RAJESH DAGA, SON OF SHRI SHANTI LAL DAGA vs. DEPUTY COMMISSIONER OF INCOME TAX

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CW/17298/2025HC RajasthanRJHC02096600202523 January 2026Author: SANJEEV PRAKASH SHARMA,SANGEETA SHARMA5 pages
AI SummaryRemanded

What did the High Court hold?

The Rajasthan High Court, Jaipur Bench, noted that the issue raised in the writ petition had been adjudicated by a Co-ordinate Bench in D.B. Civil Writ Petition No.11787/2024: Sharda Devi Chhajer & Anr. Vs The Income Tax Officer & Anr., decided on 19.03.2025. The Court reiterated the principle that the mandate of Section 151A of the Act, 1961, must be strictly followed, requiring adherence to an algorithm-based random assessing system for assessment and reassessment under Sections 147, 148, and 148A. Consequently, notices issued by the JAO for such purposes were held to be without jurisdiction and liable to be quashed. The Court also referred to its own prior decision in CWP No.21509/2023 (Jasjit Singh vs. Union of India & Ors.) which held that circulars or instructions cannot override statutory provisions and that authorities cannot usurp legal provisions for convenience. However, in the present case, since a final assessment order had been passed and an appeal was already preferred before the Commissioner of Income Tax (Appeals), the Court deemed it inappropriate to pass orders that would render the appeal redundant. Instead, the petitioner was directed to file an application before the concerned Commissioner of Income Tax (Appeals), who was directed to consider it and pass appropriate orders within 15 days, taking into account the judgments quashing proceedings based on notices issued by the JAO.

What were the facts?

The petitioner, Rajesh Daga, is challenging notices issued under Section 148 of the Income Tax Act, 1961, and the subsequent assessment order. The notice was issued on March 19, 2024, for Assessment Year 2017-2018, and the assessment order was passed on March 23, 2025. The petitioner had appealed this order to the Commissioner of Income Tax (Appeals) on April 2, 2025, which was pending. The core of the challenge is that the notices were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as per the faceless regime introduced by the Income Tax Department. The respondent is the Deputy Commissioner of Income Tax, Central Circle - 4, Jaipur.

What were the issues?

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) are valid when the faceless regime mandates algorithm-based random allocation of cases to Faceless Assessing Officers (FAOs)? (Question of law, turning on Section 148 and Section 151A of the Income Tax Act, 1961, and CBDT Notification dated 29.03.2022). Assessee's contention: The notices were illegally issued by the JAO instead of the FAO. Revenue's contention: Not recorded in the judgment. 2. Whether an assessment order passed pursuant to a notice issued by a JAO, under the faceless regime, is liable to be quashed, and if so, what is the appropriate course of action when an appeal against the final assessment order is already pending before the Commissioner of Income Tax (Appeals)? (Question of mixed law and fact, turning on the procedural validity of assessments under the faceless regime and the appellate process).

Which sections of the Income-tax Act were involved?

Section 148,Section 151A,Section 147,Section 148A,Section 119,Section 120,Section 144B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2026:RJ-JP:3156-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 17298/2025 Rajesh Daga, Son Of Shri Shanti Lal Daga, Aged About 53 Years, Resident Of 304, Royal Ensine, Statue Circle, C-Scheme, Jaipur ----Petitioner Versus Deputy Commissioner Of Income Tax, Central Circle - 4, Jaipur Having Its Address At 4Th Floor, Lic Building, Ambedkar Circle, Jaipur ----Respondent For Petitioner(s) : Ms. Satvika Jha on behalf of Mr. Siddharth Ranka For Respondent(s) : Mr. Siddharth Bapna with Ms. Tanushka Saxena HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA HON'BLE MRS. JUSTICE SANGEETA SHARMA

Order 23/01/2026

1.

Issue notice to respondent.

2.

Mr. Siddharth Bapna, learned counsel, accepts notice on behalf of the respondent.

3.

Both the learned counsel clearly state that the issue raised in the present writ petition stands finally adjudicated by a Co-ordinate Bench of this Court in D.B. Civil Writ Petition No.11787/2024: Sharda Devi Chhajer & Anr. Vs The Income Tax Officer & Anr. and other connected writ petitions decided on 19.03.2025, wherein, the Co-ordinate Bench has held as under:

“18. This Court further observes that any juri ictional error in the notices has to be cured and thus, the notices which have been issued for assessment and reassessment and which are the impugned notices

[2026:RJ-JP:3156-DB] (2 of 5) [CW-17298/2025] under Section 148 of the Act of 1961, do not withstand the broader scheme of law, which requires automated allocation based on algorithm and random assignment of the assessing officer. Part 2(i)(a) of the Scheme clear demarcates as to how the assessment and reassessment has to take place.

19.

This Court is conscious of the fact that any reform or change for betterment is always resisted by the persons in control, particularly those who do not visualize the pragmatic and progressive paths which require vision and wi om. The legislature in its own vision and wi om, for enhancing the efficiency of the taxation system by making it more transparent and impartial, decided to have infused technology in the shape of an algorithm for randomised allocations of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. The common tendency to cling to control and old methods has to be dealt with firmly and ways & means including loopholes to fall back upon the old regime of control is an imminent danger which has to be thwarted off. The legislative intention, legislative vision and legislative wi om has to be given full meaning in terms of technology and progressiveness, and thus, once an effective and strong step has been taken towards faceless regime, then maintaining the strings of local control to the prejudice of a common man would not only undermine the legislative wi om but the gains in terms of such a progressive and pragmatic step would stand to reduce. Once the gear of progress has been applied in a democratic set up, the same has to be strongly supported and sustained. The CBDT Circular read with Section 151A of the Act of 1961 has to be given full meaning and any ways & means to defeat the technology or to manually try to control the same would go against the legislative purpose.

20.

Thus, this Court holds that the mandate of Section 151A of the Act of 1961 has to be strictly followed as there cannot be a way out of doing the same. This Court also holds that the JAO shall not have the juri iction to issue notices under Section 148 of the Act of 1961, as it would not only render Section 151A weak, but may also lead to its diminishing activation. For the purpose of assessment and reassessment under Sections 147, 148 & 148A and in light of the sanction under Section 151A, adherence has to be made to algorithm based random assessing system, and therefore, the impugned notices deserve to be quashed.

21.

Consequently, the present writ petitions are allowed. Accordingly, the impugned Notices are quashed and set aside, as far as the juri iction of JAOs for the purpose of Sections 148 & 148A of the Act of 1961 to issue the same is concerned. The question

[2026:RJ-JP:3156-DB] (3 of 5) [CW-17298/2025] raised herein stands answered in the terms indicated above, with liberty to the respondents to issue fresh notices in compliance of the CBDT Notification dated 29.03.2022, by keeping the FAO as assessing officer.

21.

1 However, the time spent during the pendency of the present litigation in the Court, shall be excluded for the purpose of computing limitation for issuance of fresh notices, in case, need arises.

21.

2 All pending applications stand disposed of.”

4.

One of us (Hon’ble Mr. Justice Sanjeev Prakash Sharma) while sitting at Punjab and Haryana High Court passed an order in CWP No.21509/2023 titled as Jasjit Singh vs. Union of India & Ors., decided on 29.07.2024 wherein it was held as under:- “16. We are in agreement with the view taken by the Coordinate Bench and hold that such circular or instructions by the Board could not have been issued to override statutory provisions or to make them otiose or obsolete. Legislative enactments having financial implications are required to be followed strictly and mandatorily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 & 8), the authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees. It also leaves confusion in the minds of the taxpayers. In the opinion of this Court, instructions and circulars can be issued only for the purpose of supplementing the statutory provisions and for their implementation.

17.

In view of the aforesaid discussion, there is no occasion to distinguish or take a different view as suggested by the learned counsel for the revenue from what has already been held by the Coordinate Bench.

18.

Keeping in view the law laid down by the Co- ordinate Bench(supra) notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961 and accordingly notices dated 28.02.2023, 16.03.2023, 20.03.2024 and 30.03.2023 and order dated 30.03.2023, are set aside for want of juri iction.

19.

The respondents-revenue would be, however at liberty to follow the procedure as laid down under the Act, 1961 and proceed accordingly, if so advised.

20.

All the writ petitions are allowed. The interim order passed by the Court shall stand merged with the present order.”

[2026:RJ-JP:3156-DB] (4 of 5) [CW-17298/2025]

5.

Learned counsel for the petitioner submits that the notices were illegally issued by the Juri ictional Assessing Officer instead of Faceless Assessing Officer.

6.

We notice that the notice issued under Section 148 of the Income Tax Act, 1961 (for Assessment Year 2017-2018) was issued on 19.03.2024 and the assessment order was passed on 23.03.2025 and the same has been challenged before the learned Commissioner of Income Tax (Appeals) on 02.04.2025 which is currently pending. The same has been challenged in the present writ petition.

7.

Admittedly, in this case, the final order was passed after the notice was issued by the Juri ictional Assessing Officer. Although the faceless regime has been introduced. In view of the judgments passed in the cases of Jasjit Singh (supra) as well as Sharda Devi Chhajer (supra), the proceedings could not have been initiated by the Juri ictional Assessing Officer nor the faceless regime could have later on passed orders. However, it is noticed that the appeal has been preferred against the final order and, therefore, it would not be appropriate for this Court to pass orders resulting in making the appeal redundant.

8.

In these circumstances, we direct the petitioner to file an application before the concerned Commissioner of Income Tax (Appeal) who will take into consideration and pass appropriate orders accordingly within a period of 15 days following the judgment already rendered by this Court relating to quashing of the proceedings based on the notice issued by the Juri ictional Assessing Officer.

9.

The present Civil Writ Petition stands disposed of.

[2026:RJ-JP:3156-DB] (5 of 5) [CW-17298/2025]

10.

All pending applications also stand disposed of. (SANGEETA SHARMA),J (SANJEEV PRAKASH SHARMA),ACTING CJ RAHUL MIRKHANI/18

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