ASHISH KUMBHAT vs. DEPUTY COMMISSIONER OF INCOME-TAX

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CW/22793/2025HC Rajasthan2025:RJ-JD:50239-DB20 November 2025Author: PUSHPENDRA SINGH BHATI, ANUROOP SINGHI5 pages
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What did the High Court hold?

The High Court quashed and set aside the notice dated March 22, 2025, issued under Section 148 of the Income Tax Act, 1961, along with consequential proceedings. The Court found that the Gujarat High Court's judgment in Talati and Talati LLP was based on a different factual matrix and a narrower interpretation of Explanation 2 to Section 148, without considering the impact of CBDT orders dated March 31, 2021, and September 06, 2021, and other High Court decisions like Hexaware Technologies Ltd. (Bombay) and Venkataramana Reddy Patloola (Telangana). The Court disagreed with the Gujarat High Court's reasoning that pre-requisites for issuing a Section 148 notice in search cases could not be met by a Faceless Assessing Officer. The Court explicitly stated that it did not agree with the Gujarat High Court's reasoning. The revenue was granted liberty to revive the notice if the Apex Court were to interfere with the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited. Other grounds raised by the petitioner were not pressed.

What were the facts?

The petitioner, Ashish Kumbhat, challenged a notice dated March 22, 2025, issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO), rendering it invalid. This contention was supported by previous judgments 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 contended, citing a Gujarat High Court judgment in Talati and Talati LLP, that notices issued by JAO in search and seizure cases were valid. The High Court noted that the Gujarat High Court's decision was based on a different interpretation of Explanation 2 to Section 148 and did not consider subsequent CBDT orders and other High Court rulings.

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, particularly in cases involving search and seizure, turning on the interpretation of Section 148 and the e-assessment scheme notified on March 29, 2022. Assessee's Contentions: - The notice dated March 22, 2025, issued under Section 148 is invalid because it was issued by the JAO and not the FAO. - This Court's previous decisions in Shree Cement Limited and Sharda Devi Chhajer, which followed the Bombay High Court's ruling in Hexaware Technologies Ltd., support the invalidity of such notices. - Any assessment order based on an invalid notice would be bad in law. Revenue's Contentions: - Citing the Gujarat High Court judgment in Talati and Talati LLP, the revenue argued that notices issued by JAO in search and seizure cases are valid. - The Gujarat High Court did not interfere with the notice but directed the assessee to file a reply.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JD:50239-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 22793/2025 Ashish Kumbhat S/o Dalpat Mal Kumbhat, Aged About 46 Years, Kumbhat Street, Mahamandir, Paota Road, Jodhpur - 342006 ----Petitioner Versus Deputy Commissioner Of Income-Tax, Central Circle-1, Aaykar Bhawan, Paota C Road, Jodhpur. ----Respondent For Petitioner(s) : Mr. Anjay Kothari For Respondent(s) : Mr. K.K. Bissa with Mr. G.S. Chouhan HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE ANUROOP SINGHI

Order 20/11/2025

1.

Learned counsel for the petitioner submits that petitioner is unhappy with notice dated 22nd March 2025 issued under Section 148 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 (Uploaded on 21/11/2025 at 06:26:34 PM) (Downloaded on 28/10/2026 at 12:38:13 AM)

[2025:RJ-JD:50239-DB] (2 of 5) [CW-22793/2025] 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 cases by using suitable technological tools including Artificial Intelligence and Machine Learning, as defined in Clause 2(1)(b) of (Uploaded on 21/11/2025 at 06:26:34 PM) (Downloaded on 28/10/2026 at 12:38:13 AM)

[2025:RJ-JD:50239-DB] (3 of 5) [CW-22793/2025] 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 21/11/2025 at 06:26:34 PM) (Downloaded on 28/10/2026 at 12:38:13 AM)

[2025:RJ-JD:50239-DB] (4 of 5) [CW-22793/2025] 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 21/11/2025 at 06:26:34 PM) (Downloaded on 28/10/2026 at 12:38:13 AM)

[2025:RJ-JD:50239-DB] (5 of 5) [CW-22793/2025] Section 148 in search cases cannot be met by the FAO. With due respect, we do not agree.

12.

In these circumstances, notice dated 22nd March 2025 issued under Section 148 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 22nd March 2025 issued under Section 148 of the Act along with consequential proceedings, with liberty as prayed.

16.

Petition disposed.

17.

Consequently, all pending applications, if any, also stand disposed. (ANUROOP SINGHI),J (DR. PUSHPENDRA SINGH BHATI),J 66-suraj/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 21/11/2025 at 06:26:34 PM) (Downloaded on 28/10/2026 at 12:38:13 AM)

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