2025 (10) TMI 435 - HC - Income Tax

Appeals dismissed: both Jurisdictional and Faceless Assessing Officers have concurrent power to order reassessment under section 148

The HC dismissed the appeals, holding that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer possess concurrent jurisdiction to ... Validity of reopening of assessment - jurisdiction to initiate reassessment proceedings with Jurisdictional Assessing Officer (JAO) or the Faceless Assessing Officer (FAO) - statutory mandate of Section 151A - HELD THAT:- This Court has maintained a consistent position, that both JAO and FAO possess concurrent jurisdiction to initiate reassessment proceedings u/s 148 of the Act. In fact, in PC Jeweller Ltd. [2025 (1) TMI 1615 - DELHI HIGH COURT] a co-ordinate bench of this Court had dismissed a writ petition seeking similar relief by following the judgment in TKS Builders [2024 (10) TMI 1586 - DELHI HIGH COURT]. Though the said judgment has been taken in appeal before the Supreme Court, the Revenue has been permitted to continue the proceedings with a caveat that any order, if passed adverse to the petitioner therein shall not be given effect. As such, the judgment in TKS Builders [supra] would still hold the fort insofar as the jurisdiction of Delhi is concerned. We are bound by the same. Though there is no dispute on the proposition of law laid down in Hyder Consulting (UK) Ltd. [2015 (3) TMI 1452 - SUPREME COURT] the same would not come to the rescue of the petitioners in the peculiar facts of this case. We find no merit in the present appeals, the same are dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Jurisdictional Assessing Officer (JAO) or the Faceless Assessing Officer (FAO) - or both - possess jurisdiction to initiate reassessment proceedings under Section 148 of the Income-Tax Act, 1961. 2. Whether prior High Court and Supreme Court orders dismissing Special Leave Petitions (SLPs) against judgments holding that only FAO has jurisdiction operate as binding precedent under Article 141 of the Constitution so as to displace a contrary position adopted by a coordinate bench of this Court. 3. Whether the doctrine of per incuriam applies to the coordinate-bench decision holding concurrent jurisdiction of JAO and FAO, by reason of alleged inconsistency with statutory scheme (Section 151A) and higher court pronouncements. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Competence to initiate reassessment under Section 148: JAO v. FAO (concurrent or exclusive jurisdiction) Legal framework: Section 148 empowers issuance of notice for reassessment where income has escaped assessment; Section 151A and the faceless regime provide for faceless assessment/processing and set out administrative allocation of functions between FAO and jurisdictional officers. Precedent treatment: Two conflicting lines of High Court authority exist - one line holding that only FAO has the requisite jurisdiction to issue notices under Section 148; another (including a coordinate bench of this Court) holding that JAO and FAO have concurrent jurisdiction to initiate reassessment proceedings. Appeals against the former line have resulted in SLPs which were dismissed by the Supreme Court in various manners (including some dismissals in limine and some with brief musings). Interpretation and reasoning: The Court observes that a coordinate-bench decision of this Court (TKS Builders) has consistently been followed by this Court in subsequent matters, establishing the position that within the territorial jurisdiction of this Court both JAO and FAO possess concurrent jurisdiction to initiate reassessment under Section 148. The Court rejects the submission that recent adverse High Court decisions and dismissals of SLPs before the Supreme Court have conclusively altered that position. The Court emphasizes that dismissals of SLPs without reason (or where reasons do not conclusively address the point in issue) do not operate to reverse, modify or affirm lower court reasoning so as to displace a binding coordinate-bench ratio of this Court in absence of a stay or a final appellate pronouncement overruling the coordinate bench. Ratio vs. Obiter: The holding that both JAO and FAO have concurrent jurisdiction is applied as the binding ratio of the coordinate-bench precedent relied upon by this Court and is treated as authoritative for matters within this Court's territorial scope until set aside by a higher court. Conclusions: For the matters before this Court, both JAO and FAO have concurrent jurisdiction to initiate reassessment proceedings under Section 148. The Court will adhere to its settled coordinate-bench view unless and until a contrary authoritative decision of the Supreme Court is rendered or the said decision is stayed. Issue 2 - Legal effect of dismissal of SLPs on the binding nature of underlying High Court decisions Legal framework: Article 141 governs binding precedent of the Supreme Court. Principles governing the legal consequence of dismissal of SLPs (speaking v. non-speaking orders, dismissal in limine, effect of reasons recorded) govern whether a dismissal operates as a declaration of law binding under Article 141 or remains non-binding. Precedent treatment (followed/distinguished): The Court relies on established Supreme Court jurisprudence distinguishing speaking dismissals (which can constitute a declaration of law) from non-speaking or in-limine dismissals (which ordinarily do not bind other courts under Article 141). Authorities cited emphasize that refusal of leave does not amount to merger or affirmation of the order impugned unless the Supreme Court has exercised appellate jurisdiction or provided reasons amounting to a declaration of law. Interpretation and reasoning: The Court finds that the dismissals of certain SLPs are non-speaking or did not address the issue in a manner that would amount to a declaration binding on this Court. Where the Supreme Court record does not contain express reasoning that addresses and settles the legal question, such dismissals cannot be treated as implicitly overruling or affirming the coordinate-bench precedent of this Court. Further, where the coordinate-bench decision remains subject to an appeal pending adjudication before the Supreme Court and has not been stayed, this Court considers itself bound to follow it for cases within its jurisdiction. Ratio vs. Obiter: The Court treats the principles regarding the effect of SLP dismissal as binding statements of law (ratio) drawn from Supreme Court pronouncements; application to the present dispute - that such dismissals do not displace the coordinate bench precedent - is applied as the operative conclusion. Conclusions: Dismissal of SLPs in limine or without detailed reasons does not constitute a binding declaration of law under Article 141 sufficient to displace a coordinate-bench decision of this Court. Absent a speaking order of the Supreme Court or a stayed/overruled coordinate-bench decision, the position of concurrent jurisdiction remains operative in this Court. Issue 3 - Application of doctrine of per incuriam to the coordinate-bench decision holding concurrent jurisdiction Legal framework: The doctrine of per incuriam renders a judicial decision not binding where it has been rendered in ignorance of a relevant statutory provision or binding precedent, and Supreme Court authority sets narrow conditions for its application. Precedent treatment: The Court acknowledges the doctrine but holds that its application is exceptional and must be demonstrated by clear disregard of binding Supreme Court precedent or statutory provisions. Interpretation and reasoning: The Court finds that the coordinate-bench decision was not rendered in such circumstances as to invoke per incuriam. The existence of contrary High Court judgments and non-speaking dismissals of SLPs do not demonstrate that the coordinate bench ignored binding Supreme Court precedent or relevant statutory provisions such as Section 151A in a manner that would render its decision per incuriam. Further, the pendency of an SLP against the coordinate-bench decision before the Supreme Court and absence of any stay limits the Court's ability to treat that decision as displaced. Ratio vs. Obiter: The rejection of the per incuriam argument is a dispositive ratio applied to preserve the coordinate-bench precedent as binding within this Court. Conclusions: The doctrine of per incuriam does not apply to the coordinate-bench decision recognizing concurrent jurisdiction of JAO and FAO in the present facts; the decision continues to bind this Court. Final Disposition (as applied to the petitions before the Court) The petitions challenging reassessment notices were dismissed for lack of merit. The Court adheres to the coordinate-bench ratio that both JAO and FAO have concurrent jurisdiction to initiate reassessment under Section 148, and holds that recent dismissals of SLPs against contrary High Court decisions do not, in themselves, displace that position for matters before this Court.