Facts of the Case

The petitioner, Mount Shikhar Financial Services Limited, filed a writ petition challenging the reassessment proceedings initiated by the Income Tax Officer, Ward-17(1), through issuance of notice under Section 148 of the Income-tax Act, 1961.

The sole ground urged by the petitioner was that after the introduction of the faceless reassessment regime and Section 151A of the Act, only the Faceless Assessing Officer had jurisdiction to initiate reassessment proceedings, and the Jurisdictional Assessing Officer lacked authority to issue the impugned notice.

The petition was part of a batch of connected writ petitions raising an identical jurisdictional issue.

Issues Involved

Whether reassessment proceedings under Section 148 can be validly initiated by the Jurisdictional Assessing Officer after the introduction of the faceless reassessment scheme, or whether such power vests exclusively in the Faceless Assessing Officer.

Petitioner’s Arguments

The petitioner argued that several High Courts, including the Bombay, Telangana, and Punjab & Haryana High Courts, had taken the view that only the Faceless Assessing Officer has jurisdiction to issue reassessment notices. It was contended that dismissal of Special Leave Petitions by the Supreme Court against some of these judgments amounted to affirmation of that view under Article 141 of the Constitution.

It was further argued that the Delhi High Court’s earlier decision in TKS Builders Pvt. Ltd. v. ITO, recognising concurrent jurisdiction of the Jurisdictional Assessing Officer and the Faceless Assessing Officer, was per incuriam as it allegedly ignored Section 151A and binding Supreme Court precedent.

Respondent’s Arguments

The Revenue opposed the petition and submitted that the Delhi High Court has consistently held that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer have concurrent jurisdiction to initiate reassessment proceedings. Reliance was placed on the binding judgment in TKS Builders Pvt. Ltd. v. ITO, which had been followed in several subsequent decisions.

It was further argued that dismissal of Special Leave Petitions by the Supreme Court without a detailed speaking order does not constitute a declaration of law under Article 141 and does not dilute the binding nature of the Delhi High Court’s decisions within its territorial jurisdiction.

Court Order / Findings

The Delhi High Court examined the rival submissions and reiterated that the issue stood conclusively settled by its decision in TKS Builders Pvt. Ltd. The Court held that dismissal of Special Leave Petitions by the Supreme Court in limine or without detailed reasons does not amount to affirmation of the reasoning of the High Courts whose judgments were under challenge.

Relying on authoritative Supreme Court precedents including Kunhayammed, Fuljit Kaur, Dhirendra Sundar Das and Khoday Distilleries, the Court held that such dismissals do not attract the doctrine of merger nor constitute binding precedent under Article 141.

The Court observed that the judgment in TKS Builders continues to hold the field in Delhi, as the Special Leave Petition against it was still pending and had not been stayed. Judicial discipline required adherence to the binding precedent of the coordinate bench.

Important Clarification

The Court clarified that within the territorial jurisdiction of the Delhi High Court, reassessment proceedings initiated by the Jurisdictional Assessing Officer cannot be invalidated solely on the ground that the notice was not issued by the Faceless Assessing Officer. Challenges confined only to jurisdiction are untenable in view of binding precedent, though assessees remain free to raise all other permissible objections in accordance with law.

Final Outcome

The writ petition filed by Mount Shikhar Financial Services Limited was dismissed. The Delhi High Court upheld the validity of reassessment proceedings initiated by the Jurisdictional Assessing Officer under Section 148 of the Income-tax Act and reaffirmed that both the Jurisdictional Assessing Officer and the Faceless Assessing Officer have concurrent jurisdiction to initiate reassessment proceedings. Pending applications were dismissed as infructuous.

Link to download order- https://www.mytaxexpert.co.in/uploads/1769682019_MOUNTSHIKHARFINANCIALSERVICESLIMITEDVsINCOMETAXOFFICERWARD171.pdf

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