Faceless Reassessment Without Statutory Scheme Notification Held Jurisdictionally Invalid: ITAT Mumbai
Background and Overview
The Mumbai Bench of the Income Tax Appellate Tribunal recently delivered a significant ruling in LE Meilleur Global Trade Pvt. Ltd. Vs ITO (ITAT Mumbai), concerning the legal validity of a faceless reassessment order passed for Assessment Year 2013-14. The core question before the Tribunal was whether the National Faceless Assessment Centre (NFAC) could lawfully assume jurisdiction and conduct reassessment proceedings under Section 147 read with Section 144B of the Income-tax Act, 1961, prior to the formal notification of the governing statutory scheme on 29.03.2022.
The Tribunal's answer was unequivocal: such an assumption of jurisdiction was without authority of law, rendering the reassessment order void ab initio and non est in the eyes of the law.
Facts of the Case
The assessee, Le Meilleur Global Trade Pvt. Ltd., had originally filed its return of income on 30.09.2013, declaring a total income of Rs. 27,910/- for AY 2013-14.
Subsequently, the Investigation Wing of the Income Tax Department furnished information indicating that the assessee had sold shares of M/s JRI Industries & Infrastructure Ltd. — characterised in the proceedings as a penny stock — for a sale consideration of Rs. 1,55,95,327/-. The Assessing Officer (AO) noted that this amount had not been disclosed in the original return.
On the basis of this information, the AO initiated reopening proceedings under Section 147 by issuing a notice under Section 148 dated 31.03.2021, after obtaining prior approval from the competent authority — the learned PCIT-4, Mumbai — under Section 151, also dated 31.03.2021. The assessee filed its return of income in response to the Section 148 notice on 17.02.2022.
Procedural Timeline of the Reassessment
The following chronological sequence of notices and actions was recorded from the reassessment order:
| Date | Action |
|---|---|
| 31.03.2021 | Notice under Section 148 issued; approval under Section 151 obtained |
| 10.11.2021 | Notice under Section 142(1) issued by NFAC |
| 30.12.2021 | Second notice under Section 142(1) issued |
| 31.01.2022 | Third notice under Section 142(1) issued |
| 17.02.2022 | Notice under Section 144B(1)(xi) proposing completion under Section 144 |
| 17.02.2022 | Assessee files return in response to Section 148 notice |
| 25.02.2022 | Show-cause notice under Section 144 issued |
| 14.03.2022 | Notice under Section 143(2) issued |
| 29.03.2022 | e-Assessment of Income Escaping Assessment Scheme, 2022 notified |
| 31.03.2022 | Reassessment order passed under Section 147 r.w.s. Section 143(3) and Section 144B |
Grounds of Appeal Before ITAT
Additional Jurisdictional Grounds (Raised for the First Time)
Ground 1.0: The assumption of jurisdiction by the NFAC on 30.12.2021 was bad in law, inasmuch as the scheme for faceless assessment of income escaping assessment under Section 151A was notified by the CBDT only with effect from 29.03.2022. Consequently, the reassessment order passed under Section 147 was void ab initio.
Ground 2.0: The reassessment order under Section 147 was bad in law because the intimation to complete the assessment in accordance with the procedure prescribed under Section 144B(1)(iii) had neither been issued by the NFAC nor served upon the assessee.
Other Grounds
Ground 3.0: The CIT(A) erred in confirming the validity of the notice under
Section 148, which was issued mechanically, without new tangible material, on the basis of borrowed satisfaction, and without a genuine reason to believe that income had escaped assessment.Ground 4.0: The CIT(A) passed a non-speaking order without considering the submissions and documentary evidence placed on record.