BHARAT GARG vs. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) JAIPUR

Learned counsel for the petitioner Mr. Sharad Kothari submits that the controversy involved in this matter is squarely covered by the judgment dated 24.09.2025 passed by the co-ordinate Bench Commissioner of Income Tax (Central) Jaipur & Ors.; D.B. Civil Writ Petition No.18987/2025 which is reproduced hereinbelow :

All office objections waived.

Mr. Kothari submits that petitioner is unhappy with notice dated 26th March 2025 issued under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’).

Mr. Kothari further submits that apart from various grounds taken in the petition, one of the grounds is that notice has been issued by Jurisdictional Assessing Officer (JAO) and not Faceless Assessing Officer (FAO). He also submits that this Court in Shree Cement Limited vs. Assistant Commissioner of Income-Tax & & Another2 following judgment of Bombay High Court in Income-Tax, Circle 15(1)(2)3 has held that such a notice issued held that notification dated 29th March 2022 (prescribing e- assessment scheme) does not cover a case where notice under Section 148 is issued by the JAO, the information received by him in the matter of search and seizure under Section 132 of the Act, 1961, or requisitioned under Section 132A.

The Gujarat High Court has relied on Explanation 2 to Section 148 (as it existed at the relevant time) to approve the contention of the Revenue that the concept of automated allocation, i.e. application of algorithm for randomized allocation of cases by using suitable technological tools including Artificial Intelligence and Machine Learning, as defined in Clause 2(1)(b) of the Scheme dated 29th March 2022, cannot be applied in a case of search and seizure under Section 132. 1 DB Civil Writ Petition No.10540/2024, dated 05.08.2025 at Jaipur Bench (unreported) 2 2025 SCCOnLine Raj3386 3 [2024] 162 taxmann.com 225 (Bombay)

While upholding the said contention the Gujarat High Court was perhaps under an understanding that the FAO does not draw a satisfaction note before proceeding to issue a notice under Section 148 in search cases. The Gujarat High Court has taken cognizance of the contention that pre-requisite conditions before issuance of notice under Section 148, as provided in Explanation 2 of Section 148 would require human application of mind and cannot be fulfilled by algorithm under the Faceless Regime.

The decision of the Division Bench of the Bombay High Court in the case of Hexaware Technologies Ltd. (supra) has been distinguished as having been rendered in a case, which falls within the arena of Explanation 1 to Section 148 and not where Explanation 2 to Section 148 of the Income Tax Act' 1961, would be International Tax Ward Circle-4(2)(1), Mumbai and Ors.5 where the orders dated 31st March 2021 and 06th September 2021 issued by the CBDT creating exception for the assessment proceedings undertaken by the International taxation charges/Central Charges were subject matter of deliberation.

In Abhin Anilkumar Shah (supra) the Court held that said orders dated 31st March 2021 and 06th September 2021 issued by the CBDT only carve out exception in relation to the assessment proceedings. What has been done by order dated 06th September 2021 is to modify the order dated 31st March 2021 to the extent of what is set out in paragraph 3 thereof, namely, that in addition to such exceptions to the applicability of the faceless mechanism to assessment orders in relation to Central Charges and International Tax Charges, an additional exception was added, namely, to the assessment order in cases where pendency could not be created on ITBA because of technical reasons or cases not having a PAN, as the case may be. Thus, the scheme as framed under section 151A and notified under the notification dated 29th March 2022 does not include the applicability, inclusion or even reference to the orders dated 31st March 2021 and 06th September 2021. It was further held that it would be doing violence to the language of the notification/scheme dated 29th March 2022 to read into such notification what has not been expressly provided for and/or something which is kept outside the purview of the said notification, [2024]468ITR350(Bom)

Exemption Application is allowed.

Having heard the learned counsel appearing for the petitioners – Revenue and having gone through the materials on record, we find no good reason to interfere with the impugned order passed by the High Court.

The Special Leave Petition is, accordingly, dismissed.

Pending applications, if any, shall also stand disposed of.”

Thus the judgment passed by the Gujarat High Court is not based on the reading of notification dated 29th March 2022 along with orders dated 31st March 2021/ 06th September 2021 but is based on the simple reading of Explanation 2 to Section 148 along with understanding that the pre-requisites for issuing notice under Section 148 in search cases cannot be met by the FAO. With due respect, we do not agree.

In these circumstances, notice dated 26th March 2025 passed under Section 148 of the Act is liable to be quashed and set aside.

At this stage, Mr. Bissa submits that in judgment of Hexaware Technologies Ltd. (supra), Revenue has preferred a Special Leave Petition and notice has been issued. Counsel states that in view of the law as it stands today, Court may grant the prayer of petitioner but in case the Apex Court interferes with judgment in Hexaware Technologies Ltd. (supra), Sharda Devi Chhajer (supra) or Shree Cement Limited (supra), then Revenue should be given liberty to revive the notice issued under Section 148 of the Act.

In view of above, counsel for petitioner states that other grounds raised are not being pressed upon and they will be taken at appropriate stage, if required.

Therefore, keeping open all rights and contentions of parties, we quash and set aside notice dated 26th March 2025 passed under Section 148 of the Act with liberty as prayed.

Petition disposed.

Consequently, all pending applications, if any, also stand disposed."

Learned counsel for the respondents is not in a position to refute the above submission.

In view of the above, the present writ petition is disposed of on the same terms. (ANUROOP SINGHI),J (DR.PUSHPENDRA SINGH BHATI),J 203-Arjun/- Powered by TCPDF (www.tcpdf.org)