ITAT Kolkata Rules Pre-Notification Faceless Assessment Invalid; Rs. 1.54 Crore Penalty Deleted:

ITAT Kolkata Rules Pre-Notification Faceless Assessment Invalid; Rs. 1.54 Crore Penalty Deleted The ITAT Kolkata bench, comprising Accountant Member Rajesh Kumar and Judicial Member Pradip Kumar Choubey, allowed two appeals filed by a taxpayer. In the first appeal, the taxpayer had challenged the jurisdiction of NFAC, and in the second, a penalty amounting to Rs. 1.54 crore was objected to. Gautam Kumar Sarkar filed two appeals before the Income Tax Appellate Tribunal (ITAT), “B” Bench, Kolkata, against the Income Tax Department, challenging orders dated May 19, 2025, and June 02, 2025, passed by the CIT(A), NFAC Delhi, under Section 250 of the Income Tax Act, 1961. The case pertains to the Assessment Year 2013-14.

Also Read

ICICI Bank Faces Rs. 50.38 Crore GST Demand After Appeal Rejected

In the first appeal, the assessee raised an additional ground, challenging the jurisdiction of the National Faceless Appeal Centre (NFAC) to frame the assessment order dated September 29, 2021. The assessee flagged that Section 151A of the Income Tax Act, 1961, which deals with faceless assessment of income escaping assessment, was introduced with effect from November 01, 2020, but it became operational with the issuance of Notification No. 18/2022 dated March 29, 2022. Meaning, any assessment proceedings initiated by NFAC before March 29, 2022, suo moto become without jurisdiction as per the law. The tribunal endorsed the additional legal ground raised. When the tribunal deeply analysed the facts of the case, it held that since the cited notification bringing the faceless scheme into effect was issued only on March 29, 2022, the assessment framed by the NFAC prior to this date automatically becomes without jurisdiction. Considering the same, the tribunal quashed the impugned assessment order.

Also Read

HC Upholds restricting disallowance to 6% instead of 100% in Bogus Purchase Case

The second appeal concerned a penalty amounting to Rs. 1.54 crore imposed under Section 271(1)(c). The tribunal held that since the relevant assessment order has been quashed, the penalty becomes liable to be deleted. Hence, the tribunal directed the concerned AO to delete the penalty. As a result, both appeals of the assessee were allowed.