Navnidhi Goyal vs ITO, Ward 3(1), Gurgaon

“4.

I find that the facts relevant for adjudication of the aforesaid additional grounds are already placed on record and they go to the root of the matter. Hence we deem it fit to admit those additional grounds and take up the same first for adjudication.

5.

I have heard the rival submissions and perused the materials available on record. I find that the Learned DR had placed the comments received from the Learned AO vide letter dated 4.8.2025 with regard to the additional grounds raised by the assessee. The following list of dates and gists would be relevant for adjudication of the additional ground no. 1 raised by the assessee:-

a)

Return of income for the Assessment Year 2017-18 was filed already by the assessee but the same was considered invalid due to non-validation or e-verification not done by the assessee.

b)

As per the information received from Directorate of Income Tax, Investigation and Criminal Intelligence, New Delhi wherein it was reported that assessee had purchased an immovable property for a consideration of Rs. 21 lakhs as against the circle rate of Rs. 36,90,000. The Learned AO concluded that a sum of Rs. 15,90,000 had escaped assessment and accordingly sought to reopen the case of the assessee.

c)

Notice under Section 148 of the Act stood issued to the assessee on 31-3-21 as per the old provisions of Section 148 of the Act by the Jurisdictional AO (JAO).

d)

No return was filed by the assessee in response to notice issued under Section 148 of the Act.

e)

Notice under Section 142(1) of the Act dated 16-11-2021 together with the questionnaire was issued by the Learned JAO

f)

Notice under Section 142(1) of the Act dated 13-12-2021 was issued by NeFAC Delhi i.e. issued by Faceless Assessing Officer (FAO).

g)

Show cause notice dated 21-3-2022 stood issued by the FAO to the assessee

h)

Reassessment stood framed under section 147 r.w.s. 144 read with section 144B of the Act on 26-3-2022 determining total income at Rs 20,92,400/-.

i)

Faceless scheme for income escaping assessment under section 151A of the Act stood notified on 29-3-2022 vide Notification No. 18/2022 by Central Board of Direct Taxes (CBDT).

6.

Now the moot question that arises for my consideration is as to whether the Learned FAO could assume jurisdiction to frame the re-assessment proceedings before the issuance of Notification No 18/2022 dated 29-3-2022 under section 151A of the Act or not? In this regard, it would be relevant to reproduce the provisions of section 151A of the Act which reads as under:-

“151A. Faceless assessment of income escaping assessment.

(1)

The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 10[or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by—(a)eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;(b)optimising utilisation of the resources through economies of scale and functional specialisation;(c)introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.(2)The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:Provided that no direction shall be issued after the 31st day of March, 2022.(3)Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.”

7.

I find that the Notification suggested in section 151A(1) of the Act has been issued only on 29-3-2022. When the faceless regime for income escaping assessment stood notified only on 29-3-2022, the Learned FAO assuming jurisdiction by issuing notices under section 142(1) of the Act under faceless regime and framing reassessment order on 26-3-2022 would be clearly without jurisdiction and having any authority of law. In these circumstances, the reassessment order framed on 26-3-2022 would become non-est in the eyes of law. My view is further fortified by the Co-ordinate Bench decision of Delhi Tribunal in the case of Suresh Chand vs ITO in ITA No. 4110/Del/2024 dated 30-7-2025 and decision of Kolkata Tribunal in the case of Nabiul Industrial Metal Pvt Ltd vs ITO in ITA No. 1328/Kol/2024 dated 15-10-2024. Accordingly, the additional ground no. 1 raised by the assessee deserves to be allowed in the abovementioned terms and reassessment proceedings framed on 26-3-2022 is hereby quashed.”

“This appeal is filed by the assessee against the order of ld. Commissioner of Income Tax (Appeal) / National Faceless Appeal Centre, Delhi, vide DIN: ITBA/NFAC/S/250/2025-26/1082214081(1) dated 31.10.2025, passed against the assessment order by the Assessment Unit of the Income-tax Department u/s 147 r.w.s. 143(3) and 144B of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), dated 31.03.2022, for the Assessment Year 2013-14.

2.

Assessee has raised the following grounds of appeal:

Additional Grounds raised for 1st time

1.0

On facts and circumstances of the case and in law, the assumption of jurisdiction by the National Faceless Assessment Centre (NFAC) on 30/12/2021 is bad-in-law, since the scheme for faceless assessment of income escaping assessment prescribed u/s.151A had been notified by the CBDT w.e.f. 29/03/2022, thereby consequential re-assessment order passed u/s.147 is void ab-initio;

2.0

On facts and circumstances of the case and in law, the re-assessment order passed u/s.147 is bad-in-law, since the intimation to complete the assessment in accordance to the procedure laid u/s 144B(1)(iii) has not been issued by the NFAC and had not been served to the appellant;

Other Grounds

3.0

On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the validity of notice u/s 148 issued in mechanical manner, in absence of new tangible material and on the basis of borrowed satisfaction and without having reason to believe of escapement of income;

4.0

On facts and circumstances of the case and in law, Ld. CIT(A) erred in passing the non-speaking order, without considering the submissions and documents filed along with appeal memo;

5.0

On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s 68 of entire sale consideration of STT paid listed shares of Rs. 1,55,95,327/-, on rejecting the appellant's claim of Long term capital gain;

6.0

The Ld. CIT(A), before confirming the addition u/s 68 of entire sale consideration of STT paid listed shares of M/s JRI Industries & Infrastructure Ltd of Rs.1,55,95,327/-, ought to have considered the understated vital facts, being;

a)

The correctness of documentary evidence being Contract-cum-bills, confirmation, D-mat statement, Global report, bank statements, bhav copy, etc had not been doubted by the Ld. AO and Ld. CIT(A);

b)

The period of holding of listed shares in appellant's D-mat account exceeds 12 months and such shares had been sold on floor of BSE on which STT, Service Tax, etc had been paid;

c)

The substantial increase in price of shares listed in BSE cannot be a sole reason to treat the bonafide transaction as non-genuine;

d)

The SEBI had not framed any allegations and had not passed any contrary order against the appellant and stock broker;

e)

The appellant is not related to any directors/promoters and exit providers and the AO had not provided the copies of contrary material, evidence and statements of 3rd parties for rebuttal and also did not allow an opportunity of cross examination.

The appellant craves leave to add, amend, alter and/or withdraw any of the grounds of appeal at the time of hearing.

2.1.

As already extracted above, assessee has raised additional grounds of appeal through a separate application placed on record. In this regard, submission of the assessee is that the aforesaid additional grounds are on the jurisdictional aspect of the assessment which goes to the root of the matter and the relevant facts in this regard are already on record. Therefore, they need adjudication by admitting the same. Since, nothing objectionable came out from the other side on their admissibility, the same are admitted for adjudication.

2.2.

Assessee has raised the jurisdictional issue through additional grounds which goes to the root of the matter, we are inclined to take up first the additional ground no. 1, challenging the assumption of jurisdiction by NFAC on 30.12.2021, making the impugned reassessment order void ab initio. It is an undisputed fact that the ITA 9347/Mum/2025 Le Meilleur Global Trade Pvt Ltd A.Y. 2013-14 present case before the Tribunal is against the order passed u/s 147 r.w.s. 143(3) and 144B for which the case was reopened by issuing notice u/s 148 on 31.03.2021, after taking prior approval of the competent authority i.e. ld. PCIT-4, Mumbai u/s 151 dated 31.03.2021. Copy of this approval is placed in the paper book at page 7.

3.

Brief facts in respect of the above issue as culled out from the records are that assessee filed its return of income on 30.09.2013, reporting total income at Rs 27,910/-. Information was received from the investigation wing of the department wherefrom it is noticed that assessee had sold shares of JRI Industries & Infrastructure Ltd., a company alleged to be a penny stock, for a sale consideration of Rs 1,55,95,327/-.

3.1.

During the year under consideration, ld. AO observed that assessee had not declared this income in its return. Case of the assessee was taken up by reopening proceedings u/s 147 for which notice u/s 148 was issued on 31.03.2021. Assessee filed its return of income in response to the said notice on 17.02.2022. In para 2 of the reassessment order, ld. A.O. records that notice u/s 143 (2) was issued on 14.03.2022 by providing it the reasons to believe recorded for the said reopening in para 3. He records about statutory notices issued u/s 142(1) dated 10.11.2021, 30.12.2021 and 31.01.2022, calling for specific information and details in respect of business activities, computation of income, bank statement, details of sale of shares etc. Further, in para 3.2, ld. AO records about his proposal to complete the assessment u/s 144 for which a notice u/s 144B(1)(xi) was issued dated 17.02.2022. Again, in para 3.3, he records about a show cause notice u/s 144 dated 25.02.2022, asking to show cause as to why the assessment proceedings should not be completed ex parte u/s 144 since assessee failed to comply to any of the notices so issued. All the above stated ITA 9347/Mum/2025 Le Meilleur Global Trade Pvt Ltd A.Y. 2013-14 dates in respect of initiation of proceedings by issuing notice u/s 148, filing of return by the assessee, statutory notices issued by the ld. AO u/s 143(2) are relevant to adjudicate upon additional ground no. 1 raised by the assessee and therefore, need to be kept in perspective.

4.

We have heard both the parties and perused the material on record. Before we delve on the above issue, we take note of the relevant sections of the Act, namely, section 151A which has its header "Faceless Assessment of Income Escaping Assessment" This section was inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.11.2020. The said section is reproduced for ready reference:

"Faceless assessment of income escaping assessment.

151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re- computation under section 147 or issuance of notice under section 148 or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by-

(a)

eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;

(b)

optimising utilisation of the resources through economies of scale and functional specialisation;

(c)introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.

(2)

The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:

Provided that no direction shall be issued after the 31st day of March, 2022

(3)

Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament."

4.1.

The above section is relevant for the purpose of assessment, reassessment, re-computation u/s 147 etc. In this regard, Central Government is required to make scheme which shall be effective upon its publication by way of notification in the official gazette. Every such ITA 9347/Mum/2025 Le Meilleur Global Trade Pvt Ltd A.Y. 2013-14 notification issued is required to be laid before each House of Parliament.

5.

We also take note of section 143(3A) to (3C) of the Act:

"Assessment

143.

(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:-...

(3A) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under sub-section (3) or section 144 so as to impart greater efficiency, transparency and accountability by-

(a)

eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible;

(b)

optimising utilisation of the resources through economies of scale and functional specialisation;

(c)

introducing a team-based assessment with dynamic jurisdiction.

(3B) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (3A), by notification in the Official Gazette, direct that any of the provisions of this Act relating to assessment of total income or loss shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:

Provided that no direction shall be issued after the 31st day of March, 2021.

(3C) Every notification issued under sub-section (A) and sub-section (3B) shall, as soon as may be after the notification is issued, be laid before each House of Parliament."

5.1.

Above section has the heading "Assessment" and requires the Central Government to make scheme which shall become effective by its publication by way of notification in the official gazette for the purpose of making of assessment of total income or loss of the assessee under section 143(3) or section 144. Here also, there is a requirement to lay the said notification before each House of Parliament once it has been ITA 9347/Mum/2025 Le Meilleur Global Trade Pvt Ltd A.Y. 2013-14 issued. It is important to note that sub-sections (3A) to (3C) were inserted by the Finance Act, 2018 with effect from 01.04.2018 which is much prior to section 151A.

6.

Before us, learned counsel for the assessee brought on record the two separate notifications, notified by the Central Government in the official gazette, one in respect of provisions contained in section 143(3A) and other in respect of provisions contained in section 151A(1) and (2).

7.

The first is notification S.O. 3264(E), [Notification No. 61/2019/F. No. 370149/154/2019-TPL] dated 12.09.2019 having its short title and commencement as "E-assessment Scheme, 2019" which shall come into force on the date of its publication in the official gazette. Clause 2 of this notification contains definition and at sub-clause (iii) "assessment" means assessment of total income or loss of the assessee under sub- section (3) of section 143 of the Act.

7.1.

Another notification referred is of the same date with S.O. 3265(E) [Notification No. 62/2019/F. No. 370149/154/2019-TPL] which was also published in the official gazette for the purpose of giving effect to the "E-assessment Scheme, 2019" made u/s 143(3A). Subsequently, yet another notification was published in the official gazette in respect of section 143(3A) vide S.O. 741(E). [Notification No. 6/2021/F.No. 370149/154/2019-TPL] dated 17.02.2021 making amendment in the "Faceless Assessment Scheme, 2019" which relates to assessment u/s 143(3) r.w.s. section 144C.

8.

More relevant notification on which the attention of the Bench was invited is S.O. 1466(E) [Notification No. 18/2022/F. No. 370142/16/2022-TPL (Part 1] dated 29.03.2022 which is published in the official gazette in exercise of power conferred u/s 151A (1) and (2) for the scheme titled as "e-Assessment of Income Escaping Assessment ITA 9347/Mum/2025 Le Meilleur Global Trade Pvt Ltd A.Y. 2013-14 Scheme, 2022". This scheme is stated to come into force from the date of its publication in the official gazette which is 29.03.2022. Scope of the scheme is stated as:

(a)

assessment, reassessment or recomputation u/s 147 of the Act,

(b)

issuance of notice u/s 148 of the Act

8.1.

Under the scope of above-mentioned scheme, it is stated that for the purpose of this scheme assessment, reassessment recomputation u/s 147 and issuance of notice u/s 148 shall be through automated allocation in accordance with risk management strategy formulated by the Board and in a faceless manner to the extent provided in section 144B.

9.

In the backdrop of the above notifications, more particularly the one published in reference to section 151A(1) and (2), dated 29.03.2022 for the "e-Assessment of Income Escaping Assessment Scheme, 2022", the above dates taken note of by us from the impugned assessment order are relevant to adjudicate upon additional ground no. 1.

9.1.

Contention of the ld. Counsel for the assessee is that all these dates right from the issue of notice u/s 148 i.e. 31.03.2021 up to issue of show cause notice u/s 144 dated 25.02.2022, are all prior to the date of publication of notification in the official gazette. Only the impugned reassessment order is dated 31.03.2022 which is subsequent to the date of this notification published in the official gazette for which it is mentioned that the order is passed u/s 147 of the Act r.w.s. 144B.

9.2.

In the given set of facts as noted above, keeping in juxtaposition the stated provisions of the Act and the contents of the notifications, we find that the impugned reassessment proceedings were taken up by the National Faceless Appeal Centre (NFAC) by issuing notice u/s 142(1) ITA 9347/Mum/2025 Le Meilleur Global Trade Pvt Ltd A.Y. 2013-14 dated 10.11.2021 and notice u/s 143(2) dated 14.03.2022 which final culminated in to a show cause under section 144 dated 25.02.2022. Section 151A was brought on statute book with effect from 01.11.2020 but was made effective and applicable on and from 29.03.2022 vide above stated notification when the relevant scheme was notified in the official gazette. Thus, in the above stated factual backdrop, the impugned faceless reassessment framed in the case of the assessee is non est in the eyes of the law since assumption of jurisdiction by the ld. AO prior to 29.02.2022 is held to be without the authority of law.

9.3.

For our aforesaid finding, reference is made to the decision of Co-ordinate Bench of ITAT, Kolkata in the case of Nabiul Industrial Metal Pvt Ltd. vs. ITO in ITA no. 1328/Kol/2024 dated 15.10.2024 which dealt with identical issue, holding the assessment proceedings as well as the assessment order without jurisdiction. Accordingly, additional ground no. 1 raised by the assessee is allowed. Since, the impugned assessment proceedings as well as the assessment order are held to be without jurisdiction, void ab initio and bad in law, all the other grounds raised by the assessee are rendered academic.

10.

In the result, appeal of the assessee is allowed.”