M/S SHIV TIMBER vs. THE JOINT COMMISSIONER OF INCOME TAX (OSD)

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CW/21938/2025HC Rajasthan2025:RJ-JD:48072-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 7, 2025, passed under Section 147 of the Income Tax Act, 1961, along with consequential proceedings, are liable to be quashed and set aside. The Court found that the facts of the Gujarat High Court case (Talati and Talati LLP) were entirely different from the present case. The Gujarat High Court's reasoning was based on an understanding that the FAO does not draw a satisfaction note before issuing a notice under Section 148 in search cases, and that pre-requisite conditions under Explanation 2 to Section 148 require human application of mind, not an algorithm. However, the Tribunal noted that the Gujarat High Court was not made aware of the Bombay High Court's reasoning in Abhin Anilkumar Shah vs. Income Tax Officer, which held that CBDT orders creating exceptions for assessment proceedings in Central Charges did not negate the applicability of the faceless regime. Furthermore, the Supreme Court had dismissed the Revenue's SLP against the Telangana High Court's order in Venkataramana Reddy Patloola, which was based on similar reasoning. Therefore, the Tribunal disagreed with the Gujarat High Court's conclusion. The petitioner's counsel stated that other grounds were not being pressed, and the revenue requested liberty to revive the notice if the Apex Court interfered with the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited. The petition was disposed of, quashing the notice and assessment order, with liberty as prayed.

What were the facts?

The petitioner, M/s Shiv Timber, through its partner Pradeep Kumar Thanvi, filed a writ petition challenging a notice dated March 24, 2024, issued under Section 148 and an assessment order dated March 7, 2025, passed under Section 147 of the Income Tax Act, 1961. The petitioner argued that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not the Faceless Assessing Officer (FAO), rendering it invalid. This court had previously held in Shree Cement Limited and Sharda Devi Chhajer, following the Bombay High Court's decision in Hexaware Technologies Ltd., that such notices issued by JAO are invalid. The revenue contended that a Gujarat High Court judgment in Talati and Talati LLP supported their position, but this court found the facts to be different.

What were the issues?

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) is invalid, and consequently, whether an assessment order passed pursuant to such a notice is also bad in law? Assessee's Contention: The petitioner argued that the notice dated March 24, 2024, issued under Section 148 was invalid because it was issued by the JAO and not the FAO. They relied on this Court's decisions in Shree Cement Limited vs. Assistant Commissioner of Income-Tax & Others and Sharda Devi Chhajer vs. The Income Tax Officer & Anr., which followed the Bombay High Court's ruling in Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax, Circle 15(1)(2), holding that notices issued by JAO are invalid. Revenue's Contention: The respondent revenue cited the Gujarat High Court judgment in Talati and Talati LLP vs. Office of Assistant Commissioner of Income Tax, Circle 4(1)(1), Ahmedabad, which considered the validity of a show cause notice under Section 148 and proceedings under Section 153A. The revenue submitted that the Gujarat High Court did not interfere with the notice but directed the assessee to file a reply. The revenue also argued that the concept of automated allocation under the e-assessment scheme cannot apply in cases of search and seizure under Section 132, relying on Explanation 2 to Section 148.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JD:48072-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 21938/2025 M/s Shiv Timber, Through Its Partner Pradeep Kumar Thanvi, S/o, Purshottam Thanvi Aged About 45 Years Old, Address Pokran Ki Haweli, Inside Sojati Gate, Jodhpur, 342001 Rajasthan. ----Petitioner Versus 1. The Joint Commissioner Of Income Tax (Osd), Central Circle - 1, Jodhpur Having Its Address At Aayakar Bhawan, Paota C Road, Jodhpur. 2. The Deputy Commissioner Of Income Tax, Central Circle - 1, Jodhpur Having Its Address At Aayakar Bhawan, Paota C Road, Jodhpur. ----Respondents 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 07th March, 2025 passed under Section 147 of the Income Tax Act, 1961 (for short ‘the Act’).

2.

(Uploaded on 11/11/2025 at 05:02:33 PM) (Downloaded on 28/10/2026 at 12:31:53 AM)

[2025:RJ-JD:48072-DB] (2 of 6) [CW-21938/2025] Income-Tax & Others (D.B. Civil Writ Petition No.10540/2024, dated 05.08.2025, at Jaipur Bench) and Sharda Devi Chhajer 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 (Uploaded on 11/11/2025 at 05:02:33 PM) (Downloaded on 28/10/2026 at 12:31:53 AM)

[2025:RJ-JD:48072-DB] (3 of 6) [CW-21938/2025] 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. 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 (Uploaded on 11/11/2025 at 05:02:33 PM) (Downloaded on 28/10/2026 at 12:31:53 AM)

[2025:RJ-JD:48072-DB] (4 of 6) [CW-21938/2025] the International taxation charges/Central Charges were subject matter of deliberation.

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 05:02:33 PM) (Downloaded on 28/10/2026 at 12:31:53 AM)

[2025:RJ-JD:48072-DB] (5 of 6) [CW-21938/2025]

11.

The Revenue filed an SLP against another order passed by Telangana High Court based on the aforesaid Order in 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 07th 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 (Uploaded on 11/11/2025 at 05:02:33 PM) (Downloaded on 28/10/2026 at 12:31:53 AM)

[2025:RJ-JD:48072-DB] (6 of 6) [CW-21938/2025] 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.

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 07th 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 136-Sudheer/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 11/11/2025 at 05:02:33 PM) (Downloaded on 28/10/2026 at 12:31:53 AM)

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