ACIT Vs Sharmanji Yarns Private Limited (ITAT Chandigarh)
The present case concerns cross-appeals arising from the assessment year 2018–19, originating from the order of the CIT(A), NFAC, Delhi, dated 03-03-2025. The assessment had been framed by the Assessing Officer (AO) under Section 147 read with Section 144B on 21-03-2024. The primary issue involved the addition of alleged bogus purchases of ₹29.69 crore, made by the assessee from four parties. The CIT(A) estimated this addition at 9%, and both the assessee and the Revenue filed further appeals before the ITAT.
The assessee’s representative raised a legal objection to the reopening, arguing that the notice issued under Section 148 was bad in law. It was contended that, under Section 151A and CBDT Notification No. 18/2022 dated 29-03-2022, notices for reassessment must be issued by a Faceless Assessing Officer (FAO), not a Jurisdictional Assessing Officer (JAO). The AO had issued the notice on 07-04-2022 through the JAO of the assessee, which was contrary to the statutory mandate. The Departmental Representative did not contest this position, stating that the matter was under consideration before the Supreme Court.
It was an undisputed fact that the notice under Section 148 had been issued by the JAO instead of the FAO, in contravention of the statutory requirements. The Tribunal referred to the Punjab & Haryana High Court decision in Jatinder Singh Bhangu (165 Taxmann.com 115; 19-07-2024), which held that faceless assessment provisions apply from the stage of issuance of the show-cause notice under Sections 148 and 148A. The High Court emphasized that the object of faceless assessments would be defeated if a notice under Section 148 is issued by the JAO. Circulars or office memoranda cannot override statutory provisions. Subsequent High Court decisions, including Om Satya Overseas (178 Taxmann.com 137; 29-08-2025), confirmed this principle.
