ANKIT AGARWAL (AY 2020-21) S/O VINOD KUMAR AGARWAL, vs. DEPUTY COMMISSIONER OF INCOME TAX,

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CW/15325/2025HC RajasthanRJHC02082303202504 November 2025Author: SANJEEV PRAKASH SHARMA,BALJINDER SINGH SANDHU4 pages
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What did the High Court hold?

The Tribunal held that notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, are invalid. The reasoning is that the mandate of Section 151A of the Act, which requires adherence to an algorithm-based random assessing system for assessment and reassessment under Sections 147, 148, and 148A, must be strictly followed. The Court observed that the JAO does not have the jurisdiction to issue such notices as it weakens Section 151A and undermines the legislative intent behind the faceless regime, which aims for transparency and impartiality through technology. The ratio is that any attempt to circumvent the algorithm-based allocation system or revert to manual control is against the legislative purpose and the gains of the progressive faceless regime. Consequently, the impugned notices dated 15.04.2024 and all consequential orders, including the order dated 13.10.2025, were quashed and set aside for want of jurisdiction. The respondents are at liberty to issue fresh notices in compliance with the CBDT Notification dated 29.03.2022, keeping the Faceless Assessing Officer (FAO) as the assessing officer. The time spent during the litigation is to be excluded for computing the limitation for fresh notices.

What were the facts?

The petitioner, Ankit Agarwal, is challenging notices issued by the Deputy Commissioner of Income Tax, Circle - 2, Kota, for assessment year 2020-21. The petitioner filed a writ petition seeking amendment to include additional documents, which was allowed. The core of the dispute revolves around the validity of notices issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO). The petitioner contends that these notices are invalid due to procedural irregularities concerning the faceless assessment scheme and algorithm-based allocation of cases. The respondent is the Deputy Commissioner of Income Tax.

What were the issues?

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO) are valid, considering the scheme of faceless assessment and algorithm-based allocation of cases? Assessee's Contention: The assessee argues that notices issued by the JAO under Section 148 are invalid because they bypass the mandatory algorithm-based random allocation system envisaged by the faceless assessment scheme and Section 151A of the Act. Reliance is placed on the principle that legislative intent for transparency and efficiency through technology must be upheld. Revenue's Contention: The judgment does not explicitly record the revenue's contentions. However, the context implies a defense of the notices issued by the JAO, potentially arguing for the JAO's jurisdiction or that the faceless scheme does not preclude such notices.

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
[2025:RJ-JP:44399-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 15325/2025 Ankit Agarwal (AY 2020-21) S/o Vinod Kumar Agarwal, Aged About 45 Years, Presently Residing At B-1102, Cedar Luxuria, 11th Floor, Mansarovar Extension, Sanganer - 302029 ----Petitioner Versus Deputy Commissioner Of Income Tax, Circle - 2, Office Of The Deputy Commissioner Of Income Tax, Central Revenue Building, Rawat Bhata Road, Kota, Rajasthan - 324009. ----Respondent For Petitioner(s) : Mr. Vedant Agarwal For Respondent(s) : Mr. Shantanu Sharma with Mr. Parth Vashistha HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE BALJINDER SINGH SANDHU

Order 04/11/2025

1.

For the reasons mentioned in the application No.1/2025 for seeking amendment to the writ petition and to bring additional documents on record, the same is allowed.

2.

Both the learned counsel clearly states that the issue raised in the present writ petitions stands finally adjudicated by a Co-ordiante 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

[2025:RJ-JP:44399-DB] (2 of 4) [CW-15325/2025] impugned notices 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

[2025:RJ-JP:44399-DB] (3 of 4) [CW-15325/2025] of 1961 to issue the same is concerned. The question 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.”

3.

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.

[2025:RJ-JP:44399-DB] (4 of 4) [CW-15325/2025]

20.

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

4.

Keeping in view of the above, the present writ petitions are allowed in the aforesaid terms. The observations and order passed above shall apply mutatis mutandis to the present cases.

5.

The notices dated 15.04.2024 issued by the Juri ictional Assessing Officer(JAO) and all the consequential orders passed on the said basis stands quashed and set aside.

6.

Since the show cause notice is already held to be bad, thus subsequent order dated 13.10.2025 and all consequential orders passed would also stand set aside.

7.

Pending application(s), if any, also stand disposed. (BALJINDER SINGH SANDHU),J (SANJEEV PRAKASH SHARMA),ACTING CJ GAURAV/24

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