M/S POTALIA ENTERPRISES PRIVATE LIMITED vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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CW/24693/2025HC Rajasthan2025:RJ-JD:54415-DB17 December 2025Author: PUSHPENDRA SINGH BHATI, SANJEET PUROHIT3 pages
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What did the High Court hold?

The High Court held that as long as the law declared in Sharda Devi Chhajer and Hexaware Technologies Ltd. (which states that jurisdiction vests with the Faceless Assessing Officer) continues to be valid, notices issued by the Jurisdictional Assessing Officer are not legally sustainable. Consequently, the impugned notice dated 18.03.2025 issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings were quashed and set aside for being without jurisdiction. The Court clarified that the respondent-Revenue is at liberty to proceed afresh through the Faceless Assessing Officer (FAO), strictly in accordance with law, subject to limitations and other legal requirements. Furthermore, the Court reserved liberty for the Revenue to act in accordance with law if the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited are reversed, set aside, or materially modified by the Hon'ble Supreme Court. The petitioner stated that other grounds were not being pressed and would be taken up at an appropriate stage.

What were the facts?

The petitioner, M/s Potalia Enterprises Private Limited, filed a writ petition challenging a notice dated 18.03.2025 issued under Section 148 of the Income Tax Act, 1961. The respondent is the Deputy Commissioner of Income Tax, Central Circle-2, Jodhpur. The respondent's counsel submitted that the controversy is covered by the High Court's judgment in Sharda Devi Chhajer vs. The Income Tax Officer & Another, which followed the Bombay High Court's decision in Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax. These judgments held that notices issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) are invalid. The revenue also noted that a Special Leave Petition (SLP) was filed against the Hexaware Technologies Ltd. judgment, and notice had been issued by the Supreme Court.

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 when the assessment proceedings are mandated to be conducted by a Faceless Assessing Officer (FAO)? (Question of law turning on the procedural framework for faceless assessments). Assessee's Contention: The petitioner implicitly relies on the principle that notices must be issued by the competent authority, which, in the context of faceless assessments, should be the FAO. The petitioner's challenge to the notice issued by the JAO is based on this premise. Revenue's Contention: The respondent-revenue acknowledges that the prevailing legal position, as per Sharda Devi Chhajer and Hexaware Technologies Ltd., supports the invalidity of notices issued by the JAO. However, the revenue seeks liberty to revive proceedings if the aforementioned judgments are set aside or materially modified by the Supreme Court, given that an SLP has been filed and admitted against the Hexaware Technologies Ltd. decision.

Which sections of the Income-tax Act were involved?

Section 148

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Cause title — parties, addresses and appearances
[2025:RJ-JD:54415-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 24693/2025 M/s Potalia Enterprises Private Limited, Through Its Director Moola Ram Choudhary S/o Goma Ram Choudhary, Age About 63 Years, 62-63 Udhyog Nagar, Second Phase Basni Jodhpur - 342001 Rajasthan. Pan - Aahcp1480B ----Petitioner Versus The Deputy Commissioner Of Income Tax, Central Circle -2, Jodhpur Having Its Address At Aayakar Bhawan, Paota C Road, Jodhpur. ----Respondent For Petitioner(s) : Mr. Harshvardhan Singh. For Respondent(s) : Mr. K.K. Bissa. HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE SANJEET PUROHIT

Order 17/12/2025

1.

Mr. K.K. Bissa, learned counsel appearing for the respondents, at the outset, fairly submits that the controversy involved in the present writ petition is squarely covered by the judgment of this Court in Sharda Devi Chhajer vs. The Income Tax Officer & Another [2025 SCC OnLine Raj 3386], which has followed the judgment of the Bombay High Court in Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax, Circle- 15(1)(2) [2024] 162 taxmann.com 225 (Bom.). It is held therein that notices issued by the Jurisdictional Assessing Officer (JAO), instead of the Faceless Assessing Officer, are invalid.

2.

Learned counsel, however, submits that the respondents are acting under the mandate of the directions issued by the learned (Uploaded on 20/12/2025 at 12:14:34 PM) (Downloaded on 28/10/2026 at 12:36:50 AM)

[2025:RJ-JD:54415-DB] (2 of 3) [CW-24693/2025] ITAT. He further submits that against the judgment in Hexaware Technologies Ltd. (supra), the Revenue has preferred a Special Leave Petition before the Hon’ble Supreme Court and notice has been issued. Learned counsel, therefore, submits that while the prayer of the petitioner may be granted in view of the prevailing legal position, liberty be reserved in favour of the Revenue to revive the proceedings in the event the judgments in Hexaware Technologies Ltd. (supra), Sharda Devi Chhajer (supra) or Shree Cement Limited (supra) are set aside or materially modified by the Hon’ble Apex Court.

3.

This Court finds that so long as the law declared in Sharda Devi Chhajer (supra) and Hexaware Technologies Ltd. (supra) holding that the jurisdiction vests with the Faceless Assessing Officer continues to hold the field, issuance of notices by the Jurisdictional Assessing Officer would not be legally sustainable.

4.

Accordingly, this Court directs that, keeping open all rights and contentions of parties, the impugned notice dated 18.03.2025 (Annex.3) issued under Section 148 of the Income Tax Act, 1961, along with all proceedings consequential thereto, are hereby quashed and set aside, being without jurisdiction.

5.

However, this Court clarifies that liberty is reserved in favour of the respondent-Revenue to proceed afresh through the Faceless Assessing Officer (FAO), strictly in accordance with law and the prevailing statutory framework, subject to limitation and other legal requirements. (Uploaded on 20/12/2025 at 12:14:34 PM) (Downloaded on 28/10/2026 at 12:36:50 AM)

[2025:RJ-JD:54415-DB] (3 of 3) [CW-24693/2025]

6.

It is further made clear that in the event the judgments in Hexaware Technologies Ltd. (supra), Sharda Devi Chhajer (supra) or Shree Cement Limited (supra) are reversed, set aside, or materially modified by the Hon’ble Supreme Court, the respondent-Revenue shall be at liberty to act in accordance with law.

7.

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. Further, learned counsel for the petitioner undertakes to apply within two weeks to withdraw the appeal already filed.

8.

Undertaking accepted.

9.

Accordingly, the writ petition stands disposed of. All pending applications, if any, also stand disposed of. (SANJEET PUROHIT),J (DR.PUSHPENDRA SINGH BHATI),J 221-Zeeshan Powered by TCPDF (www.tcpdf.org) (Uploaded on 20/12/2025 at 12:14:34 PM) (Downloaded on 28/10/2026 at 12:36:50 AM)

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