DEVENDRA KUMAR BHANDARI vs. DEPUTY COMMISSIONER OF INCOME-TAX

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CW/22214/2025HC Rajasthan2025:RJ-JD:48808-DB12 November 2025Author: PUSHPENDRA SINGH BHATI, ANUROOP SINGHI6 pages
AI SummaryWithdrawn

What did the High Court hold?

The Tribunal held that the notice dated March 30, 2024, issued under Section 148 and the assessment order dated March 26, 2025, passed under Section 147 of the Act, along with consequential proceedings, were liable to be quashed and set aside. The Court found that the facts of the Gujarat High Court case in Talati and Talati LLP were entirely different from the present case. The Court disagreed with the Gujarat High Court's reasoning, stating it was not based on a comprehensive reading of the notification dated March 29, 2022, along with CBDT orders dated March 31, 2021, and September 6, 2021. The Court noted that the Bombay High Court in Abhin Anilkumar Shah vs. Income Tax Officer, International Tax Ward Circle-4(2)(1), Mumbai, had held that the aforementioned CBDT orders only carved out exceptions for assessment proceedings and did not alter the applicability of the faceless mechanism in the manner suggested by the Gujarat High Court. The Court also accepted the petitioner's submission that other grounds were not pressed, and the revenue was granted 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 with liberty as prayed.

What were the facts?

The petitioner, Devendra Kumar Bhandari, challenged a notice dated March 30, 2024, issued under Section 148 and an assessment order dated March 26, 2025, passed under Section 147 of the Income Tax Act, 1961. The petitioner contended 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 decisions from the Rajasthan High Court in Shree Cement Limited and Sharda Devi Chhajer, which followed a Bombay High Court ruling in Hexaware Technologies Ltd. The revenue argued, citing a Gujarat High Court judgment in Talati and Talati LLP, that in certain search and seizure cases, a JAO could issue such notices. The Rajasthan High Court noted that the Gujarat High Court's decision was based on a different understanding of the relevant provisions and CBDT orders.

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, as opposed to being issued by a Faceless Assessing Officer (FAO)? (Question of law) 2. Whether an assessment order passed pursuant to an invalid notice under Section 148 is also bad in law? (Question of law) Assessee's Contentions: The petitioner argued that the notice under Section 148 was issued by the JAO and not the FAO. This is contrary to established law as per Shree Cement Limited vs. Assistant Commissioner of Income-Tax & Others and Sharda Devi Chhajer, which followed Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax, Circle 15(1)(2) (Bombay). Therefore, any assessment order based on such an invalid notice is also bad in law. Revenue's Contentions: The respondent revenue relied on the Gujarat High Court's decision in Talati and Talati LLP vs. Office of Assistant Commissioner of Income Tax, Circle 4(1)(1), Ahmedabad. The revenue contended that in cases involving search and seizure under Section 132 of the Act, the Gujarat High Court did not interfere with the notice issued by the JAO, directing the assessee to file a reply. The Gujarat High Court's reasoning was based on Explanation 2 to Section 148, suggesting that automated allocation under the faceless regime might not apply to 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:48808-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 22214/2025 Devendra Kumar Bhandari S/o Ganpat Mal Bhandari, Aged About 60 Years, 42, Arihant Tower, 5Th A Road, Sardarpura, Jodhpur- 342003. ----Petitioner Versus 1. Deputy Commissioner Of Income-Tax, Central Circle-1, Aayakar Bhawan, Paota C Road, Jodhpur. 2. The Commissioner Of Income-Tax (Appeals), Jaipur Aaykar Bhawan, Lic Building- 2, Bhawani Singh Road, Ambedkar Circle, Jaipur. ----Respondents For Petitioner(s) : Mr. Anjay Kothari For Respondent(s) : Mr. K.K. Bissa HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE ANUROOP SINGHI

Order 12/11/2025

1.

Learned counsel for the petitioner submits that petitioner is unhappy with notice dated 30th March 2024 issued under Section 148 and assessment order dated 26th 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 18/11/2025 at 06:02:53 PM) (Downloaded on 28/10/2026 at 12:37:42 AM)

[2025:RJ-JD:48808-DB] (2 of 6) [CW-22214/2025] 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 18/11/2025 at 06:02:53 PM) (Downloaded on 28/10/2026 at 12:37:42 AM)

[2025:RJ-JD:48808-DB] (3 of 6) [CW-22214/2025] 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 18/11/2025 at 06:02:53 PM) (Downloaded on 28/10/2026 at 12:37:42 AM)

[2025:RJ-JD:48808-DB] (4 of 6) [CW-22214/2025]

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 18/11/2025 at 06:02:53 PM) (Downloaded on 28/10/2026 at 12:37:42 AM)

[2025:RJ-JD:48808-DB] (5 of 6) [CW-22214/2025] 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.

12.

In these circumstances, notice dated 30th March 2024 issued under Section 148 and assessment order dated 26th 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 30th March 2024 issued under Section 148 and assessment order dated 26th March, 2025 passed under Section 147 of the Act along with consequential proceedings, with liberty as prayed. (Uploaded on 18/11/2025 at 06:02:53 PM) (Downloaded on 28/10/2026 at 12:37:42 AM)

[2025:RJ-JD:48808-DB] (6 of 6) [CW-22214/2025]

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.

19.

Consequently, all pending applications, if any, also stand disposed. (ANUROOP SINGHI),J (DR. PUSHPENDRA SINGH BHATI),J 2-Taruna/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 18/11/2025 at 06:02:53 PM) (Downloaded on 28/10/2026 at 12:37:42 AM)

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