KAILASH HARISHKUMAR SHAMBHAVANI vs. INCOME TAX OFFICER WARD 3 SANGLI AND ORS

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WP/7766/2025HC BombayHCBM07028176202530 July 2025Bench: HON'BLE SHRI JUSTICE B.P. COLABAWALLA,HON'BLE SHRI JUSTICE FIRDOSH PHIROZE POONIWALLA4 pages
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What did the High Court hold?

The High Court held that it is bound to follow the decision of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, as the present case is squarely covered by it. Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all proceedings/orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the writ petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon'ble Supreme Court. The Court clarified that revival could be done by moving a Praecipe, and if the Supreme Court dismisses the SLP, there would be no question of revival. If revived, the petition would be decided on its merits, considering other issues raised. The Rule was made absolute, and the Writ Petition was disposed of.

What were the facts?

The petitioner, Kailash Harishkumar Shambhavani, filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that the notice was issued by the Jurisdictional Assessing Officer, whereas the law mandates it should be issued by a Faceless Assessing Officer, constituting a fatal defect. The petitioner relied on a Bombay High Court decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax. The Revenue acknowledged that the issue was covered by the Hexaware Technologies Ltd. judgment but stated it was challenged before the Supreme Court, though no stay was granted. The High Court, with consent of parties, heard the matter finally.

What were the issues?

1. Whether the Notice issued under Section 148 of the Income Tax Act, 1961, is invalid due to being issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer, as mandated by law? Assessee's contention: The Notice is invalid and must be quashed as it suffers from a fatal defect by being issued by the Jurisdictional Assessing Officer when the law requires it to be issued by the Faceless Assessing Officer. This issue is squarely covered by the Bombay High Court's decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax. Revenue's contention: While acknowledging that the issue is concluded by the Hexaware Technologies Ltd. decision, the Revenue stated that this decision has been challenged before the Hon'ble Supreme Court and is likely to be taken up soon. The Revenue conceded that there is no stay to the judgment in Hexaware Technologies Ltd.

Which sections of the Income-tax Act were involved?

Section 148

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 7766 OF 2025 Kailash Harishkumar Shambhavani .. Petitioner Versus Income Tax Officer, Ward-3, Sangli & Ors. .. Respondents Ms.Rutuja Pawar a/w Ms.Hetal Laghave a/w Ms.Sneha More, Advocate for the Petitioner. Mr.Arjun Gupta, Advocate for Respondent.

CORAM: B. P. COLABAWALLA & FIRDOSH P. POONIWALLA, JJ. DATE: JULY 30, 2025 P. C. 1. In the above Petition Rule was issued on 17th June 2025 and interim relief was also granted interalia staying the Notice issued under Section 148 of the Income Tax Act, 1961. Today, though the matter has come up under the caption “for directions”, we have, with the consent of parties, heard it finally. 2. The above Writ Petition interalia challenges the Notice issued under Section 148 of the Income Tax Act, 1961 on various grounds. One of the Page 1 of 4 JULY 30, 2025 Mohite TRUSHA TUSHAR MOHITE Digitally signed by TRUSHA TUSHAR MOHITE Date: 2025.08.02 13:59:37 +0530

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grounds is that the Notice has been issued by the Jurisdictional Assessing Officer when the law mandates that it has to be issued by the Faceless Assessing Officer. This is a fatal defect and therefore the Notice has to be quashed, is the argument of the Petitioner. 3. It is the Petitioners’ contention that this issue is squarely covered by a decision of a Division Bench of this Court in the case of Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)]. 4. On the other hand, the learned advocate appearing on behalf of the Revenue stated that though it is true that this issue is concluded by the decision in Hexaware Technologies Ltd (supra), the said decision has been challenged before the Hon’ble Supreme Court, and the Hon’ble Supreme Court is likely to take up the matter immediately on re-opening. The learned counsel has fairly stated that there is no stay to the judgment in Hexaware Technologies Ltd (supra). 5. Considering these facts, we do not propose to keep the matter pending in this Court. Once it is fully covered by the decision in Hexaware Technologies Ltd (supra) we are bound to follow it. Page 2 of 4 JULY 30, 2025 Mohite

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6.

We accordingly set aside the impugned Notice issued under Section 148 and all other proceedings/orders emanating therefrom. 7. We however grant liberty to the Revenue to revive the above Writ Petition in the event the decision in Hexaware Technologies Ltd (supra) is set aside by the Hon’ble Supreme Court on this issue. We make it clear that it will not be necessary for the Revenue to file a separate Interim Application to seek a revival of this Petition and the same can be done simply by moving a Praecipe before this Court. It is needless to clarify that if the Hon’ble Supreme Court dismisses the SLP challenging the decision in Hexaware Technologies Ltd (supra), there would be no question of any revival. 8. We also make it clear that once the Petition is revived and restored, the same would have to be decided on its own merits considering that several other issues are also raised challenging the Notice issued under Section 148. 9. Rule is accordingly made absolute and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs. Page 3 of 4 JULY 30, 2025 Mohite

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10.

This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.] Page 4 of 4 JULY 30, 2025 Mohite

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