Supreme Court Disposes of Revenue’s SLP, Permitting High Court Review in Light of Retrospective Clarifications on JAO Jurisdiction

By | February 21, 2026
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Supreme Court Disposes of Revenue’s SLP, Permitting High Court Review in Light of Retrospective Clarifications on JAO Jurisdiction

1. The Core Dispute: JAO vs. FAO (Faceless Reassessment)

The primary legal conflict involves whether a Jurisdictional Assessing Officer (JAO) has the authority to issue a reassessment notice under Section 148 after the introduction of the Faceless Assessment Scheme.

  • High Court View: Several High Courts (notably Bombay, Telangana, and Madras) held that post-April 1, 2021, the Faceless Assessing Officer (FAO) has exclusive jurisdiction. Notices issued by the JAO were deemed “jurisdictionally fatuous” and void ab initio for violating the mandate of Section 151A.

  • Revenue’s Stand: The Revenue contended that the JAO and FAO hold concurrent jurisdiction. They argued that the JAO is not divested of power simply because a faceless scheme exists, especially in specific categories like International Taxation or Central Charges.

2. The Supreme Court’s Intervention

The Revenue filed a Special Leave Petition (SLP) against the High Court rulings that quashed JAO-issued notices.

  • The Development: During the pendency of these matters, the government proposed/introduced retrospective clarifications (notably in Finance Act 2024/2026) intended to validate the jurisdiction of the JAO for issuing notices under Section 148 and orders under Section 148A, effective from April 1, 2021.

  • The Order: Instead of deciding the merit of the concurrent jurisdiction, the Supreme Court disposed of the SLP. It permitted the Revenue to approach the High Court again to present this “latest clarification” and retrospective amendment.

3. Legal Implications: A “Second Inning” for Revenue

The Supreme Court’s direction ensures that the High Courts re-evaluate their stance in light of the new legislative intent.

  • Hearing Opportunity: The High Court is directed to consider the Revenue’s application after giving both sides an opportunity to be heard on the merits of the retrospective changes.

  • Current Standing: While the Hexaware ruling (favoring the assessee) currently “holds the fort” in many jurisdictions, it is now subject to the outcome of these revival applications based on the new statutory clarifications.

Key Takeaways for Taxpayers

  • Notice Validity is Not Final: If you won a case on the grounds of “JAO vs. FAO” jurisdiction, remain vigilant. The Revenue now has the liberty to seek a revival of the case based on the new retrospective amendments.

  • Check Finance Act 2024/2026: The legislature has moved to nullify the Hexaware effect. If your notice was quashed solely on jurisdictional grounds, it may be revived if the High Court accepts the retrospective validation of JAO powers.

  • Substantive Defenses: Taxpayers should focus on merits (e.g., no escapement of income) and limitation periods, as jurisdictional defenses are currently in a state of flux due to these legislative “plugging” of gaps.

SUPREME COURT OF INDIA
Income-tax Officer
v.
Vandana Malhotra*
Mrs. B.V. Nagarathna and Ujjal Bhuyan, JJ.
SLP (CIVIL) DIARY NO(S). 57403 OF 2025†
FEBRUARY  3, 2026
Raghavendra P. Shankar, A.S.G., Ms. Madhulika Upadhyay, AOR, Ms. Pallavi Mishra, Ms. Aashna Gill, B.K. Satija, Piyush Beriwal, Chandrashekhara A. Chaklabbi, Surendra Sinha, Sudhakar Dwivedi, Mrs. Sunita Sharma, Sushil Raaja, Krishna Kant Dubey, Kamal Kishor, S.A. Haseeb, Mrs. Alka Agarwal, Sanjay Kumar Dubey, Sachin Sharma, Brijesh Yadav, Ms. Anasuya Choudhary, Shashank Bajpai, Keshav Thakur, Arun Kumar Singh, Ms. Shweta Garg, Suvesh Kumar, Abhinav Mishra, Mrs. Rashmi Malhotra, Gobind Kumar, Mukesh K. Verma, Mrs. Pankhuri Srivastava and Praneet Pranav, Advs. for the Petitioner.
ORDER
1. We dispose of these Special Leave Petition(s) by permitting the petitioner(s) herein to file an application(s) before the High Court(s) in the disposed of matter(s) to bring to the notice of the High Court(s) the latest clarification which has been issued with effect from 01.04.2021 on such clarification to be inserted in the proposed Finance Act.
2. If such an application(s) is made by the petitioner herein before the High Court, the same shall be considered after giving an opportunity of hearing to both sides on its merits.
3. In the event, the petitioner or any other party is unsuccessful, then liberty is reserved to the aggrieved party(s) to approach this Court to assail the impugned order(s) as well as the subsequent order(s) to be passed.
4. Special Leave Petitions are disposed of in the aforesaid terms.
5. All contentions on both sides are kept open to be advanced on the application(s) to be filed by the petitioner herein before the High Court in the disposed of cases.
6. All pending application(s), including application(s) seeking condonation of delay, shall stand disposed of.