Chirag Kirpal Vs ACIT (ITAT Delhi)
Faceless Mandate Prevails – JAO Has No Power to Issue Notice u/s 148 Post Faceless Regime- Notice by Jurisdictional AO Invalid Under s.151A: ITAT Delhi
Assessee, a Non-Resident Indian (NRI), had purchased immovable property worth ₹65 lakh in AY 2016-17 but did not file return. Based on flagged information under CBDT’s risk management strategy, AO issued notice u/s 148 on 29.03.2023. In response, Assessee filed return declaring income of only ₹2,482/-. AO disbelieved Assessee’s claim that the investment was funded by a gift from his father & made addition of ₹65 lakh. DRP upheld the addition & final reassessment order u/s 147 r.w.s. 144C(13) was passed on 21.02.2025.
Assessee’s Argument:
- Notice u/s 148 was issued by the Jurisdictional AO, whereas under the faceless regime post Finance Act, 2021 & CBDT Notification dated 29.03.2022, only the Faceless AO (FAO) had authority.
- Relied on Jatinder Singh Banghu & Jyoti Sareen Vs. UOI (P&H HC, 466 ITR 474), Hexaware Technology Ltd. Vs. ACIT (Bom HC, 464 ITR 430), Kankanala Ravindra Reddy Vs. ITO (Telangana HC, 156 Taxmann.com 178), Ram Narayan Sah Vs. UOI (Gauhati HC, 163 Taxmann.com 478).
- Noted that Telangana HC in Sri Venkataramana Reddy Vs. DCIT (468 ITR 181) quashed notices in International Tax cases as well, which was later affirmed by Supreme Court dismissing Revenue’s SLP (16.07.2025).
Revenue’s Stand:
- Relied on contrary rulings of T.K.S. Builders Pvt. Ltd. Vs. ITO (Delhi HC, 469 ITR 657), Mark Studio India Pvt. Ltd. Vs. ITO (Madras HC, 169 Taxmann.com 542) & Triton Overseas Pvt. Ltd. Vs. UOI (Cal HC, 156 Taxmann.com 318) to argue that JAO continues to have concurrent powers & NFAC cannot issue notices u/s 148.
Tribunal’s Findings:
- Punjab & Haryana High Court (Jurisdictional HC) had already held that notices u/s 148 issued by JAO post Finance Act, 2021 were invalid, binding on the Tribunal.
- Following consistent rulings of Bombay, Telangana & Gauhati HCs (affirmed by SC), ITAT held that issuance of notice by JAO instead of FAO vitiated jurisdiction.
- Office memoranda or CBDT instructions cannot override clear statutory mandate of s.151A & Notification dated 29.03.2022 requiring faceless procedure from the very stage of notice.
- Reassessment notice & consequent order were quashed. Appeal allowed in favour of Assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
