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JAO vs. FAO: Reassessment Powers under Section 148 – Evolving Delhi High Court and Apex Court Position
It is pertinent to note that the issue in question is common and has arisen before various High Courts across the country through a bunch of writ petitions. While several High Courts have rendered judgments in favour of the assessee, certain others have taken a view in favour of the Revenue. The judgments delivered by the High Courts in favour of the assessees were challenged by the Revenue before the Hon’ble Supreme Court. However, the Apex Court neither granted any stay on the operation of such judgments nor interfered with the same and, in several cases, dismissed the Special Leave Petitions filed by the Revenue.
In this backdrop, the present discussion confines itself to the perspective of the Delhi High Court alone, examining the stand taken and the legal position that continues to prevail therein. The analysis of Delhi High Court also takes into account the judgments of other High Courts as well as the recent position adopted by the Hon’ble Supreme Court on the issue.
First and foremost, it is pertinent to note that the Delhi High Court, comprising Hon’ble Mr. Justice Yashwant Varma and Hon’ble Mr. Justice Ravinder Dudeja, has settled the law on the said issue in TKS Builders Pvt. Ltd. v. Income Tax Officer, Ward 25(3), New Delhi, W.P.(C) No. 1968/2023, decided on 28.10.2024. Although the said judgment is presently under challenge before the Hon’ble Supreme Court, its operation has not been stayed and, therefore, it continues to hold the field.
Recently, in Inder Dev Gupta v. Assistant Commissioner of Income Tax, Central Circle–2, Delhi, W.P.(C) No. 16937/2025, judgment dated 21.11.2025, the Delhi High Court, comprising Hon’ble Mr. Justice V. Kameswar Rao and Hon’ble Mr. Justice Vinod Kumar, has emphatically reiterated that this Court has consistently taken the view that both the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) possess concurrent jurisdiction to initiate reassessment proceedings under Section 148 of the Act.
It is to be noted that the assessee submitted that, consistent with the above statutory scheme, several High Courts have categorically held that the JAO has no jurisdiction to issue reassessment notices under Section 148 of the Act, as held in the cases listed below:
a. Hexaware Technologies Ltd. v. ACIT [2024] 162 taxmann.com 225 (Bombay HC);
b. Prakash Pandurang Patil v. ITO [2024:BHC-AS:32759-DB] (Bombay HC);
c. Sri Venkataramana Reddy Patloola v. DCIT [W.P. Nos. 13353, 16141 & 16877 of 2024] (Telangana HC);
d. Deepanjan Roy v. ADIT (International Taxation)-2 [W.P. No. 23573 of 2024] (Telangana HC);
e. Jatinder Singh Bhangu v. Union of India [CWP 15745 of 2024] (Punjab & Haryana HC);
f. Royal Bitumen (P.) Ltd. v. ACIT [2024] 164 taxmann.com 606 (Bombay HC);
g. Everest Kanto Cylinder Ltd. v. DCIT/ACIT [2024] 165 taxmann.com 192 (Bombay HC);
h. Sundaram Multi Pap Ltd. v. ACIT [2024] 164 taxmann.com 608 (Bombay HC);
i. Venus Jewel v. ACIT [2024] 164 taxmann.com 414 (Bombay HC).
It was submitted that the Revenue had carried some of these judgments in appeal before the Supreme Court, which has since conclusively settled the issue in ADIT (International Taxation)-2, Hyderabad & Anr. v. Deepanjan Roy, SLP(C) Diary No. 33956/2025, by dismissing the Revenue’s SLP on 16.07.2025. Consequently, the ratio of the aforesaid judgments stands affirmed by the Supreme Court, thereby crystallising the position that only the FAO has the jurisdiction to issue notices under Section 148 of the Act.
The assessee placed reliance on the judgment of the High Court of Judicature at Madras in Dadha Pharma LLP v. DCIT, W.P. No. 35385 of 2024, wherein the High Court followed the ratio laid down in Hexaware Technologies Ltd. (supra), while noting that the SLP against the said judgment is pending before the Supreme Court.
It was further submitted before the Court by the assessee that the Supreme Court, in SLP(C) Diary No. 13266/2025 (filed to challenge the Delhi High Court’s order in P.C. Jewellers Ltd. vs. ACIT, W.P.(C) 13229/2024, dated 23.01.2025), vide its order dated 04.04.2025, had specifically directed that the Revenue may proceed with the reassessment proceedings, but any adverse order against the petitioner therein shall not be given effect to until further orders. According to the assessee, this direction of the Supreme Court, by necessary implication, constitutes an interim stay, and consequently, any reliance on TKS Builders (supra) is no longer maintainable in law.
In this regard, the Delhi High Court observed that, in P.C. Jeweller Ltd. (supra), a coordinate bench of this Court had dismissed a writ petition seeking similar relief by following the judgment in TKS Builders (supra). Although the said judgment has been appealed before the Supreme Court, the Revenue was permitted to continue the proceedings, subject to the caveat that any order passed adverse to the petitioner therein shall not be given effect to.
The Delhi High Court has also held that, in addition, in the cases of M/s Mala Petrochemicals and Polymers v. Income Tax Officer & Ors., W.P.(C) 12011/2025, decided on 19.08.2025; Mehak Jagga v. ITO, W.P.(C) 13149/2025, decided on 28.08.2025; All India Kataria Education Society v. DCIT, W.P.(C) 14225/2025, decided on 15.09.2025; and M/s Empire Fasteners v. Assistant Commissioner of Income Tax & Anr., W.P.(C) 14754/2025, decided on 23.09.2025, similar petitions were dismissed by relying upon TKS Builders Pvt. Ltd. (supra).
Further, the assessee submitted before the Delhi High Court that, since the Supreme Court has dismissed the SLP filed against the judgment of the Bombay High Court in Prakash Pandurang Patil v. ITO [2024:BHC-AS:32759-DB], wherein the High Court held that only the FAO has the jurisdiction to initiate proceedings under Section 148 of the Act, the said decision has attained finality and, by necessary implication, would operate to read down the judgment of this Court in TKS Builders (supra). However, the Hon’ble Delhi High Court held that it does not find any merit in the submission, noting that the Supreme Court, while dismissing the SLP, had merely stated that it does not find any merit in the petition, without providing any detailed reasons.
In this regard, the Delhi High Court referred to the ruling in Fuljit Kaur v. State of Punjab & Ors., (2010) 11 SCC 455, particularly paragraph 7, which held that:
“There is no dispute to the settled proposition of law that dismissal of the special leave petition in limine by this Court does not mean that the reasoning of the judgment of the High Court against which the special leave petition has been filed before this Court stands affirmed or the judgment and order impugned merges with such order of this Court on dismissal of the petition. it simply means that this Court did not consider the case worth examining for the reason, which may be other than merit of the case. Nor such an order of this Court operates as res judicata. An order rejecting the special leave petition at the threshold without detailed reasons therefore does not constitute any declaration of law or a binding precedent.”
(Emphasis supplied)
It means that the Supreme Court’s dismissal of a Special Leave Petition (SLP) without detailed reasons does not mean it agrees with the High Court’s judgment. Such a dismissal is not a precedent, does not confirm the High Court’s reasoning, and does not prevent further legal arguments on the matter. It simply means the Supreme Court chose not to examine the case at that stage.
Further, the Delhi High Court also referred to the Supreme Court’s judgment in State of Orissa & Anr. v. Dhirendra Sundar Das & Ors., (2019) 6 SCC 270, wherein the Court observed as follows:
“9.27. It is a well-settled principle of law emerging from a catena of decisions of this Court, including Supreme Court Employees’ Welfare Assn. V. Union of India [Supreme Court Employees’ Welfare Assn. V. Union of India, (1989) 4 SCC 187, paras 22 and 23 : 1989 SCC (L&S) 569] and State of Punjab v. Davinder Pal Singh Bhullar [State of Punjab v. Davinder Pal Singh Bhullar, (2011) 14 SCC 770, paras 112 and 113 : (2012) 4 SCC (Civ) 1034 : (2012) 4 SCC (Cri) 496 : (2014) 1 SCC (L&S) 208] , that the dismissal of an SLP in limine simply implies that the case before this Court was not considered worthy of examination for a reason, which may be other than the merits of the case. Such in limine dismissal at the threshold without giving any detailed reasons, does not constitute any declaration of law or a binding precedent under Article 141 of the Constitution.”
(Emphasis supplied)
Even in the judgment in Kunhayammed and Others v. State of Kerala & Ors. (2000) 6 SCC 359 relied upon by Mr. Abbas, the Supreme Court has observed as under:-
40. A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving being dealt with by the Apex Court of the country and so on. The expression often employed by this Court while disposing of such petitions are — “heard and dismissed”, “dismissed”, “dismissed as barred by time” and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The Court may apply its mind to the merit worthiness of the petitioner’s prayer seeking leave to file an appeal and having formed an opinion may say “dismissed on merits”. Such an order may be passed even ex parte, that is, in the absence of the opposite party. In any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion neither doctrine of merger nor Article 141 of the Constitution is attracted to such an order. Grounds entitling exercise of review jurisdiction conferred by Order 47 Rule 1 CPC or any other statutory provision or allowing review of an order passed in exercise of writ or supervisory jurisdiction of the High Court (where also the principles underlying or emerging from Order 47 Rule 1 CPC act as guidelines) are not necessarily the same on which this Court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of a special leave petition does not take away the jurisdiction of the court, tribunal or forum whose order forms the subject-matter of petition for special leave to review its own order if grounds for exercise of review jurisdiction are shown to exist. Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger.
41. Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court.
xxx xxx xxx
43. We may look at the issue from another angle. The Supreme Court cannot and does not reverse or modify the decree or order appealed against while deciding a petition for special leave to appeal. What is impugned before the Supreme Court can be reversed or modified only after granting leave to appeal and then assuming appellate jurisdiction over it. If the order impugned before the Supreme Court cannot be reversed or modified at the SLP stage obviously that order cannot also be affirmed at the SLP stage.”
(Emphasis supplied)
Further, in Khoday Distilleries Ltd. & Others vs. Sri Mahadeshwara Sahakara Sakkare Karkhane Limited, Kollegal, (2019) 4 SCC 376, the Supreme Court held as under:-
“26.2. We reiterate the conclusions relevant for these cases as under: (Kunhayammed case, SCC p. 384)
“(iv) An order refusing special leave to appeal may be a non-speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed.
(v) If the order refusing leave to appeal is a speaking order i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the Apex Court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.
(vi) Once leave to appeal has been granted and appellate jurisdiction of the Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.
(vii) On an appeal having been preferred or apetition seeking leave to appeal having been converted into an appeal before the Supreme Court the jurisdiction of the High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Order 47 Rule 1 CPC.”
The assessee submitted before Delhi High Court that, according to paragraph 3 of Prakash Pandurang Patil (supra), the SLP was dismissed both on merits and on delay. He argued that, by necessary implication, this means the judgment in Hexaware Technologies Ltd. v. ACIT [2024] 162 taxmann.com 225 (Bombay HC), relied upon by the Bombay High Court, would be affirmed, and the judgment in TKS Builders (supra) would be effectively overruled. However, The Hon’ble Delhi High Court held that this argument is not convincing because the Supreme Court merely dismissed the SLP without addressing the issue. Based on the judicial pronouncements discussed earlier, this cannot be taken to have overruled TKS Builders (supra). Moreover, the SLP filed against TKS Builders (supra) is still pending before the Supreme Court.
As regards the submission of assessee that this Court (Delhi High Court), in TKS Builders (supra), Mala Petrochemicals and Polymers (supra), and Mehak Jagga (supra), has wrongly recognised the concept of concurrent jurisdiction between the JAO and FAO, the Court held that it is sufficient to note that this issue is presently pending consideration before the Supreme Court.
With respect to the submission that the Supreme Court, in All India Kataria Education Society (SLP (C) 29723/2025), has issued notice and stayed the assessment proceedings, and that similar stays were granted in Yukti Export v. Income Tax Officer (arising out of Yukti Export v. Income Tax Officer, W.P.(C) 15024/2025 (Delhi High Court), judgment dated 26.09.2025), the High Court noted that these facts are a matter of record. However, the Supreme Court has not stayed the operation of the High Court orders passed in those writ petitions, which were based on the judgment in TKS Builders (supra). The same position applies to the SLP filed in P.C. Jeweller Ltd. (supra).
In view of the above discussion, the Delhi High Court found no merit in the present petitions [ in Inder Dev Gupta) (supra)] and dismissed them. Consequently, all pending applications, having become infructuous, were also dismissed.
Table: Supreme Court Orders / Status vis-à-vis High Court Judgments
| Sr. No. | Supreme Court Order / Status | Order of High Court Challenged before the Supreme Court |
| 1 | ADIT (International Taxation)-2, Hyderabad & Anr. v. Deepanjan Roy, SLP(C) Diary No. 33956/2025 — SLP dismissed on 16.07.2025. The Supreme Court observed: “Having heard the learned counsel appearing for the petitioners–Revenue and having gone through the material on record, we find no good reason to interfere with the impugned order passed by the High Court.” | Deepanjan Roy v. ADIT (International Taxation)-2, W.P. No. 23573 of 2024 (Telangana High Court), judgment dated 29.08.2024 |
| 2 | SLP pending before the Supreme Court | Dadha Pharma LLP v. DCIT, W.P. No. 35385 of 2024 (Madras High Court), judgment dated 24.06.2025, wherein the High Court followed the ratio laid down in Hexaware Technologies Ltd. (supra) |
| 3 | All India Kataria Education Society v. ACIT, Central Circle-02, Delhi & Anr., SLP(C) No. 29723/2025 — Order dated 31.10.2025: Notice issued and assessment proceedings stayed till the next date of hearing | All India Kataria Education Society v. ACIT, W.P.(C) No. 14225/2025 (Delhi High Court), judgment dated 15.09.2025 |
| 4 | Yukti Export v. Income Tax Officer, SLP(C) No. 31818/2025 — Assessment proceedings stayed till the next date of hearing | Yukti Export v. Income Tax Officer, W.P.(C) No. 15024/2025 (Delhi High Court), judgment dated 26.09.2025 |
| 5 | P.C. Jewellers Ltd. v. ACIT, SLP(C) Diary No. 13266/2025 — Order dated 04.04.2025: Revenue may proceed with reassessment proceedings; however, any adverse order passed shall not be given effect to until further orders | P.C. Jewellers Ltd. v. ACIT, W.P.(C) No. 13229/2024 (Delhi High Court), judgment dated 23.01.2025, relying upon TKS Builders (supra) |
| 6 | Special Leave to Appeal (C) Nos. 34977-34985/2025 — Pending. Order: “Issue notice. In the meantime, the assessment proceedings shall remain stayed till the next date of hearing.” Tagged with SLP(C) No. 29723/2025 | Inder Dev Gupta v. ACIT, Central Circle-2, Delhi, W.P.(C) No. 16937/2025 (Delhi High Court), judgment dated 21.11.2025 |
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