The Office Of NaFAC In Delhi Confer Jurisdiction When JAO Is Outside Delhi? Delhi High Court Refers The Issue To Larger Bench

The Delhi High Court has referred to the larger bench the question of whether the presence of National Faceless Assessment Centre (NaFAC) in Delhi is sufficient to hear a writ petition when the Jurisdictional Assessing Officer (JAO) is located outside of Delhi.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has directed that the matter be placed before the Chief Justice for the constitution of a larger bench.

The petitioner/assessee has challenged the assessment order passed by the department and notice of demand, as well as notice for the initiation of penalty proceedings under Section 271AAC (1) of the Income Tax Act of 1961.

The court had granted a stay on the operation of the assessment order and the accompanying notice for demand, as well as the notice for initiating penalty proceedings.

The court listed the petition for hearing, in which a preliminary objection was taken by the department as to the maintainability of the writ petition on the ground of territorial jurisdiction since the PAN AO was located outside Delhi.

The question was whether the presence of the National Faceless Assessment Center in Delhi was a sufficient "cause of action" to confer jurisdiction on the Court to hear a writ petition under Article 226 while ignoring the location of the PAN/Assessing Officer Jurisdictional Assessing Officer and any other relevant factors.

The department contended that the jurisdictional assessing officer (PAN AO) would be determinative of the jurisdiction of the High Court for the purpose of entertaining writ petitions under Article 226 of the Constitution. Applying the doctrine of forum non conveniens, the Court should reject the writ petition for the reason that the assessee has chosen not to change his PAN jurisdiction, to which he is otherwise entitled under the Act. It can be presumed that his PAN jurisdiction is as convenient to him as it is for the revenue. The Faceless Assessment regime in no way weakens the principle that the location of the PAN AO determines the High Court's jurisdiction.

The assessee contended that under the faceless regime, the role of the JAO is limited to receiving the income-tax return of the assessee located within the territorial jurisdiction of the JAO; the JAO becomes functus officio. Even the jurisdiction to levy a penalty does not lie with the JAO but with the NaFAC itself.

The assessee stated that as per Section 144B(3), NaFAC shall be set up by the CBDT to facilitate the conduct of faceless assessment proceedings in a centralised manner, which shall be vested with the jurisdiction to make faceless assessments. Subsection (3) further provides for the setting up of regional faceless assessment centres, assessment units, verification units, technical units, and review units for undertaking various tasks as provided for in Section 144B, which are all set up under the umbrella of the NaFAC. In the faceless regime, the JAO has no locus standi with respect to exercising jurisdiction over an assessee to make an assessment. The suggestion that NaFAC is only a medium for correspondence with assessees is devoid of merit.

The court refused to entertain the writ petitions, and the jurisdictional assessing officer, i.e. JAO, which is based outside the NCT of Delhi, found it appropriate to refer the matter to a larger bench for a conclusive view as this issue will arise repeatedly in many cases.

Case Title: GPL-RKTCPL JV Versus NaFAC

Citation: W.P.(C) 5546/2021 & CM APPL. 17180/2021

Date: 17.11.2022

Counsel For Petitioner: Advocates Rohit Jain, Aniket D. Agrawal

Counsel For Respondent: Senior Standing Counsel Puneet Rai for Revenue with Adeeba Mujahid

Click Here To Read Order