Gautam Kumar Sarkar Vs ITO (ITAT Kolkata)
NFAC Reassessment Without Sec 151A Notification Held Void – Entire Assessment & Penalty u/s 271(1)(c) Deleted – ITAT Kolkata
ITAT Kolkata admitted additional jurisdictional ground and quashed reassessment holding that faceless proceedings initiated prior to notification of Sec 151A scheme on 29.03.2022 were without jurisdiction. Tribunal observed that though Sec 151A was inserted earlier, faceless reassessment mechanism became operational only after CBDT notification; therefore notices and assessment framed by NFAC before that date were invalid. Following coordinate bench decisions, ITAT annulled reassessment order in entirety and consequentially deleted penalty u/s 271(1)(c) of ₹1.54 Cr, holding that once quantum fails, penalty cannot survive. Both appeals allowed in favour of assessee.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present two appeals filed by the assessee are arising from orders dated 19.05.2025 and 02.06.2025 passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter referred to as “the Ld.CIT(A)].
ITA No. 1103/Kol/2025
2. At the outset, the Ld. Counsel of the assessee pointed out that the assessee has raised additional ground challenging the jurisdiction of National Faceless Appeal Centre (NFAC) to frame assessment order dated 29.09.2021 as without jurisdiction and therefore, the same is invalid and may be quashed. The additional ground raised by the assessee is extracted below:
“National faceless Assessment Centre (NFAC) erred in having assumed jurisdiction under section 151A, read with section 144B of the Income Tax Act, 1961 from 18.02.2021 when they were not empowered under section any Notification under section 151A about the applicability of the faceless scheme for making income escaping assessment in faceless manner prior to 29.03.2022.”
3. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688, ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, we are inclined to admit the same for adjudication.
