DEEPA RAM vs. THE DEPUTY COMMISIONER OF INCOME TAX

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CW/23485/2025HC Rajasthan2025:RJ-JD:52018-DB03 December 2025Author: PUSHPENDRA SINGH BHATI, SANJEET PUROHIT6 pages
AI SummaryWithdrawn

What did the High Court hold?

The Tribunal held that the Gujarat High Court's judgment in Talati and Talati LLP was based on a reading of Explanation 2 to Section 148 and an understanding that the pre-requisites for issuing a Section 148 notice in search cases could not be met by a Faceless Assessing Officer (FAO). The Tribunal respectfully disagreed with this view. It 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, International Tax Ward Circle-4(2)(1), Mumbai, which dealt with CBDT orders creating exceptions for assessment proceedings in Central and International Taxation charges. The Bombay High Court in Abhin Anilkumar Shah held that the faceless scheme notification dated March 29, 2022, did not include or refer to these earlier CBDT orders, and it would be doing violence to the language of the notification to read them into it. The Tribunal found the judgment in Hexaware Technologies Ltd. to be distinguishable as it pertained to Explanation 1 to Section 148, not Explanation 2. Consequently, the Tribunal quashed and set aside the notice dated March 24, 2024, issued under Section 148 and the assessment order dated March 17, 2025, passed under Section 147, along with consequential proceedings, with liberty to the revenue to revive the notice if the Apex Court interferes with the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited. The petitioner was permitted to withdraw the appeal.

What were the facts?

The petitioner, Deepa Ram, challenged a notice dated March 24, 2024, issued under Section 148 and an assessment order dated March 17, 2025, passed under Section 147 of the Income Tax Act, 1961. The primary ground for challenge was that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO). The petitioner relied on previous judgments from the Rajasthan High Court (in cases concerning Shree Cement Limited and Sharda Devi Chhajer) which followed a Bombay High Court ruling (Hexaware Technologies Ltd.) stating such notices issued by JAO are invalid. The respondent argued, citing a Gujarat High Court judgment (Talati and Talati LLP), that the validity of a Section 148 notice issued by JAO in search cases should not be interfered with.

What were the issues?

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO) is invalid, particularly when the assessment proceedings are intended to be faceless under the relevant scheme. Assessee's Contention: The petitioner argued that a notice issued by the JAO, instead of a Faceless Assessing Officer (FAO), is invalid. They relied on Shree Cement Limited vs. Assistant Commissioner of Income-Tax & Others and Sharda Devi Chhajer vs. The Income Tax Officer & Anr., which followed Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax, Circle 15(1)(2) (Bombay High Court), holding that such notices are bad in law, rendering subsequent assessment orders invalid. Revenue's Contention: The respondent cited Talati and Talati LLP vs. Office of Assistant Commissioner of Income Tax (Gujarat High Court), arguing that the court did not interfere with a Section 148 notice issued by JAO in search cases and directed the assessee to file a reply. The Gujarat High Court's reasoning was based on Explanation 2 to Section 148 (as it existed then) and the understanding that automated allocation under the faceless regime cannot apply to search and seizure cases under Section 132, as these require human application of mind.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JD:52018-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 23485/2025 Deepa Ram S/o Mishri Lal, Aged About 64 Years, R/o Bera Wala Bas, Bhadwasiya, Jodhpur, Rajasthan. Pan Afept9943E. ----Petitioner Versus The Deputy Commissioner of Income Tax, Central Circle-1, Jodhpur Having its Address IT Aaykar Bhawan, Paota C Road, Jodhpur. ----Respondent For Petitioner(s) : Mr. Harshvardhan Singh Chundawat. For Respondent(s) : Mr. K.K. Bissa. HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE SANJEET PUROHIT

Order 03/12/2025

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 17th 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 vs. The Income Tax Officer & Anr., reported in 2025 SCCOnLine Raj3386, following judgment of Bombay High Court (Uploaded on 05/12/2025 at 03:35:57 PM) (Downloaded on 28/10/2026 at 12:34:33 AM)

[2025:RJ-JD:52018-DB] (2 of 6) [CW-23485/2025] of Income-Tax, Circle 15(1)(2), 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 cases by using suitable technological tools including Artificial Intelligence and Machine Learning, as defined in Clause 2(1)(b) of (Uploaded on 05/12/2025 at 03:35:57 PM) (Downloaded on 28/10/2026 at 12:34:33 AM)

[2025:RJ-JD:52018-DB] (3 of 6) [CW-23485/2025] 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.

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 (Uploaded on 05/12/2025 at 03:35:57 PM) (Downloaded on 28/10/2026 at 12:34:33 AM)

[2025:RJ-JD:52018-DB] (4 of 6) [CW-23485/2025] 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 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 (Uploaded on 05/12/2025 at 03:35:57 PM) (Downloaded on 28/10/2026 at 12:34:33 AM)

[2025:RJ-JD:52018-DB] (5 of 6) [CW-23485/2025] Section 148 in search cases cannot be met by the FAO. With due respect, we do not agree.

12.

In these circumstances, notice dated 27th March 2024 issued under Section 148 and assessment order dated 23th March, 2025 passed under Section 147 of the Act along with consequential proceedings are liable to be quashed and set aside.

13.

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.

14.

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.

15.

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 17th March, 2025 passed under Section 147 of the Act along with consequential proceedings, with liberty as prayed.

16.

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

17.

Undertaking accepted.

18.

Petition disposed. (Uploaded on 05/12/2025 at 03:35:57 PM) (Downloaded on 28/10/2026 at 12:34:33 AM)

[2025:RJ-JD:52018-DB] (6 of 6) [CW-23485/2025]

19.

Consequently, all pending applications, if any, also stand disposed. (SANJEET PUROHIT),J (DR. PUSHPENDRA SINGH BHATI),J 2-sumer/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 05/12/2025 at 03:35:57 PM) (Downloaded on 28/10/2026 at 12:34:33 AM)

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