Supreme Court Permits Revenue to Bring Retrospective Clarifications to High Court in Challenge Against JAO-Issued Reassessment Notices
1. The Core Dispute: Exclusive vs. Concurrent Jurisdiction
The central legal question was whether the Jurisdictional Assessing Officer (JAO) has the authority to issue a reassessment notice under Section 148 after the introduction of the Faceless Assessment Scheme and the enactment of Section 151A.
Assessee’s Stand: Following the introduction of the Faceless Reassessment Scheme (2022) and Section 151A, the power to issue notices under Section 148 is vested exclusively with the Faceless Assessing Officer (FAO) or the National Faceless Assessment Centre (NFAC). Notices issued by JAOs are jurisdictionally void.
Revenue’s Stand: The JAO and FAO hold concurrent jurisdiction. Section 144B and the Faceless Schemes do not divest the JAO of their statutory power to issue notices, especially since the “faceless” requirement is satisfied as long as the communication is electronic.
2. Legal Context: Conflicting High Court Views
Before reaching the Supreme Court, several High Courts had taken differing positions:
Bombay, Telangana, and Punjab & Haryana HCs: Ruled that only the FAO can issue such notices; JAO-issued notices were quashed (e.g., Hexaware Technologies case).
Delhi and Madras HCs: Generally held that the JAO retains jurisdiction to issue the notice, while the subsequent assessment/reassessment is to be conducted facelessly under Section 144B.
3. The Supreme Court’s Intervention and SLP Disposal
The Revenue filed a Special Leave Petition (SLP) against the High Court orders that favored the assessees. During the pendency, the Revenue pointed to latest clarifications and proposed legislative amendments aimed at validating the JAO’s actions retrospectively from 01-04-2021.
The Order: The Supreme Court did not provide a final adjudication on the merits of concurrent jurisdiction. Instead, it disposed of the SLP by granting the Revenue liberty to:
File an application before the respective High Courts.
Bring to the High Court’s notice the latest clarifications/amendments (including those in the Finance Act).
Request a fresh consideration of the matter.
Natural Justice: The Court mandated that the High Courts must hear both sides on the merits of these retrospective clarifications before passing a fresh order.
4. Key Takeaways for Taxpayers
Procedural Limbo: If your Section 148 notice was quashed by a High Court solely on the “JAO vs. FAO” jurisdictional ground, the Revenue may now seek to revive the case based on the Supreme Court’s liberty.
Legislative Validation: The Revenue is relying on the Finance Act 2024/2025 amendments which seek to validate JAO-issued notices retrospectively to prevent mass quashing of reassessment proceedings.
Stage-wise Division: Recent trends suggest a “two-stage” approach: The JAO initiates (issues notice), but the FAO adjudicates (conducts the assessment).