Assessment Proceedings u/s 151A and SCN Passed without Jurisdiction: ITAT quashes NFAC’s orders [Read Order]
ITAT ruled that the assessment was invalid as NFAC issued notice and finalized it before Section 151A, effective from 29.03.2022, was operational
![Assessment Proceedings u/s 151A and SCN Passed without Jurisdiction: ITAT quashes NFAC’s orders [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/ITAT-ITAT-Kolkata-ITAT-quashes-NFAC-orders-Section-151A-Income-Tax-Act-TAXSCAN.jpg "Assessment Proceedings u/s 151A and SCN Passed without Jurisdiction: ITAT quashes NFAC’s orders [Read Order]")
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) quashed the orders passed by the National Faceless Assessment Centre’s orders as the latter observed that the assessment proceedings under Section 151A of the Income Tax Act, 1961, as well as the show cause notice (SCN), were issued without jurisdiction. In this case, the assessee, Md. Mahimud SK, appealed against the orders...
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) quashed the orders passed by the National Faceless Assessment Centre’s orders as the latter observed that the assessment proceedings under Section 151A of the Income Tax Act, 1961, as well as the show cause notice (SCN), were issued without jurisdiction.
In this case, the assessee, Md. Mahimud SK, appealed against the orders of the NFAC and the Commissioner of Income Tax (Appeals) [CIT(A)], which had upheld additions of Rs. 21,06,182 to his income for assessment year (AY) 2015-16 on account of unexplained credits in his bank accounts.
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Based on the information received about large cash deposits and withdrawals in the assessee's bank accounts during AY 2015-16, the Assessing Officer (AO) initiated proceedings under Section 147 of the Income Tax Act, 1961, after recording reasons and obtaining approval from the Principal Commissioner of Income Tax (PCIT).
A notice under Section 148 of the Income Tax Act was issued on 31.03.2021, and the assessee filed his return, declaring an income of Rs. 2,25,800. And after that, the case was transferred to the NFAC, which issued notices under Sections 142(1) and 147 of the Act, resulting in a draft assessment order dated 23.03.2022, adding Rs. 21,06,182 as unexplained credits under Section 69A read with Section 115BBE of the Income Tax Act.
The assessee’s counsel contended that the proceedings were invalid as they were conducted before the formal notification of Section 151A of the Act on 29.03.2022. It was submitted that the assessment framed by the AO under Section 147 read with Section 144B of the Act dated 23.03.2022, was without jurisdiction and should be quashed.
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The Departmental Representative (DR), contended that the proceeding under the NFAC was continuous and there was nothing wrong with it.
The ITAT, after going through the timeline and legal provisions, noted that Section 151A of the Income Tax Act, introduced on 01.11.2020, was only operationalized on 29.03.2022. The tribunal observed that the proceedings were invalid since the NFAC had issued the notice and finalised the assessment before the above-mentioned date.
The Kolkata ITAT, comprising Shri Rajesh Kumar (Accountant Member) and Shri Sonjoy Sarma (Judicial Member), concluded that the assessment was framed without jurisdiction and will not sustain.
To Read the full text of the Order CLICK HERE
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MD Mahimud SK vs ITO , 2025 TAXSCAN (ITAT) 687 , ITA Nos. 2230 & 2229/KOL/2024 , 04 March 2025 , Shri S.K. Tulsiyan , Shri Prabhakar Prakash Ranjan