BHARAT KUMAR ANJANA vs. ASSISTANT COMMISSONER OF INCOME-TAX

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CW/8011/2025HC Rajasthan2025:RJ-JD:41175-DB16 September 2025Author: K.R. SHRIRAM, RAVI CHIRANIA6 pages
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What did the High Court hold?

The High Court held that the order dated August 28, 2024, passed under Section 148A(d) and the notice dated August 28, 2024, issued under Section 148 of the Act are liable to be quashed and set aside. The Court found the facts of the Gujarat High Court case (Talati and Talati LLP) to be entirely different from the present case. The Court disagreed with the Gujarat High Court's reasoning, particularly its reliance on Explanation 2 to Section 148 and the understanding that the pre-requisites for issuing a notice under Section 148 in search cases cannot be met by a Faceless Assessing Officer (FAO). The Court noted that the Gujarat High Court was not made aware of the Bombay High Court's reasoning in Abhin Anilkumar Shah, which dealt with exceptions to the faceless mechanism for Central Charges and International Tax Charges. The Court also highlighted the dismissal of an SLP by the Supreme Court against a Telangana High Court order in Venkataramana Reddy Patloola, which was based on similar reasoning. The Court quashed the notice and order, keeping open all rights and contentions of the parties, with liberty as prayed. 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.

What were the facts?

The petitioner, Bharat Kumar Anjana, is challenging an order dated August 28, 2024, passed under Section 148A(d) and a notice dated August 28, 2024, issued under Section 148 of the Income Tax Act, 1961. The petitioner's primary contention is that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO), rendering it invalid. The petitioner relies 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., holding such notices issued by JAOs to be invalid. The Revenue, however, cites a Gujarat High Court judgment in Talati and Talati LLP, which did not interfere with a similar notice but directed the assessee to reply.

What were the issues?

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) is invalid, thereby rendering any subsequent assessment order bad in law? (Question of law and mixed fact and law, turning on the scheme of faceless assessment and Section 148). Assessee's Contentions: - The notice issued by the JAO is invalid, relying on Shree Cement Limited vs. Assistant Commissioner of Income-Tax & Others and Sharda Devi Chhajer vs. The Income Tax Officer & Another, which followed Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-Tax. - An assessment order passed on an invalid notice is also bad in law. Revenue's Contentions: - The Gujarat High Court in Talati and Talati LLP vs. Office of Assistant Commissioner of Income Tax did not interfere with a notice issued under Section 148 by a JAO and directed the assessee to file a reply. - The Gujarat High Court's reasoning was based on Explanation 2 to Section 148 and the understanding that automated allocation under the e-assessment scheme cannot apply to search and seizure cases.

Which sections of the Income-tax Act were involved?

Section 148A,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:41175-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 8011/2025 Bharat Kumar Anjana S/o Ram Lal Anjana, Aged About 56 Years, R/o Village Kesunda, Choti Sadri, Pratapgarh (Rajasthan) 312604. ----Petitioner Versus 1. Assistant Commissoner Of Income-Tax, Central Circle-1, Udaipur, (Rajasthan). 2. Director General Of Income Tax (Inv.), Jaipur (Rajasthan). 3. Central Board Of Direct Taxes, Through Chairman, Department Of Revenue, Ministry Of Finance, North Block, New Delhi. ----Respondents For Petitioner : Mr. Vikas Balia, Sr. Adv assisted by Mr. Priyansh Arora, Mr. Prateek Gattani For Respondents : Mr. K.K Bissa HON'BLE THE CHIEF JUSTICE MR. K.R. SHRIRAM HON'BLE MR. JUSTICE RAVI CHIRANIA

Order 16/09/2025

1.

Mr. Balia submits that petitioner is unhappy with order dated 28th August 2024 passed under Section 148A(d) and notice dated 28th August 2024 issued under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’).

2.

Mr. Balia further submits that apart from various grounds taken in the petition, one of the grounds is that notice has been issued by Jurisdictional Assessing Officer (JAO) and not Faceless Assessing Officer (FAO). He also submits that this Court in Shree Cement Limited vs. Assistant Commissioner of Income-Tax & Others1 and Sharda Devi Chhajer vs. The Income Tax DB Civil Writ Petition No.10540/2024, dated 05.08.2025 at Jaipur Bench (unreported)

[2025:RJ-JD:41175-DB] (2 of 6) [CW-8011/2025] Officer & Another2 following judgment of Bombay High Court in Income-Tax, Circle 15(1)(2)3 has held that such a notice 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 2 2025 SCCOnLine Raj3386 3 [2024] 162 taxmann.com 225 (Bombay)

MANU/GJ/2382/2024 [2025:RJ-JD:41175-DB] (3 of 6) [CW-8011/2025] 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.5 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.

[2024]468ITR350(Bom)

[2025:RJ-JD:41175-DB] (4 of 6) [CW-8011/2025]

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 [2024]468ITR181 [2025:RJ-JD:41175-DB] (5 of 6) [CW-8011/2025]

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, order dated 28th August 2024 passed under Section 148A(d) and notice dated 28th August 2024 passed under Section 148 of the Act 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 prayer of petitioner but in case the Apex Court interferes with judgment in Hexaware Technologies Ltd. (supra), Sharda [2025:RJ-JD:41175-DB] (6 of 6) [CW-8011/2025] 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 order dated 28th August 2024 passed under Section 148A(d) of the Act and notice dated 28th August 2024 passed under Section 148 of the Act with liberty as prayed.

17.

Petition disposed.

18.

Consequently, all pending applications, if any, also stand disposed. (RAVI CHIRANIA),J (K.R. SHRIRAM),CJ 1-divyaP/- Powered by TCPDF (www.tcpdf.org)

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