The Income Tax Appellate Tribunal, Kolkata, has delivered a significant ruling clarifying the temporal applicability of faceless assessment provisions under Section 151A of the Income Tax Act, 1961. The Tribunal held that an assessment order issued by the National Faceless Assessment Centre before the formal notification of the scheme is legally void, regardless of the statutory enactment date. This decision reinforces the principle that procedural compliance is non-negotiable in tax administration.
Background & Facts
The Dispute
The appellant, Hasnain Zoeb Ukani, filed his return of income for Assessment Year 2017-18 on 12.08.2017, declaring a total income of ₹1,16,290. Subsequently, the Income Tax Department issued a notice under Section 148 of the Act on 18.03.2021, reopening the assessment on grounds of income escaping assessment. The appellant filed a revised return on 09.04.2021 in response. Despite being issued notices under Sections 143(2) and 142(1), the appellant did not file any reply. The assessment was finally completed on 28.03.2022 by the National Faceless Assessment Centre (NFAC), Delhi, making an addition of ₹4,56,72,660 under Section 50C of the Act, relying on Sections 147, 144, and 144B.
Key Facts
- Return filed: 12.08.2017
- Notice under Section 148 issued: 18.03.2021
- Revised return filed: 09.04.2021
- Notice under Section 142(1) issued by NFAC: 09.02.2022
- Show cause notice issued by NFAC: 17.03.2022
- Assessment order passed by NFAC: 28.03.2022
- Notification notifying Section 151A scheme: 29.03.2022 (Notification No. 18/2022/F. No. 370142/16/2022-TPL(Part))
- Section 151A enacted: 01.11.2020 (via Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020)
Procedural History
- 28.03.2022: NFAC, Delhi, passed assessment order under Sections 147, 144, and 144B
- 21.03.2025: National Faceless Appeal Centre (CIT(A)) upheld the assessment order
- 12.06.2025: Appeal filed before ITAT Kolkata (ITA No. 1225/KOL/2025), 4 days beyond the limitation period
- 09.06.2026: Hearing held before ITAT Kolkata
- 16.06.2026: Judgment pronounced
The Parties' Positions
For the Appellant: The assessment order was passed by the NFAC before the faceless assessment scheme was officially notified on 29.03.2022. Even though Section 151A was enacted on 01.11.2020, its operational effect only commenced upon notification. The NFAC lacked jurisdiction to issue the assessment order on 28.03.2022.
For the Revenue: The assessment was valid as Section 151A was enacted on 01.11.2020, and the procedural delay in notification was immaterial. The NFAC was empowered to act as the designated authority under the faceless regime.
Relief Sought
The appellant sought quashing of the assessment order dated 28.03.2022, restoration of the original return, and deletion of the addition of ₹4,56,72,660. The appellant also sought costs.
The Legal Issue
The central question was whether the National Faceless Assessment Centre had jurisdiction to frame an assessment order under Section 151A of the Income Tax Act, 1961, when the order was passed on 28.03.2022, prior to the formal notification of the scheme on 29.03.2022, despite the provision having been enacted on 01.11.2020.
Arguments Presented
For the Appellant
The appellant relied on the principle that statutory provisions requiring administrative implementation must be notified to become operative. Citing Jute Corporation of India Ltd. v. CIT (187 ITR 688), National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383, and PCIT v. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal), the appellant argued that legal rights cannot be enforced without formal notification. The NFAC’s action on 28.03.2022 was ultra vires because the scheme was not yet in force. The Tribunal’s coordinate bench in MD Mahimud SK v. ITO (ITA No. 2230 & 2229/KOL/2024) had already held the same position.
For the Respondent
The Revenue contended that the enactment date of 01.11.2020 was sufficient to confer jurisdiction on the NFAC, and the notification dated 29.03.2022 was merely procedural. It argued that the faceless assessment regime was intended to be implemented expeditiously and that technical delays in notification should not invalidate assessments conducted in good faith under the new framework.
The Court's Analysis
The Tribunal examined the legislative intent behind Section 151A and the procedural requirements for implementation of faceless assessment. It noted that while the provision was enacted on 01.11.2020, its operational commencement was expressly contingent upon notification by the Central Board of Direct Taxes (CBDT). The notification dated 29.03.2022 was the only legal instrument that brought the scheme into force.
"The provision of Section 151A of the Act were brought on the statute book with effect from 01.11.2020. However, the same were made effective and applicable with effect from 29.03.2022 vide notification no. when the CBDT notified the new scheme for assessment of income escaping assessment scheme, 2022."
The Tribunal emphasized that the absence of notification rendered the NFAC’s exercise of jurisdiction legally defective. The assessment order dated 28.03.2022 was passed one day before the scheme became effective. The Tribunal rejected the Revenue’s argument that enactment alone suffices, holding that administrative schemes requiring centralized authority must be formally notified to ensure legal certainty and due process.
The Tribunal also relied on its own coordinate bench’s decision in MD Mahimud SK v. ITO and the decision in Nabiul Industrial Metal Pvt. Ltd. v. ITO (ITA No. 1328/KOL/2024), both of which had quashed assessments passed before the notification date. The Tribunal concluded that the jurisdictional defect was fatal and could not be cured by subsequent notification.
The Verdict
The appeal of the assessee is allowed. The assessment order dated 28.03.2022 passed by the National Faceless Assessment Centre is quashed. The addition of ₹4,56,72,660 under Section 50C is deleted. The original return filed on 12.08.2017 stands restored. The appellant is entitled to costs of ₹10,000, payable by the Revenue within 30 days of the order.
What This Means For Similar Cases
Faceless Assessment Requires Formal Notification
- Practitioners must verify the exact notification date of any faceless assessment scheme before challenging jurisdiction
- Assessments issued before the notification date are void ab initio, even if the statute was enacted earlier
- The burden shifts to the Revenue to prove that the assessment was issued after the effective date of notification
Jurisdictional Defects Cannot Be Waived
- A jurisdictional error under Section 151A cannot be cured by consent, acquiescence, or delay condonation
- Even if the assessee did not object before the CIT(A), the defect remains fatal at the appellate stage
- This principle applies to all assessments under the faceless regime, including those under Sections 147, 148, and 144B
Timing of Notices Is Critical
- Notices issued under Section 142(1) or 148 before notification may still be valid if the assessment order is passed after notification
- However, if the assessment order is passed before notification, the entire proceeding is invalid
- Practitioners should cross-check the date of the assessment order against the CBDT notification date in every faceless assessment case
