NOSHAD KHAN vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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CW/21874/2025HC Rajasthan2025:RJ-JD:48070-DB10 November 2025Author: PUSHPENDRA SINGH BHATI, ANUROOP SINGHI6 pages
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What did the High Court hold?

The Tribunal held that the notice dated March 24, 2024, issued under Section 148 and the assessment order dated March 9, 2025, passed under Section 147, along with consequential proceedings, are liable to be quashed and set aside. The Court found the facts of the Gujarat High Court case (Talati and Talati LLP) to be entirely different from the present case. The Court noted that the Gujarat High Court's reasoning was based on a reading of Explanation 2 to Section 148 and an understanding that pre-requisites for issuing a Section 148 notice in search cases cannot be met by a Faceless Assessing Officer (FAO). The Rajasthan High Court disagreed with this reasoning. The Court also referred to the Bombay High Court's decision in Abhin Anilkumar Shah, which held that CBDT orders creating exceptions for assessment proceedings in Central and International Tax Charges did not alter the scheme notified on March 29, 2022. Furthermore, the Supreme Court's dismissal of an SLP against a Telangana High Court order in Venkataramana Reddy Patloola, which was based on similar reasoning, supported the petitioner's stance. The revenue sought liberty to revive the notice if the Apex Court were to interfere with the Hexaware Technologies Ltd. judgment, which was granted. The petitioner stated other grounds were not being pressed and would be taken up later. The Court quashed the notice and assessment order with liberty as prayed.

What were the facts?

The petitioner, Noshad Khan, is challenging a notice dated March 24, 2024, issued under Section 148 and an assessment order dated March 9, 2025, passed under Section 147 of the Income Tax Act, 1961. The primary ground for challenge is that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO). The petitioner relies on previous judgments from the Rajasthan High Court (Shree Cement Limited) and the Bombay High Court (Hexaware Technologies Ltd.) which held such notices issued by JAO to be invalid. The respondent revenue argued that a Gujarat High Court judgment in Talati and Talati LLP distinguished the situation, particularly concerning search and seizure cases under Section 132, where automated allocation might not apply.

What were the issues?

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) is invalid, thereby rendering the consequent assessment order under Section 147 bad in law? (Question of law) Assessee's Contention: The petitioner argues that notices issued by JAO are invalid, citing Shree Cement Limited vs. Assistant Commissioner of Income-Tax & Others and Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax, Circle 15(1)(2). Any assessment order based on such an invalid notice would also be invalid. Revenue's Contention: The respondent relies on Talati and Talati LLP vs. Office of Assistant Commissioner of Income Tax, Circle 4(1)(1), Ahmedabad, suggesting that in search and seizure cases under Section 132, the JAO might be permitted to issue notices, and the Gujarat High Court did not interfere with such notices, directing the assessee to reply. The revenue also points to the Gujarat High Court's reliance on Explanation 2 to Section 148, implying that automated allocation cannot be applied in search cases.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JD:48070-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 21874/2025 Noshad Khan S/o Shri Noor Mohammad, Aged About 57 Years, Resident Of Plot No. 217, Dig Firoz Khan Colony, Chopasni Road, Jodhpur 342008, 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 09th 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 05:02:08 PM) (Downloaded on 28/10/2026 at 12:31:47 AM)

[2025:RJ-JD:48070-DB] (2 of 6) [CW-21874/2025] 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 05:02:08 PM) (Downloaded on 28/10/2026 at 12:31:47 AM)

[2025:RJ-JD:48070-DB] (3 of 6) [CW-21874/2025] 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 05:02:08 PM) (Downloaded on 28/10/2026 at 12:31:47 AM)

[2025:RJ-JD:48070-DB] (4 of 6) [CW-21874/2025]

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 05:02:08 PM) (Downloaded on 28/10/2026 at 12:31:47 AM)

[2025:RJ-JD:48070-DB] (5 of 6) [CW-21874/2025] 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 09th 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 05:02:08 PM) (Downloaded on 28/10/2026 at 12:31:47 AM)

[2025:RJ-JD:48070-DB] (6 of 6) [CW-21874/2025] 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 09th 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 134-Sudheer/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 11/11/2025 at 05:02:08 PM) (Downloaded on 28/10/2026 at 12:31:47 AM)

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