MANOJ MANGHWANI vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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CW/21803/2025HC Rajasthan2025:RJ-JD:48062-DB10 November 2025Author: PUSHPENDRA SINGH BHATI, ANUROOP SINGHI6 pages
AI SummaryWithdrawn

What did the High Court hold?

The Tribunal quashed and set aside the notice dated March 24, 2024, issued under Section 148 and the assessment order dated March 11, 2025, passed under Section 147, along with consequential proceedings. The Tribunal found the facts of the Gujarat High Court case (Talati and Talati LLP) to be entirely different from the present case. The Tribunal disagreed with the reasoning of the Gujarat High Court, which was based on a reading of Explanation 2 to Section 148 and the understanding that pre-requisites for issuing a Section 148 notice in search cases could not be met by a Faceless Assessing Officer (FAO). The Tribunal noted that the Bombay High Court in Abhin Anilkumar Shah had distinguished cases falling under Explanation 1 from those under Explanation 2, and that the Supreme Court had dismissed an SLP against a Telangana High Court order in Venkataramana Reddy Patloola, which was based on similar reasoning. The Tribunal concluded that the notice issued by the JAO was liable to be quashed. The revenue was granted liberty to revive the notice if the Apex Court were to interfere with the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited. The petitioner stated that other grounds were not being pressed at this stage.

What were the facts?

The petitioner, Manoj Manghwani, challenged a notice dated March 24, 2024, issued under Section 148 and an assessment order dated March 11, 2025, passed under Section 147 of the Income Tax Act, 1961. The primary contention was that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO), rendering it invalid. The petitioner relied on previous judgments from the Rajasthan High Court (Shree Cement Limited and Sharda Devi Chhajer) and the Bombay High Court (Hexaware Technologies Ltd.) which held such notices issued by JAO to be invalid. The respondent revenue argued, citing a Gujarat High Court judgment in Talati and Talati LLP, that the faceless assessment scheme might not apply in search and seizure cases.

What were the issues?

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) is invalid, thereby rendering the consequential assessment order under Section 147 bad in law? Assessee's Contentions: The petitioner argued that the notice dated March 24, 2024, issued under Section 148 by the JAO is invalid. They relied on the Rajasthan High Court's decisions in Shree Cement Limited and Sharda Devi Chhajer, and the Bombay High Court's decision in Hexaware Technologies Ltd., which held that notices issued by JAO in such circumstances are invalid. Consequently, any assessment order based on such an invalid notice would also be illegal. Revenue's Contentions: The respondent revenue, citing the Gujarat High Court's judgment in Talati and Talati LLP, contended that the faceless assessment scheme might not apply to cases involving search and seizure under Section 132 of the Act, and that a JAO could issue such notices. They also highlighted that the Gujarat High Court had not interfered with the notice but directed the assessee to file a reply.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 132,Section 153A,Section 151A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JD:48062-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 21803/2025 Manoj Manghwani S/o Shri Ghanshyam Das Manghwani, Aged About 54 Years, Resident Of 587, 10B-B-Road, Sardarpura, Jodhpur 342003, Rajasthan. ----Petitioner Versus The Deputy Commissioner Of Income Tax, Central Circle - 1, Jodhpur Having Its Address At Aayakar Bhawan, Paota C Road, Jodhpur. ----Respondent For Petitioner(s) : Mr. Rajat Arora Mr. Dinesh Bothra Mr. Lucky Rajpurohit For Respondent(s) : Mr. K.K. Bissa HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE ANUROOP SINGHI

Order 10/11/2025

1.

Learned counsel for the petitioner submits that petitioner is unhappy with notice dated 24th March 2024 issued under Section 148 and assessment order dated 11th March, 2025 passed under Section 147 of the Income Tax Act, 1961 (for short ‘the Act’).

2.

Income-Tax & Others (D.B. Civil Writ Petition No.10540/2024, dated 05.08.2025, at Jaipur Bench) and Sharda Devi Chhajer (Uploaded on 11/11/2025 at 04:59:48 PM) (Downloaded on 28/10/2026 at 12:31:27 AM)

[2025:RJ-JD:48062-DB] (2 of 6) [CW-21803/2025] vs. The Income Tax Officer & Anr., reported in 2025 of Income-Tax, Circle 15(1)(2), reported in (2024) 162 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.

5.

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 (Uploaded on 11/11/2025 at 04:59:48 PM) (Downloaded on 28/10/2026 at 12:31:27 AM)

[2025:RJ-JD:48062-DB] (3 of 6) [CW-21803/2025] 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. 6. 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.

7.

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 International Tax Ward Circle-4(2)(1), Mumbai and Ors. reported in (2024) 468 ITR 350 (Bom) 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. (Uploaded on 11/11/2025 at 04:59:48 PM) (Downloaded on 28/10/2026 at 12:31:27 AM)

[2025:RJ-JD:48062-DB] (4 of 6) [CW-21803/2025]

9.

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 (Uploaded on 11/11/2025 at 04:59:48 PM) (Downloaded on 28/10/2026 at 12:31:27 AM)

[2025:RJ-JD:48062-DB] (5 of 6) [CW-21803/2025] Venkataramana Reddy Patloola (supra). The said SLP came to be dismissed by the Hon’ble Supreme Court vide order dated 16th July 2025 in SLP (Civil) Diary No. 33956/2025 stating the following- 1. “Delay condoned.

2.

Exemption Application is allowed.

3.

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.

3.

The Special Leave Petition is, accordingly, dismissed.

4.

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

12.

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.

13.

In these circumstances, notice dated 24th March 2024 issued under Section 148 and assessment order dated 11th March, 2025 passed under Section 147 of the Act along with consequential proceedings are liable to be quashed and set aside.

14.

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 (Uploaded on 11/11/2025 at 04:59:48 PM) (Downloaded on 28/10/2026 at 12:31:27 AM)

[2025:RJ-JD:48062-DB] (6 of 6) [CW-21803/2025] 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.

15.

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.

16.

Therefore, keeping open all rights and contentions of parties, we quash and set aside notice dated 24th March 2024 issued under Section 148 and assessment order dated 11th March, 2025 passed under Section 147 of the Act along with consequential proceedings, with liberty as prayed.

17.

In view of above, learned counsel for the petitioner undertakes to apply within two weeks to withdraw the appeal already filed.

18.

Undertaking accepted.

19.

Petition disposed.

20.

Consequently, all pending applications, if any, also stand disposed. (ANUROOP SINGHI),J (DR. PUSHPENDRA SINGH BHATI),J 127-Sudheer/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 11/11/2025 at 04:59:48 PM) (Downloaded on 28/10/2026 at 12:31:27 AM)

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