JAO vs FAO Dispute: Supreme Court Allows Taxpayers to Approach High Courts Again After Proposed Retrospective Amendment
In an important procedural development in the ongoing dispute over jurisdiction between the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO), the Supreme Court has disposed of certain Special Leave Petitions with liberty to the petitioners to move appropriate applications before the respective High Courts.
The Court observed that in light of the proposed retrospective amendment in the Finance Bill affecting the jurisdictional framework, taxpayers should first seek reconsideration from the High Courts in matters already decided.
The order ensures that affected parties are not left without remedy and clarifies the litigation path going forward.
Background of the JAO vs FAO Controversy
The dispute over JAO versus FAO jurisdiction has been one of the most widely litigated issues in faceless assessment cases.
Several High Courts had earlier examined whether reassessment notices and proceedings issued by officers outside the taxpayer’s jurisdiction were legally valid, particularly where the statutory scheme appeared to allocate powers differently between jurisdictional officers and faceless units.
In multiple cases, courts quashed notices on jurisdictional grounds.
However, the proposed retrospective amendment in the Finance Bill seeks to validate certain actions taken under the faceless regime, thereby potentially altering the legal basis on which earlier High Court rulings were delivered.
This created uncertainty regarding cases that had already been decided or were pending before appellate forums.
What the Supreme Court Has Directed
While disposing of the SLPs, the Supreme Court clarified the following procedural course:
• Petitioners are permitted to file appropriate applications before the High Courts in matters already disposed of
• High Courts will examine such applications on merits after hearing both parties
• The impact of the proposed retrospective amendment can be considered by the High Courts
• If parties remain aggrieved after the High Court’s decision, they may again approach the Supreme Court
Thus, the Court has effectively restored the first opportunity of reconsideration to the High Courts instead of deciding the issue directly at the Supreme Court level.
Why This Order Is Significant
The order does not decide the substantive jurisdiction issue but has important practical implications.
First, it recognises that retrospective amendments can affect the foundation of earlier judicial decisions and therefore require fresh examination.
Second, it ensures procedural fairness by allowing taxpayers to contest the amendment’s impact before the same High Courts that earlier ruled on jurisdiction.
Third, it keeps the legal question alive and open for eventual final determination by the Supreme Court after High Courts re-evaluate the matter.
In effect, the litigation clock has been reset to some extent.
Impact on Pending and Decided Cases
The direction is relevant in several situations:
• Cases where High Courts have already quashed reassessment notices on jurisdiction grounds
• Matters pending in appeal before the Supreme Court
• Situations where retrospective validation provisions may affect the outcome
• Cases where reassessment proceedings are still underway and jurisdiction remains contested
Taxpayers and professionals must now evaluate whether filing a restoration or modification application before the High Court is strategically advisable.
Practical Takeaways for Tax Professionals
This development highlights the need for careful litigation planning.
Professionals should consider:
• Reviewing whether the client’s case falls within the scope of the proposed amendment
• Checking whether the earlier High Court decision relied on jurisdictional interpretation now proposed to be changed
• Evaluating timelines for filing restoration or recall applications
• Preparing arguments on both constitutional validity and interpretation of retrospective provisions
The matter is likely to see fresh rounds of High Court litigation before returning to the Supreme Court for final resolution.
Conclusion
The Supreme Court’s order on the JAO versus FAO dispute does not settle the controversy but provides a structured path for reconsideration in light of the proposed retrospective amendment.
By directing petitioners back to the High Courts, the Court has ensured that the issue is examined in the correct procedural sequence and that affected taxpayers retain their right to challenge the amendment and its consequences.
The next phase of this jurisdictional battle will now unfold before High Courts – and its outcome may ultimately shape the future contours of faceless assessment law in India. The issue would be all the more interesting in view of the retrospective amendment already done by the FB – 2026 which has amended so as to provide the concurrent jurisdiction to AO.
The copy of the order is as under:
