvi) of sub-section (1), which includes checking whether the relevant and material evidence has been brought on record, relevant points of fact and law have been duly incorporated, the issues requiring addition or disallowance have been incorporated and such other functions as may be required for the purposes of review and the term ―review unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board;

4. The assessment unit, verification unit, technical unit and the review unit shall have the following authorities, namely:-

i. Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may be;

ii. Deputy Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax Officer, as the case may be;

iii. such other income-tax authority, ministerial staff, executive or consultant, as may be considered necessary by the Board.

5. All communications,-

i. among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre;

ii. between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and

iii. between the National Faceless Assessment Centre and various units shall be exchanged exclusively by electronic mode:

Provided that the provisions of this sub-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances as may be specified by the Board in this behalf.

6. For the purposes of faceless assessment-

i. an electronic record shall be authenticated by-

a. the National Faceless Assessment Centre by way of an electronic communication;

b. the assessment unit or verification unit or technical unit or review unit, as the case may be, ⁸[by way of an electronic communication];

c. assessee or any other person, by affixing his digital signature or under electronic verification code, or by logging into his registered account in the designated portal;

ii. every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of-

a. placing an authenticated copy thereof in the registered account of the assessee; or

b. sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or

c. uploading an authenticated copy on the Mobile App of the assessee, and followed by a real time alert;

iii. every notice or order or any other electronic communication shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert;

iv. the assessee shall file his response to any notice or order or any other electronic communication, through his registered account, and once an acknowledgement is sent by the National Faceless Assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated;

v. the time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000);

vi. a person shall not be required to appear either personally or through authorised representative in connection with any proceedings before any unit set up under this section;

vii. in a case where a variation is proposed in the income or loss determination proposal or the draft order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such income or loss determination proposal, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority of the relevant unit;

viii. where the request for personal hearing has been received, the income-tax authority of relevant unit shall allow such hearing, through National Faceless Assessment Centre, which shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board;

ix. subject to the proviso to sub-section (5), any examination or recording of the statement of the assessee or any other person (other than the statement recorded in the course of survey under section 133A) shall be conducted by an income-tax authority in the relevant unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board;

x. the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end;

xi. the Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre and the units set up, in an automated and mechanised environment.

7. (a) The Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of the National Faceless Assessment Centre shall, in accordance with the procedure laid down by the Board in this regard, if he considers appropriate that the provisions of sub-section (2A) of section 142 may be invoked in the case,-

i. forward the reference received from an assessment unit under clause (xxxii) of sub-section (1) to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the assessment unit accordingly;

ii. transfer the case to the Assessing Officer having jurisdiction over such case in accordance with sub-section (8);

(b) where a reference has been received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under sub-clause (i) of clause (a), he shall direct the Assessing Officer, having jurisdiction over the case, to invoke the provisions of sub-section (2A) of section 142;

(c) where a reference has not been forwarded to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over the case, in a case referred to in sub-clause (i) of clause (a), the assessment unit shall proceed to complete the assessment in accordance with the procedure laid down in this section.

8. Notwithstanding anything contained in sub-section (1) or sub-section (2), the Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of National Faceless Assessment Centre may, at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board.]

9. ⁴[****]

10. (10) ⁵[****]

Explanation.-In this section, unless the context otherwise requires-

a. “addressee” shall have the same meaning as assigned to it in clause (b) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

b. “authorised representative” shall have the same meaning as assigned to it in sub-section (2) of section 288;

c. “automated allocation system” means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources;

d. “automated examination tool” means an algorithm for standardised examination of draft orders, by using suitable technological tools, including artificial intelligence and machine learning, with a view to reduce the scope of discretion;

e. “computer resource” shall have the same meaning as assigned to it in clause (k) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

f. “computer system” shall have the same meaning as assigned to it in
clause (l) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

g. “computer resource of assessee” shall include assessee’s registered account in designated portal of the Income-tax Department, the Mobile App linked to the registered mobile number of the assessee, or the registered email address of the assessee with his email service provider;

h. “digital signature” shall have the same meaning as assigned to it in clause (p) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

i. “designated portal” means the web portal designated as such by the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre;

j. “Dispute Resolution Panel” shall have the same meaning as assigned to it in clause (a) of sub-section (15) of section 144C;

k. “faceless assessment” means the assessment proceedings conducted electronically in ‘e-Proceeding’ facility through assessee’s registered account in designated portal;

l. “electronic record” shall have the same meaning as assigned to it in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

6[(la) ―electronic verification code‖ means a code generated for the purpose of electronic verification as per the data structure and standards specified by the Principal Director General or Director General, as the case may be, in charge of information technology;]

m. “eligible assessee” shall have the same meaning as assigned to in clause (b) of sub-section (15) of section 144C;

n. “email” or “electronic mail” and “electronic mail message” means a message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message;

o. “hash function” and “hash result” shall have the same meaning as assigned to them in the Explanation to sub-section (2) of section 3 of the Information Technology Act, 2000 (21 of 2000);

p. “Mobile app” shall mean the application software of the Income-tax Department developed for mobile devices which is downloaded and installed on the registered mobile number of the assessee;

q. 7[****]

r. “real time alert” means any communication sent to the assessee, by way of Short Messaging Service on his registered mobile number, or by way of update on his Mobile App, or by way of an email at his registered email address, so as to alert him regarding delivery of an electronic communication;

s. “registered account” of the assessee means the electronic filing account registered by the assessee in designated portal;

t. “registered e-mail address” means the e-mail address at which an electronic communication may be delivered or transmitted to the addressee, including-

(i) the e-mail address available in the electronic filing account of the addressee registered in designated portal; or

(ii) the e-mail address available in the last income-tax return furnished by the addressee; or

(iii) the e-mail address available in the Permanent Account Number database relating to the addressee; or

(iv) in the case of addressee being an individual who possesses the Aadhaar number, the e-mail address of addressee available in the database of Unique Identification Authority of India; or

(v) in the case of addressee being a company, the e-mail address of the company as available on the official website of Ministry of Corporate Affairs; or

(vi) any e-mail address made available by the addressee to the income-tax authority or any person authorised by such authority.

u. “registered mobile number” of the assessee means the mobile number of the assessee, or his authorised representative, appearing in the user profile of the electronic filing account registered by the assessee in designated portal;

v. “video conferencing or video telephony” means the technological solutions for the reception and transmission of audio-video signals by users at different locations, for communication between people in real-time.]

23. It is further noted that Section 151A was inserted by the Finance Act, 2020 with effect from 01.11.2020 as an enabling provision. It empowered the Central Government to notify a scheme for faceless assessment, reassessment or recomputation under Section 147, issuance of notice under Section 148, proceedings under Section 148A, and sanction under Section 151. However, the provision did not, by itself, make reassessment faceless. The operative scheme, namely the e-Assessment of Income Escaping Assessment Scheme, 2022, notified by Notification No. 18/2022, S.O. 1466(E) dated 29.03.2022, came into force only from that date. The scheme was only for issuance of notice u/s. 148 of the Act. Thus, such notification applies to all notices issued u/s. 148 of the Act after 29.03.2022. In the impugned case notice u/s. 148 was issued on 31.03.2021.

24. Thus, where a matter involves a reassessment notice issued in the window prior to 29.03.2022, the faceless-jurisdiction objection does not arise at all, since the Scheme had not then commenced; the inquiry there is confined to ordinary jurisdiction, sanction under Section 151, and limitation.

25. A reassessment completed before 29.03.2022 is not invalid merely because it was processed through the faceless mechanism. The issue must be examined in two parts: the initiation limb, comprising the notice under Section 148 and proceedings under Section 148A, and the assessment limb, comprising the reassessment order. Before 29.03.2022, a notice under Section 148 wasrequired to be issued by the Jurisdictional Assessing Officer in the conventional manner, as the e-Assessment of Income Escaping Assessment Scheme, 2022 [S.O. 1466(E)] had not yet come into force. That course was therefore valid and, indeed, the only permissible course. Any objection based on ―faceless invalidity‖, if available at all, can arise only in relation to the assessment limb, where the reassessment proceedings were routed through the National Faceless Assessment Centre.

26. The Hon’ble Bombay High Court in Madhuri Sameer Gokhale v. Addl. Joint/Dy./Asstt. Commissioner of Income-tax/Income-tax Officer, National Faceless Assessment Centre, Delhi [2025] 172 taxmann.com 696 (Bombay) / [2025] 304 Taxman 359 (Bombay), dated 07.03.2025, considered an NFAC order dated 29.03.2022 passed under Section 147 read with Sections 144 and 144B. The challenge in that case was not to NFAC’s jurisdiction to conduct faceless reassessment, but to alleged non-compliance with the procedure under the unamended Section 144B and the first proviso to Section 147.

27. On a fair reading of the Memorandum, the Finance Act, 2022 substitution expressly inserting ―Section 147″ in Section 144B(1), with effect from01.04.2022, appears clarificatory and procedural rather than a first-time conferment of jurisdiction. The stated object was to streamline the faceless assessment process and address legal and procedural difficulties in implementing the provision, indicating consolidation and refinement rather than creation of an entirely new jurisdiction. The description of the unamended Section 144B as covering only Sections 143(3) and 144 merely reflects its express wording; it does not, by itself, render an NFAC reassessment framed under Sections 143(3)/144 read with Section 147 a nullity.

28. The plea of invalidity is further weakened by the retrospective omission of erstwhile Section 144B(9), which had declared an assessment ―non-est” or void where the faceless procedure was not followed. This sub-section was omitted by the Finance Act, 2022 with retrospective effect from 01.04.2021. The consequence is significant: during the relevant period, even non­compliance with the faceless procedure no longer attracted the statutory consequence of voidness.

29. Thus, the decisions cited by the ld AR are not authority for the invalidity of a faceless reassessment conducted before 03.2022, which remains governed by the analysis of the provisions of the Income tax Act and further supported by the decision of the Hon’ble Bombay High court and also for the reason that those decisions have not at all interpreted the substituted section 144B of The Act with effect from 1/4/2022. Thus, those does not bind this bench.

30. In view of the above analysis and reading of the law we hold that assessment order passed by the Ld AO on 26/03/2022 is valid and cannot be held to be non est. Thus, this ground is dismissed.

31. On the merits of the issues as none of the lower authorities have decided it, as prayed by the both the parties, the issues is restored to the fileof the ld. AO with a direction to the assessee to substantiate that Assessee has entered a transaction of property for Rs. 2,25,00,000/- and further cash deposit of Rs. 18,30,500/- in Chartered Sahakari Bank, Niyamitha, Koramangala Branch, Bengaluru does not have any element of unexplained income. The onus is on the assessee to state that there is no unaccounted income in these transactions. The Ld AO may examine the submission and then decide the issue in accordance with the law.

32. Thus, appeal of the assessee is partly allowed.

Order pronounced in the open court on 15^th June, 2026.