2025 (8) TMI 217 - HC - Income Tax

Notices by JAO Are Invalid Under Hexaware Precedent; Rights Reserved If SC Reverses Judgment

The HC held that notices issued by the JAO instead of the FAO are invalid, following the precedent set in Hexaware Technologies Ltd. The Revenue's ... Validity of assessment - notices to be issued by JAO and not FAO - HELD THAT:- We follow the law as laid down in Hexaware Technologies Ltd [2024 (5) TMI 302 - BOMBAY HIGH COURT] the said judgment was authored by one of us (Chief Justice), that it is mandatory for the FAO to issue the concerned notices and issuance thereof by the JAO would make the notice invalid. Assessees are ad idem that the law as laid down in Hexaware Technologies Ltd (supra) will apply. Learned Additional Solicitor-General, however, submits that the Revenue does not accept the law as laid down in Hexaware Technologies Ltd (supra); and that there is a special leave petition filed against the order and judgment in Hexaware Technologies Ltd (supra) and the same is expected to be taken up after the Supreme Court reopens. Admittedly, learned Additional Solicitor-General, in fairness, states that there is no stay. Therefore, the law as laid down by Hexaware Technologies Ltd (supra) applies. As clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court. Keeping open all rights and contentions of parties, including liberty to apply to this Court, in case the Revenue succeeds before the Apex Court, for revival of these petitions, the notices issued in these petitions are quashed and set aside. In these petitions, apart from the issue of notices issued by JAO instead of FAO, all or many of the issues which were considered in Hexaware Technologies Ltd (supra) are involved. To the extent the issues raised in Hexaware Technologies Ltd (supra) are not covered, those are kept open to be raised at the appropriate stage. The Madras High Court, in a common order authored by the Chief Justice, resolved a conflict between two Single Judges regarding the validity of notices issued by the Jurisdictional Assessing Officer (JAO) versus the Faceless Assessment Officer (FAO). One Single Judge held that issuance by the JAO was permissible, while the other, following the Bombay High Court's decision in *Hexaware Technologies Ltd v. Assistant Commissioner of Income Tax* [[2024] 162 taxmann.com 225 (Bombay)], held that it is 'mandatory for the FAO to issue the concerned notices' and that notices issued by the JAO are invalid. The Division Bench adopted the *Hexaware* ruling, emphasizing that notices must be issued by the FAO, and accordingly quashed the notices issued by the JAO in the present petitions. The Additional Solicitor-General acknowledged no stay against *Hexaware* is in place, so its law applies, but reserved the Revenue's right to seek revival if the Supreme Court overturns *Hexaware*. The Court clarified: 'if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court.' All other issues raised, including those beyond *Hexaware*, remain open for future consideration. The petitions were disposed of in favor of the assessees, with no order as to costs, and interim applications were also disposed. The Court granted liberty to apply for revival should the Supreme Court rule differently.