FAOs And JAOs Have Concurrent Jurisdiction For Assessment, Re-assessment Or Re-Computation U/S 147 Income Tax Act: Madras High Court
The Madras High Court recently clarified that both the Faceless Assessment Officer and Jurisdictional Assessment Officer have concurrent jurisdiction as far as assessment, re-assessment or re-computation under Section 147 of the Income Tax Act. “As far as the assessment, re-assessment or re-computation in terms of the provisions of Section 147 of the IT Act is concerned, both the FAO...
The Madras High Court recently clarified that both the Faceless Assessment Officer and Jurisdictional Assessment Officer have concurrent jurisdiction as far as assessment, re-assessment or re-computation under Section 147 of the Income Tax Act.
“As far as the assessment, re-assessment or re-computation in terms of the provisions of Section 147 of the IT Act is concerned, both the FAO as well as the JAO will have concurrent jurisdiction,” the court ruled.
Justice Krishnan Ramasamy made it clear that for issuance of notice under Section 148 of the IT Act, the JAO had exclusive jurisdiction. The court added that the in matters of international taxation, central Circle charges and search and seizure cases also, the JAO had exclusive jurisdiction and the FAO, in such cases, did not have jurisdiction to make assessment, re-assessment or re-computation.
“As far as the international taxation, Central Circle Charges and search and seizure cases are concerned, it has been specified only for the JAO. In such case, the FAO will not have any jurisdiction to make assessment, re-assessment or re-computation…As far as the issuance of notice under Section 148 of the IT Act is concerned, only the JAO will have exclusive jurisdiction,” the court said.
The court was hearing a plea by Mark Studio India Private Limited, a company based in Chennai, challenging the order and notice issued by the Income Tax Officer. The petitioner company challenged the jurisdiction of the JAO to issue notice under Section 148 of the Income Tax Act.
Advocate Vardhini Karthik, appearing for the company, argued that the JAO would not have any jurisdiction subsequent to the incorporation of Section 151A of the IT Act and introduction of the “E-Assessment of Income Escaping Assessment Scheme 2022” and the “Faceless Jurisdiction of Income-tax Authorities Scheme 2022”. She pointed out that after the schemes were introduced by the Central Government to conduct assessment, re-assessment and re-computation in a faceless manner, the JAO would seize to have any jurisdiction and the all processes would have to be carried out by the FAO.
Vardhini thus pointed out that while the impugned notices and orders should have been sent by the National Faceless Assessment Centre (NaFAC), in the present case, the JAO had sent the same. Thus, she called for quashing the same arguing that the impugned notice and order was passed without jurisdiction.
On the other hand, the Standing Counsel for the Respondents argued that the scheme and the provisions of Section 144B explicitly provide that the JAO would have jurisdiction to issue notice under Sections 148 and 148A of the Act. He explained the system and submitted that the cases were selected by the Directorate of Income Tax (Systems) through an Automated Allocation System based on the risk management strategy formulated under Section 148 of the IT Act and thereafter, the same was forwarded to the JAO-based on the PAN card jurisdiction. Subsequently, the notices would be sent to the e-mail id of the registered account of the assessee through the web portal of ITBA. Thus, he pointed out that the impugned notices were sent in a faceless manner.
The respondent pointed out that the three requirements for sending a notice under Section 148 of the Act – Automated Allocation System, Risk Management Strategy formulated by the Board, and Faceless manner, were complied in the present case. Thus, he argued that the notices were not sent without jurisdiction.
The court agreed with this submission. Though the petitioner argued that the notices contained the name of the officer, the court remarked that the same could only be construed as a procedural error and would not vitiate the entire proceedings.
The court noted that as far as income escaped assessment was concerned, the NaFAC's jurisdiction would start only from the stage of initiation of notice under Section 143(2) or 142(1), ie, subsequent to the issuance of notice under Section 148 of the IT Act. The court thus held that the NaFAC would not have any power to issue notice under Section 148 or 148A of the IT Act.
The court was thus inclined to dismiss the petitions and gave liberty to the petitioner company to submit their reply within 30 days from the date of order. The court also directed the authorities to consider the reply and pass orders after hearing all the parties concerned.
Counsel for the Petitioner: Ms. G. Vardhini Karthik
Counsel for the Respondent: Dr. B. Ramaswamy, Senior Standing counsel & Mr. V. Mahalingam, Senior Standing counsel Assisted by Ms. S. Premalatha, Junior Standing counsel
Case Title: Mark Studio India Private Limited v. Income Tax Officer and Others
Citation: 2025 LiveLaw (Mad) 3
Case No: W.P.Nos.25223 & 25227 of 2024