Faceless mechanism for reopening include Central & International Tax charges

Faceless mechanism for income escaping assessment would not exclude the Central charges and International Taxation charges from its application – ITAT

In a recent judgment, ITAT Chandigarh quashed notice under section 148 issued by JAO holding that faceless mechanism for income escaping assessment would not exclude the Central charges and International Taxation charges from its application

ABCAUS Case Law Citation:
4890 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition u/s 69 and 69A of the Income Tax Act, 1961 (the Act).

The additions were result of a search action by the department on assessee-group. Subsequent to search action, the case was centralized vide order u/s 127 dated 28-07-2023. Subsequently, a notice u/s 148 was issued on 29-12-2023.

In pursuance of the said notice, the assessee filed return of income. Based on search findings, the AO framed the assessment making impugned addition in the hands of the assessee.

Before the Tribunal the assessee raised a legal ground to assert that reopening was bad-in-law and in derogation of the provisions of Section 151A read with CBDT Notification No.18/2022 dated 29-03-2022 which mandated issuance of such notice by Faceless Assessing Officer (FAO) only.

The assessee further contended that in terms of ratio of various decisions of jurisdictional High Court, issuance of notice u/s 148 by Jurisdictional Assessing Officer (JAO) instead of FAO would vitiate the entire assessment proceedings. The Department could not controvert the said position but stated that the matter is under consideration before Hon’ble Supreme Court.

The Tribunal observed that admittedly, notice u/s 148 had been issued on 29-12-2023 by Jurisdictional Assessing Officer instead of Faceless Assessing Officer. The said notice, in terms of notification of the CBDT Notification dated 29-03-2022 u/s 151A subsection (1) and (2) of the Income Tax Act (namely, e-Assessment of Income Escaping Assessment Scheme, 2022), was required to be issued by FAO. The failure to do so would vitiate the assessment proceedings as held by the lead decision of Hon’ble High Court of Punjab & Haryana. The said decision had been followed by the same court in several subsequent decisions.

The Department contended that the faceless scheme is not applicable to Central charges and International Taxation matters. However, the Tribunal observed that this controversy also had been dealt with by Hon’ble Bombay High Court wherein Hon’ble Court, referring to decision in Hexaware Technologies Ltd. dealt with a case of international charge and adjudicated the controversy in favor of the assessee.

The Tribunal noted that the Hon’ble Court ultimately concluded that the scheme notified by the Central Government on 29-03-2022 would not exclude the Central charges and International Taxation charges from the application of the faceless mechanism as notified under section 144B read with section 151A of the Act.

Respectfully following the said decisions, the Tribunal held that the impugned notice as issued by JAO u/s 148 on 29-12-2023 was liable to be quashed on this score only.

Accordingly, the Tribunal quashed the impugned assessment order.

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