Assessment Order Passed on Same Date as S.151A Modified via Notification: ITAT quashes order for lack of jurisdiction [Read Order]

The Guwahati Bench of the Income Tax Appellate Tribunal (ITAT) quashed a reassessment order and held that the NFAC lacked the authority to frame an assessment on March 29, 2022, the very same day the "e-assessment of income escaping assessment scheme, 2022" was notified.

Assam Valley Finance and Investment Pvt. Ltd. (the assessee), a company engaged in share trading, investment, and providing loans, filed its return for Assessment Year 2016-17 declaring nil income.

The case was reopened under Section 147, and the Assessing Officer (AO) ultimately made an addition of ₹4,47,48,164. This addition was categorized as unexplained cash credit under Section 68, corresponding to the loss shown in the assessee's profit and loss account from trading derivatives and stock options.

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Aggrieved by the AO’s order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) dismissed the appeal. Aggrieved by the CIT(A)’s dismissal, the assessee filed an appeal before the ITAT.

The assessee contended that while Section 151A dealing with faceless assessment of escaping income was inserted earlier, the specific scheme enabling the NFAC to act was only notified on March 29, 2022. The assessee further argued that the NFAC acted without jurisdiction as it issued notices and framed the final order on or before this notification date.

The two-member bench, comprising Rajesh Kumar (Accountant Member) and Manomohan Das (Judicial Member) observed that Section 151A provisions were made effective and applicable only from March 29, 2022, when the CBDT notified the new scheme.

The bench held that notices issued by the NFAC prior to this notification (such as the Section 142(1) notice dated February 9, 2022) were issued without the necessary legal authority. It also held that the final assessment order framed on March 29, 2022, could not be sustained as it coincided with the notification date of the very scheme it relied upon for jurisdiction.

The tribunal concluded that the assessmentorder passed by the NFAC, Delhi, was devoid of jurisdiction. It quashed the assessment order and allowed the assessee's grounds regarding the lack of jurisdiction. The appeal of the assessee was allowed.

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