Bombay HC slaps Income Tax JAO and Chief Commissioner with Rs. 25k Fine for ignorance of Hexaware Decision [Read Order]

The Bombay High Court has imposed a fine of Rs. 25,000 on the Jurisdictional Assessing Officer (JAO) for failing to adhere to a binding judgement in the case of Hexaware Technologies Limited vs. Assistant Commissioner of Income Tax & 4 Ors.

The judgement clarified that under the faceless assessment scheme, as introduced by Section 151A of the Income Tax Act, 1961, the National Faceless Assessment Centre ( NFAC ) holds exclusive jurisdiction for issuing reassessment notices.

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The bench, comprising Justice G. S. Kulkarni and Justice Somasekhar Sundaresan, criticised the conduct of the JAOs, highlighting that the situation has not been rectified by higher officials, including the Commissioner and Chief Commissioner of Income-tax. The court pointed out that even the Chief Commissioner acted with a total lack of consideration.

The bench labelled this as a classic case of abuse of power by the JAO.

The JAO initiated proceedings against the petitioner under Section 148A of the Income-tax Act, 1961. Although the notice under Section 148A(b) was issued before the order by the CIT (A) was passed, by the time the order under Section 148A(d) was issued on March 8, 2024, the JAO was fully aware of the appeal's outcome. Nevertheless, the order under Section 148A(d) failed to address the crucial facts that were the basis of the reassessment.

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Despite the available information, the Chief Commissioner of Income-tax mechanically granted sanction under Section 151(ii) of the Act, again without proper consideration. The notice under Section 148 was issued contrary to the provisions of Section 151A and outside the faceless mechanism stipulated by a Central Government notification dated March 29, 2022.

In response to the writ petition, the JAO asserted that the department did not agree with the Bombay High Court’s judgement in the *Hexaware Technologies* case. The petitioner argued that the actions initiated against them were done with gross negligence or, at the very least, mechanical application, as the notices were based on amounts already considered by the Assessing Officer in an assessment order, which ultimately led to their deletion. The petitioner emphasised that the notice under Section 148 was issued contrary to Section 151A and should be deemed illegal.

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The petitioner further highlighted that the JAO's reply affidavit showed a refusal to acknowledge that the Rs. 4 crore in question had already been considered on its merits in previous assessment orders. The affidavit also disregarded the order dated February 26, 2024, from the CIT(A), which had deleted the addition made by the Assessing Officer. The JAO's failure to consider or respect these legal orders was a significant oversight, constituting a dereliction of duty.

The court observed that it was unacceptable for the JAO to ignore the proceedings that led to the assessment order dated December 20, 2019, and the subsequent appellate order dated February 26, 2024.

The JAO's decision to initiate reassessment proceedings, as if the prior assessment and appellate orders did not exist, was deeply troubling. The court further criticised the reasoning provided in the JAO's affidavit, indicating more than just gross negligence but a fundamental disregard for the rule of law.

The court underscored that while the Revenue may not have "accepted" the judgement of the Bombay High Court, this does not nullify the binding nature of the ruling unless it is overturned through proper legal channels.

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The JAO's approach to treating the court's decision as "not acceptable" was a blatant disregard for legal precedents, as established by the Supreme Court.

The Bombay High Court thus directed both the JAO and the Chief Commissioner to personally deposit costs of Rs. 25,000 each with the "National Association for the Blind" within two weeks, reflecting the seriousness of their misconduct.

To Read the full text of the Order CLICK HERE

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