ITO Vs Meghana Enterprises (ITAT Hyderabad)
Faceless vs JAO: Reassessment Notice Issued by JAO Held Invalid – Revenue Appeal Dismissed with Liberty to Revive
In this appeal by Revenue, the core issue before Tribunal was whether a notice u/s 148 & order u/s 148A(d) issued by the Jurisdictional AO (JAO) — instead of the Faceless Assessment Officer (FAO) — is valid after the introduction of mandatory faceless reassessment regime w.e.f. 01.04.2021.
Assessee was a non-filer, and information indicated contractor payments of ₹1.21 crore. JAO issued notice u/s 148 on 31.03.2022 & completed best-judgment assessment u/s 144, taxing the entire sum.
Before CIT(A), Assessee placed on record the Telangana High Court order dated 04.03.2024 in W.P.5606/2024 quashing the reassessment proceedings for this very AY on the ground that reassessment initiation must be by Faceless AO under the amended scheme. Relying on this binding jurisdictional ruling, CIT(A) held the notice u/s 148 itself invalid & deleted the additions.
Before Tribunal, Revenue argued that the issue is pending before Supreme Court in UOI vs Suryalakshmi Cotton Mills & other batch matters and sought to keep issue open. Assessee fairly agreed that liberty may be granted to revive depending on SC outcome.
Tribunal noted that the issue is squarely covered by the jurisdictional Telangana High Court & by the Hyderabad Bench decision in Pitti Holdings Pvt Ltd & Kotha Kanthaiah, holding that:
- Notices u/s 148A(b)/148 issued by JAO after 01.04.2021 are invalid,
- Reassessment proceedings stand vitiated,
- Additions cannot survive once initiation is bad in law.
Since the Telangana High Court had already quashed the reassessment in Assessee’s own case, Tribunal held the order of CIT(A) to be correct & upheld deletion of additions.
