JAOs, FAOs have concurrent jurisdiction to issue income tax notice under faceless scheme: Madras High Court

The Madras High Court recently held that all assessments, re-assessments, and re-computation under the Income Tax Act, 1961, can be conducted by both the Jurisdictional Assessing Officer (JAO) and the Faceless Assessment Officer (FAO) as both authorities have “concurrent jurisdiction.”.In an order passed on December 20, 2024, Justice Krishnan Ramasamy dismissed a petition filed by a Chennai based film equipment rental firm that had challenged and sought quashing of assessment and re-assessment notices issued to it by the JAO in April last year under Section 148A(d) of the Income Tax (IT) Act.The judge relied on the October 2024 judgement of the Delhi High Court in TKS builders vs ITO and said the Madras High Court was “inclined to follow” the Delhi High Court's findings in the judgement on the issue of the jurisdiction of the JAO and FAO.“As far as the assessment, re-assessment or re-computation is concerned, this Court is of the considered view that both the Faceless Assessment Officer as well as the Jurisdictional Assessment Officer will have concurrent jurisdiction,” the Madras High Court said..The Court further clarified that while only JAO has the jurisdiction to issue notices under Section 148 of the IT 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.It also said that even under the Faceless scheme, JAOs will have to comply with the provisions of Section 151A of the IT Act and obtain “prior approval from the higher authority for issuance of Section 148 notice under the Scheme in faceless manner.”.The Court was hearing the petition filed by Mark Studio India challenging the notices and questioned the jurisdiction of the JAO under the ‘Faceless’ income tax assessment scheme introduced by the Union government in 2022..The petitioner’s counsel, advocate G Vardhini Karthik, argued that when assessment is conducted under Sections 147 and 148 of the IT Act in a faceless manner, the JAO will have no role to play and the process has to be carried out only by the FAO.However, Senior Advocate Dr B Ramaswamy, who appeared for the respondent IT officer and the National Faceless Assessment Unit, argued that the Faceless scheme as well as the provisions of Section 144B of the Act explicitly provides that the JAO will always have the jurisdiction in the process of issuing the notice under Sections 148 and 148A of the IT Act.The Senior Counsel further argued that in the present case, the notices to the petitioner firm had been issued via email and that the petitioner’s case itself had been picked for assessment and re-assessment through an automated allocation system based on the risk management strategy under Section 148 of the IT Act. Therefore, while the notices issued mentioned the name of the JAO who had territorial jurisdiction over the case at hand, the notices issued to the petitioner did comply with the faceless scheme, Ramaswamy argued..The Court agreed and said that though mentioning the name of the JAO in the notices issued under the faceless scheme was a procedural lapse, such error will not vitiate the initiation of the proceedings for issuance of notice under Section 148 of the IT Act since such errors are curable.“While the FAO performing the duties of faceless assessment in faceless manner, the JAO is also equally performing his duties, in faceless manner, while issuing the notice under Section 148A/148 of the IT Act, as intended in the Scheme,” the High Court said..[Read Order]