JAO Vs. FAO: The Jurisdictional Battle continues

 

Recently, Madras High Court in the case of Mark Studio India Private Limited held that JAO & FAO have concurrent jurisdiction; Procedural, ‘curable’ error won’t vitiate proceedings.

It may be noted that the Faceless Assessment Scheme, introduced in 2022, mandates that re-assessment proceedings u/s 148 of the ITA to be conducted without direct interaction between tax authorities and assesses.

However, the question arises that who holds the authority to issue notices u/s 148 – the JAO (Jurisdictional Assessing Officer) or the FAO (Faceless Assessing Officer)?

From the plain reading of the scheme requires that the notices are to be issued in a faceless manner. Controversy arose when in reality JAOs issued notices, deviating from the prescribed faceless and automated allocation process.

Judiciary being the problem solver, have taken divergent views as under.

 

Views in the favour of assessee

1 Bombay HC in the case of Hexaware Technologies Ltd. have reinforced the view that the JAO’s authority was superseded by the faceless assessment scheme.

2 Telangana HC in the case of Kankanala Ravindra Reddy emphasized that reassessment must be conducted facelessly, invalidating notices issued by the JAO.

Views against the assessee

1 Delhi HC in the case of T.K.S. Builders emphasized that the JAO’s role is not entirely overridden by the faceless system, asserting their critical powers for a balanced assessment process.

2 Madras HC in the case of Mark Studio India Private Limited held that JAO, FAO have concurrent jurisdiction; Procedural, ‘curable’ error won’t vitiate proceedings.

One may note that the Supreme Court is yet to take a view on this issue. SLP against Bombay HC order in the case of Hexaware Technologies Ltd. has been filed by Income Tax Department.