2025 (8) TMI 1706 - HC - Income Tax

Decision confirms both Jurisdictional and Faceless Assessing Officers have concurrent power to reopen tax assessments; prior view binding

M/s MALA PETROCHEMICALS AND POLYMERS Versus THE INCOME TAX OFFICER & ORS. AND ROHIT KUMAR JAIN Versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 61 (1), DELHI

HC held that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer have concurrent jurisdiction to reopen assessments. The Court ... Validity of reopening of assessment - Jurisdiction of FAO or JAO to issue notice - HELD THAT:- We are of the view that the submission of Mr. Chitale cannot be accepted for the reason that a co-ordinate Bench of this Court in the case of TKS Builders Pvt. Ltd. [2024 (10) TMI 1586 - DELHI HIGH COURT] has settled the issue insofar as the jurisdiction of Delhi is concerned, by stating that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer have concurrent jurisdiction. This Court in the case of PC Jeweller [2025 (1) TMI 1615 - DELHI HIGH COURT] has also dismissed a writ petition seeking similar relief by following the ratio in TKS Builders Pvt. Ltd. [2024 (10) TMI 1586 - DELHI HIGH COURT] Though the judgment in PC Jeweller (Supra), has been taken in appeal before the Supreme Court, we note that the Revenue has been permitted to continue the proceedings on the caveat that any order, if passed adverse to the petitioner, shall not be given effect. While it is true that the appeal against TKS Builders Pvt. Ltd. (Supra) is also pending adjudication before the Supreme Court, we note that the Supreme Court has not stayed the operation of the judgment. The judgment in Hexaware Technologies Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] is also pending consideration before the Supreme Court. Having heard learned counsel for the parties, we are of the view that the issue raised in so far as Delhi is concerned, the same shall be covered by the judgment of this Court in TKS Builders Pvt. Ltd.(supra) and the same being binding on us, unless we take a contra view and refer the matter to the larger Bench 1. ISSUES PRESENTED AND CONSIDERED Whether a notice issued under Section 148 of the Income Tax Act, 1961 (and proceedings under Section 148A(1)/(3)) for a given assessment year is vitiated because it was issued by the Jurisdictional Assessing Officer (JAO) rather than by the Faceless Assessing Officer (FAO). Whether interim relief (stay of operation of notices/proceedings) should be granted by the High Court pending adjudication of conflicting decisions in appeal before the Supreme Court. Whether the High Court is bound to follow its earlier Division Bench decision holding concurrent jurisdiction of JAO and FAO (and related consequences for petitions challenging notices issued by JAO). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of notices under Section 148 issued by JAO vs FAO Legal framework: Section 148 confers power to the tax authority to issue notice for reopening assessment. Section 148A prescribes procedural safeguards for initiation of reassessment proceedings. The scheme contemplates exercise of power by a competent tax authority; the mode of issuance (faceless versus jurisdictional officer) is challenged as affecting jurisdiction and validity. Precedent Treatment: A prior Division Bench decision of this High Court held that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer possess concurrent jurisdiction to issue notices under Section 148. Another High Court had taken the contrary view (holding issuance by JAO fatal), and that contrary view is the subject of pending proceedings before the Supreme Court. The earlier Division Bench ruling of this Court was expressly followed in subsequent petitions and relied on to dismiss or cause withdrawal of proceedings challenging JAO-issued notices. Interpretation and reasoning: The Court observed that the question is no longer res integra within this jurisdiction because of the Division Bench precedent holding concurrent jurisdiction of JAO and FAO. The mere pendency of appeals to the Supreme Court against other High Court decisions (including decisions adopting the contrary position) does not displace a binding Division Bench precedent of this Court. Where a binding intra-court precedent exists, petitions asserting invalidity solely on the ground that a JAO (and not an FAO) issued the notice must fail unless the Court refers the question to a larger bench or the binding precedent is stayed or set aside. Ratio vs. Obiter: Ratio - The authoritative holding applied is that both JAO and FAO have concurrent jurisdiction to issue notices under Section 148; accordingly, issuance by JAO is not, by itself, vitiating. Obiter - Observations regarding judgments of other High Courts and their pendency before the Supreme Court are incidental to the application of the binding Division Bench decision. Conclusions: Challenges to notices under Section 148 (and related orders under Section 148A) solely on the ground that they were issued by the JAO and not by the FAO are not sustainable in this High Court in view of the binding Division Bench precedent affirming concurrent jurisdiction. The petitions on that ground are to be dismissed. Issue 2 - Grant of interim relief pending Supreme Court consideration of conflicting High Court decisions Legal framework: The grant of interim relief in writ jurisdiction is governed by principles of judicial restraint, balance of convenience, and regard for binding precedent. Interim orders must not frustrate the effect of binding intra-court precedents unless exceptional circumstances exist (e.g., stay of the precedent by a superior court or a larger bench reference). Precedent Treatment: The Court noted that the Supreme Court is seised of appeals arising from other High Court decisions, including those adopting a contrary view. However, there is no stay of this Court's Division Bench decision affirming concurrent jurisdiction. Other High Courts have taken different approaches - some following the contrary decision and quashing notices, some refusing interim relief - and those differences are before the Supreme Court. Interpretation and reasoning: The Court held that pendency of appeals or special leave petitions in the Supreme Court against other High Court decisions will not automatically justify grant of interim relief where a binding Division Bench decision of the same High Court governs the matter. The Court examined representations that interim protection had been granted elsewhere but concluded that where this Court's binding precedent remains operative and unsuspended, continuation of proceedings is permissible and interim relief is not warranted. The Court further relied on the fact that similar petitions in this Court have been dismissed or withdrawn following the binding precedent, reinforcing the propriety of refusing interim protection in the present petitions. Ratio vs. Obiter: Ratio - Absence of stay of a binding Division Bench decision precludes grant of interim relief that would be inconsistent with that precedent. Obiter - Comments on orders of other High Courts and the pendency of assorted appeals before the Supreme Court are explanatory and not determinative of the intra-court binding precedent issue. Conclusions: Interim stay of the impugned notices was not appropriate where the High Court's own Division Bench decision affirming concurrent jurisdiction remained binding and unsuspended. The petitions seeking interim relief on that ground were denied and the substantive challenge dismissed accordingly. Cross-references and consequential directions The Court indicated that, in the event the binding Division Bench precedent is set aside or stayed by a larger bench or the Supreme Court, the Revenue may be permitted to revive disposed petitions without a fresh interim application, but such revival would require adjudication on merits of all raised issues at that stage. The Court also noted that divergent High Court decisions and their pendency before the Supreme Court do not operate to displace an existing binding internal precedent absent a superior court order.