Reassessment notices issued by JAO instead of FAO was not valid

Vijay Vs ITO (Madras High Court)

Conclusion: Reassessment notices was quashed as the same was issued by Jurisdictional Assessment Officers (JAOs) instead of the designated Faceless Assessment Officers (FAOs).

Held: Assessee had challenged the notices alleging, inter alia, that the notices were not valid on the ground that they had been issued by a Jurisdictional Assessment Officer (JAO) and not Faceless Assessment Officer (FAO). The Court relied on the precedent laid down by the Bombay High Court in the Hexaware Technologies Ltd. case and observed that non-issuance of notice by FAO would make the notice invalid. Revenue stated that if the judgment in Hexaware Technologies Limited was interfered with by the Apex Court, then liberty be given to the Revenue to take steps as available in accordance with law to revive these notices. The court held that Revenue would be permitted to revive the show cause notices already issued and take further proceedings in accordance with law. It was also clarified that other connected legal issues not directly covered by this ruling remained open to be contested at the appropriate stage.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

These petitions, we are informed, are pending before the learned Single Judge, in which, the assessees have challenged the notices alleging, inter alia, that the notices are not valid on the ground that they have been issued by a Jurisdictional Assessment Officer (JAO) and not Faceless Assessment Officer (FAO).

2. Today, in a separate order, we have held, relying on a judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax¹that non-issuance of notice by FAO will make the notice invalid.

3. Counsel states that, therefore, this Court may dispose these petitions accordingly.

4. By consent, these petitions are taken up on board. In view of the order passed by us today in a batch of writ petitions starting with W.P.No.22402 of 2024, notices in these petitions are also quashed and set aside.

5. Sundaresan states that if the judgment in Hexaware Technologies Limited (supra) is interfered with by the Apex Court, then liberty be given to the Revenue to take steps as available in accordance with law to revive these notices. Certainly, Revenue will be permitted to revive the show cause notices already issued and take further proceedings in accordance with law.

6. If there are any orders passed consequent to the notices issued, which have been quashed by this order, those consequential orders also stand quashed and set aside.

7. Petitions are disposed. There shall be no order as to costs. Consequently, all the interim applications are closed.

In the order dated 24.06.2025 passed in the above petitions, the following paragraphs shall be inserted before paragraph 7 and paragraphs
renumbered:

“7. Keeping open all rights and contentions of parties, including liberty to apply to this Court in case the Revenue succeeds before the Apex Court for revival of these petitions, the notices issued in these petitions are quashed and set aside.

8. In these petitions, apart from the issue of notices issued by JAO instead of FAO, all or many of the issues which were considered in Hexaware Technologies Ltd (supra) are involved.

9. To the extent the issues raised in Hexaware Technologies Ltd (supra) are not covered, those are kept open to be raised at the appropriate stage.

2. Paragraph 7 of the order dated 24.06.2025 shall be replaced with:

“With the liberty as noted above, petitions are disposed of. There shall be no order as to costs. Consequently, all interim applications are closed.”

3. Rest of the order remain unaltered. Original order to be corrected.

Note:

¹ [2024] 162 taxmann.com225 (Bom.); 464 ITR 430 (Bom.)