DCIT Vs Seth Industrial Corporation (ITAT Chandigarh)
Assessee is engaged in manufacturing of bicycles & had filed its return on 03.09.2018. Subsequently, a search u/s 132 was conducted on 21.10.2021 on the group. Based on search findings, notice u/s 148A(b) was issued on 24.03.2022 & thereafter, notice u/s 148 was issued on 06.04.2022. These notices were issued by DCIT, Central Circle-3, Ludhiana, who is the Jurisdictional AO. Reassessment u/s 147 was completed on 24.08.2023 wherein twin additions of ₹1.30 crore & ₹21.58 lakh were made u/s 69 r.w.s 115BBE. In appeal, CIT(A) deleted the addition of ₹21.58 lakh in full & sustained ₹45.25 lakh out of ₹1.30 crore. Both Revenue & Assessee filed cross appeals before Tribunal.
At the outset, Assessee raised a crucial legal ground that reopening is void since notice u/s 148 was issued by Jurisdictional AO instead of Faceless AO, which is mandatory in terms of Sec.151A read with CBDTNotification No.18/2022 dated 29.03.2022. It was argued that faceless procedure is applicable from the stage of issuance of notice u/s 148A & 148, not merely at the assessment stage. Therefore, notice issued by Jurisdictional AO is without jurisdiction & the entire proceedings are vitiated. Assessee relied upon the landmark judgment of Punjab & Haryana High Court in Jatinder Singh Bhangu (165 Taxmann.com 115; 19.07.2024) wherein it was held that statutory provisions of faceless regime cannot be overridden by departmental circulars or internal memoranda. It was further held that issuance of notice u/s 148 by Jurisdictional AO, instead of Faceless AO, renders the reassessment void. This view was reaffirmed by the same Court in Om Satya Overseas (178 Taxmann.com 137; 29.08.2025). Revenue could not show any contrary decision or stay from Supreme Court.
