Madras HC rules JAO has exclusive powers to issue notice under Section 148 of Income Tax Act
CHENNAI: In a significant judgment on the powers of the officers dealing with income escaping assessment, the Madras High Court has ruled that the Jurisdictional Assessing Officer (JAO) does have ‘exclusive powers’ to issue notice under Section 148 of the Income Tax Act, 1961. Both the JAO and the Faceless Assessing Officer (FAO)will have concurrent powers for ‘assessment, re-assessment and re-computation’ of the particular income in a faceless manner.
Justice Krishnan Ramasamy issued the ruling on Friday while dismissing the writ petitions filed by Mark Studio India Private Limited, Chennai, questioning the powers of the JAO in issuing notices under Section 148 and 148 A (d) of Income Tax Act concerning the income escaping assessment to the company.
The counsel appearing for the petitioner, G Vardhini Karthik, contended that the JAO is not empowered to issue notice on the income escaping assessment subsequent to the incorporation of Section 151 A in the Income Tax Act and the introduction of E-Assessment of Income Escaping Assessment Scheme, 2022, dated March 29, 2022, and the Faceless Jurisdiction of Income-tax Authorities Scheme, 2022, dated March 23, 2022.
However, B Ramasamy, senior standing counsel for the Central government, submitted that Section 144 B of the Act provides powers to the JAO and the cases were selected by the Directorate of IT (Systems) through the Automated Allocation System (AAS) based on the PAN card jurisdiction.
He also stated that the notices served to the petitioner company fulfilled the three requirements of AAS, risk management strategy formulated by the board and the faceless manner, which provides for online proceedings.
The judge said, “As far as the issuance of notice under Section 148 of IT Act is concerned, only the JAO will have exclusive jurisdiction.”
He ruled, “As far as assessment, re-assessment or re-computation in terms of the provisions of Section 147 is concerned, the FAO as well as the JAO will have concurrent jurisdiction.”
The Directorate of IT (Systems) shall have the power to make allotment of cases, through the AAS, to allot the cases for issuance of notice under Section 148 A and 148 in eligible cases based on the risk management strategy in terms of the provisions of the E-Assessment of Income Escaping Assessment Scheme, to the JAO based on the PAN card jurisdiction, Justice Ramasamy said in the order.
Referring to the case on hand, the judge reasoned that the issuance of the impugned notice was “duly in accordance with the Scheme”, except the procedural lapse of mentioning the name of the JAO, as the Directorate of Income Tax (Systems) allotted the cases through the AAS based on the risk management strategy for issuing the notice in faceless manner.
The procedural errors will “not vitiate” the initiation of the proceedings for issuance of the notice under Section 148 of IT Act since such errors are “curable in nature,” he said.
Even though the court dismissed the writ petitions, it granted liberty to the petitioner company to file its reply within 30 days to the concerned authorities, who were directed to consider the reply and pass orders after affording an opportunity of a personal hearing.