2025 (10) TMI 50 - HC - Income Tax

Jurisdictional and Faceless Assessing Officers Have Concurrent Power to Reopen Tax Assessments; Earlier Precedents Continue in Effect

The HC held that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer have concurrent jurisdiction to reopen assessments. Earlier ... 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. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether a notice under Section 148A(1) of the Income Tax Act for a given assessment year is vitiated if issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer. 2. Whether the Jurisdictional Assessing Officer and the Faceless Assessing Officer possess concurrent jurisdiction to initiate reassessment proceedings under Section 148/148A within the territorial ambit of the High Court. 3. Whether precedents from coordinate Benches and subsequent orders of the Supreme Court or their dismissal of Special Leave Petitions (with or without reasons) alter the binding effect of a High Court coordinate-Bench decision on the jurisdictional question. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of notice under Section 148A(1) if issued by Jurisdictional Assessing Officer instead of Faceless Assessing Officer Legal framework: Section 148A(1) provides for issuance of notice for re-assessment proceedings; the legislative and administrative scheme contemplates assessment actions under faceless assessment regime as well as proceedings by jurisdictional officers where applicable. Precedent treatment: Multiple High Court decisions have addressed whether faceless officers exclusively hold competence; a coordinate-Bench decision of this Court held that both Jurisdictional and Faceless Assessing Officers have concurrent jurisdiction. Other High Court decisions have taken differing views; some have held that only faceless officers may validly issue such notices. Subsequent Special Leave Petitions before the Supreme Court in some matters were dismissed in limine (without reasons) or decided on merits in other contexts. Interpretation and reasoning: The Court accepted the view of the coordinate Bench that, within the territorial jurisdiction of this High Court, the Statute and administrative framework permit concurrent jurisdiction of the Jurisdictional Assessing Officer and the Faceless Assessing Officer to initiate reassessment under Section 148/148A. The Court relied upon intra-court consistency and existing precedents of this High Court which have not been stayed by the Supreme Court. The Court observed that where a coordinate-Bench judgment is operative and not stayed, it settles the law for the High Court's jurisdictional territory. Ratio vs. Obiter: The holding that a notice under Section 148A(1) issued by the Jurisdictional Assessing Officer is not vitiated for lack of faceless officer issuance (where jurisdictional concurrent power exists) is treated as ratio applicable within the High Court's territorial jurisdiction and was applied to dismiss the petitions. Conclusions: The Court concluded that the challenge to the impugned Section 148A(1) notice on the ground that it was issued by the Jurisdictional Assessing Officer and not the Faceless Assessing Officer cannot be sustained in this jurisdiction, as both officers have concurrent jurisdiction to initiate reassessment proceedings. Issue 2: Concurrent jurisdiction of Jurisdictional and Faceless Assessing Officers to initiate reassessment under Section 148/148A Legal framework: The Scheme of the Income Tax Act, read with the faceless assessment mechanism in force, permits reassessment proceedings; the question is whether the faceless regime ousts jurisdiction of territorial assessing officers vis-à-vis initiation of proceedings. Precedent treatment: A coordinate-Bench decision of this High Court affirmed concurrent jurisdiction; other High Court decisions reached opposite conclusions. Some decisions have been taken up to the Supreme Court; in certain matters the Supreme Court dismissed a Special Leave Petition on merits (giving reasons) in favour of the assessee, while in other matters SLPs were dismissed without reasons. Interpretation and reasoning: The Court followed its coordinate-Bench precedents holding concurrent jurisdiction and noted that those decisions remain operative since they have not been stayed by the Supreme Court. The Court emphasized judicial discipline between co-ordinate Benches of the same High Court and relied on subsequent decisions of this Court that followed the coordinate-Bench ratio. The Court also noted that dismissal of an SLP without reasons is a non-speaking order and does not substitute or merge the lower court order as a declaration of law binding under Article 141. Ratio vs. Obiter: The affirmation of concurrent jurisdiction as the correct legal position within the High Court's jurisdiction is treated as ratio; observations regarding the effect of special leave dismissals and the interplay of coordinate Bench precedents are applied as binding within this Court and are part of the operative reasoning. Conclusions: The Court held that in the High Court's territorial jurisdiction both the Jurisdictional Assessing Officer and the Faceless Assessing Officer possess concurrent jurisdiction to initiate reassessment proceedings under Section 148/148A, and that proceedings initiated by either are not per se invalid. Issue 3: Effect of Supreme Court action (dismissal of SLPs with or without reasons) and binding force of coordinate-Bench High Court decisions Legal framework: Principles governing precedential effect include the doctrine of stare decisis, effect of coordinate-Bench decisions, and the legal consequences of orders refusing leave to appeal or dismissing Special Leave Petitions by the Supreme Court. Precedent treatment: The Court cited established principles that an order refusing special leave may be speaking or non-speaking; a speaking order can constitute a declaration of law by the Supreme Court, whereas a non-speaking dismissal in limine does not attract the doctrine of merger nor substitute the lower court's order as a binding declaration of law beyond the parties. Coordinate-Bench decisions of the High Court are ordinarily followed unless set aside or stayed. Interpretation and reasoning: The Court reasoned that a non-speaking dismissal of an SLP does not alter the binding effect of a coordinate-Bench judgment of this Court that remains operative and unsuspended. The Court observed that where the Supreme Court has not stayed a High Court judgment, the High Court's coordinate-Bench decision continues to govern; further, subsequent High Court decisions following the coordinate-Bench ratio reinforce its operative status. The Court contrasted dismissals on merits with dismissals in limine, noting different legal consequences. Ratio vs. Obiter: The discussion on the legal effect of SLP dismissals and the binding nature of coordinate-Bench decisions is applied as part of the Court's holding and forms the governing ratio insofar as reliance on coordinate-Bench precedent and the absence of a stay or a speaking Supreme Court order determine the outcome. Conclusions: The Court concluded that the dismissal of certain SLPs in limine does not unsettle the operative coordinate-Bench precedent of this High Court; absent a stay or a speaking declaration by the Supreme Court, the coordinate-Bench ratio affirming concurrent jurisdiction remains binding and controls the adjudication of challenges to Section 148/148A notices in this Court. Overall Disposition The Court dismissed the petitions challenging the impugned Section 148A/148 notices on the ground that issuance by the Jurisdictional Assessing Officer (as opposed to the Faceless Assessing Officer) vitiated proceedings, applying the coordinate-Bench ratio that both officers have concurrent jurisdiction and relying on the continued operative status of that precedent in the absence of a stay or a speaking Supreme Court order.