ITAT Hyderabad Rules on JAO Jurisdiction: Reassessment Quashed for Violation of Faceless Assessment Scheme 2022
The transition to the Faceless Assessment regime has been a cornerstone of recent tax reforms in India, aiming to eliminate human interface and reduce corruption. However, the implementation phase has witnessed significant friction regarding the jurisdiction of tax authorities. A pivotal question has arisen: Can a Jurisdictional Assessing Officer (JAO) issue notices under Section 148 after the notification of the Faceless Scheme, or is this power exclusively reserved for the Faceless Assessing Officer (FAO)?
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, in the case of Thilak Babu Boppana Vs ITO, has reinforced the supremacy of the Faceless Scheme. The Tribunal quashed reassessment proceedings for Assessment Year 2020-21, declaring that notices issued by a local JAO violated the mandatory provisions of Section 151A read with the E-Assessment of Income Escaping Assessment Scheme, 2022.
The Legal Landscape: Faceless vs. Jurisdictional Authority
To understand the gravity of this ruling, one must analyze the statutory framework governing income escaping assessment under the Income Tax Act, 1961.
The Mandate of Section 151A
The Finance Act introduced Section 151A to empower the Central Government to frame schemes for the purposes of assessment, reassessment, or re-computation of income escaping assessment. The objective was to impart greater efficiency, transparency, and accountability by:
- Eliminating the interface between the Assessing Officer and the assessee.
- Optimizing resource utilization through economies of scale.
- Introducing a team-based assessment with dynamic jurisdiction.
The 2022 Schemes
Pursuant to Section 151A, the Central Board of Direct Taxes (CBDT) notified the E-Assessment of Income Escaping Assessment Scheme, 2022 on March 29, 2022. This scheme explicitly mandated that the issuance of notices under Section 148 must be conducted through an automated allocation system.
The core legal dispute in Thilak Babu Boppana Vs ITO centered on whether a local officer retains concurrent jurisdiction to issue notices after these schemes became effective, or if their jurisdiction is completely ousted in favor of the faceless hierarchy.