Facts of the Case

The petitioner, Yukti Export, along with several connected petitioners, filed writ petitions challenging reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961. The primary challenge was to the jurisdiction of the Jurisdictional Assessing Officer to issue notices under Section 148, contending that only the Faceless Assessing Officer was empowered to do so in view of Section 151A and the faceless assessment scheme. The petitioners relied on decisions of various High Courts, including the Bombay High Court and Telangana High Court, which had held that only the Faceless AO could initiate reassessment proceedings. The Revenue relied on binding precedents of the Delhi High Court holding otherwise.

Issues Involved

Whether within the territorial jurisdiction of the Delhi High Court, reassessment notices under Section 148 can be validly issued by the Jurisdictional Assessing Officer, whether Section 151A mandates exclusive jurisdiction of the Faceless Assessing Officer, and whether dismissal of SLPs by the Supreme Court against contrary High Court judgments altered the binding nature of Delhi High Court precedents.

Petitioner’s Arguments

The petitioners contended that the issue was no longer res integra as multiple High Courts had held that only the Faceless Assessing Officer has jurisdiction to issue reassessment notices under Section 148. It was argued that the Supreme Court had dismissed SLPs against such judgments, including in Prakash Pandurang Patil and Deepanjan Roy, thereby settling the law under Article 141 of the Constitution. The petitioners further submitted that earlier Delhi High Court decisions recognising concurrent jurisdiction of Jurisdictional AO and Faceless AO were per incuriam and contrary to the statutory mandate of Section 151A.

Respondent’s Arguments

The Revenue submitted that within Delhi jurisdiction, the issue stood conclusively settled by the Delhi High Court in TKS Builders Pvt. Ltd. v. ITO, which held that both Jurisdictional AO and Faceless AO possess concurrent jurisdiction to initiate reassessment proceedings. It was argued that dismissal of SLPs by the Supreme Court without a reasoned order does not amount to affirmation of the High Court judgments under Article 141 and does not negate binding precedents of the Delhi High Court. The Revenue also pointed out that the decision in TKS Builders had not been stayed by the Supreme Court.

Court Order / Findings

The Delhi High Court held that it was bound by its earlier decision in TKS Builders Pvt. Ltd., which clearly recognised concurrent jurisdiction of the Jurisdictional AO and Faceless AO to initiate reassessment proceedings under Section 148. The Court analysed the effect of dismissal of SLPs by the Supreme Court and reiterated the settled law that dismissal of an SLP in limine, without a speaking order, does not constitute declaration of law under Article 141 and does not result in merger. The Court rejected the contention that dismissal of SLPs in cases from other High Courts rendered the Delhi High Court’s view per incuriam. It was held that until the Supreme Court conclusively decides the issue or stays the operation of TKS Builders, the said judgment continues to bind benches of the Delhi High Court.

Important Clarification

The Court clarified that judicial discipline mandates adherence to binding precedents of the jurisdictional High Court. Divergent views taken by other High Courts, or dismissal of SLPs against such views without reasoned orders, do not dilute the binding nature of Delhi High Court judgments within its territorial jurisdiction.

Final Outcome

The writ petition filed by Yukti Export and the connected writ petitions were dismissed. The reassessment notices issued under Section 148 by the Jurisdictional Assessing Officers were upheld as valid. All pending applications were dismissed as infructuous, and the decision was rendered in favour of the Revenue and against the petitioners.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769680763_YUKTIEXPORTVsINCOMETAXOFFICERWARD607DELHI.pdf

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