The Rajasthan High Court has ruled that a Jurisdictional Assessing Officer (JAO) does not have the authority to issue reassessment notices under Section 148 of the Income Tax Act, 1961. The judgment emphasizes the role of the Faceless Assessing Officer (FAO) in such cases, in compliance with the e-Assessment Scheme introduced in 2022.
A bench comprising Justice Pushpendra Singh Bhati and Justice Munnuri Laxman observed:
"The JAO shall not have the jurisdiction to issue notices under Section 148 of the Act of 1961, as it would not only render Section 151A weak but may also lead to its diminishing activation."
Legal Background
Under the Income Tax Act, 1961:
Section 147: Grants the Assessing Officer (AO) the discretion to reopen assessment proceedings if there is reason to believe that some income has escaped assessment.
Section 148: Allows the Income Tax Department to issue notices to taxpayers if their income has not been assessed properly.
The Case & Notification No.18 of 2022
The case involved petitioners who had filed their Income Tax Returns. The department issued notices under Section 133(6) of the Act, followed by reassessment notices under Sections 147 and 148. However, the Central Board of Direct Taxes (CBDT) had already framed the e-Assessment of Income Escaping Assessment Scheme, 2022 through Notification No.18 of 2022/S.O. 1466(E) dated 29.03.2022, which mandates a faceless assessment process.
The notices issued under Sections 147 and 148 were required to adhere to this scheme and be processed in a faceless manner, as stipulated in the CBDT notification.
Assessee’s Contention:
- The 2022 Scheme complied with all parameters of Section 151A(3) and should have been strictly followed.
- The department failed to adhere to the prescribed faceless assessment process.
- Granting JAO the power to issue reassessment notices would undermine the Scheme and render it ineffective.
- The authority to issue such notices lies exclusively with the FAO, making the JAO’s actions illegal and ineffective.
Department’s Contention:
- Faceless authorities have concurrent jurisdiction, meaning JAO still holds reassessment powers.
- Human supervisory elements in JAO-led assessments help address deficiencies arising from faceless assessments.
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Court’s Observations & Ruling
The court examined Section 151A, which governs assessment, reassessment, and re-computation under Sections 147 and 148. It concluded that these procedures must be faceless, with exclusive jurisdiction granted to the FAO.
The bench emphasized:
"It is only the FAO which can issue the notice under Section 148 of the Act and not the JAO. Accepting an argument against the above position of law would render Clause 3(b) of the Scheme otiose and to be ignored or contravened; and, implicitly would thereby make the whole Scheme otiose."
The ruling clarifies that JAO lacks jurisdiction to issue reassessment notices under Section 148, reinforcing the exclusive role of FAO in handling such matters.
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In view of the above, the bench allowed this petition.
Case Title: Sharda Devi Chhajer v. Union of India and others
Case Number: D.B. Civil Writ Petition No. 11787/2024
Counsel for Petitioner/ Assessee: Vikas Balia
Counsel for Respondent/ Department: K.K. Bissa
