VELOCITY INSURANCE BROKING SERVICE PRIVATE LIMITED vs. INCOME TAX OFFICER OF INCOME TAX DEPARTMENT

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CW/14670/2025HC RajasthanRJHC02080386202519 September 2025Author: SANJEEV PRAKASH SHARMA,SANJEET PUROHIT4 pages
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What did the High Court hold?

The High Court held that notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, are invalid. The Court reasoned 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. Issuing notices by the JAO would weaken Section 151A and potentially lead to its diminished activation. The Court emphasized that the legislative intention behind infusing technology, including artificial intelligence and machine learning, for randomized allocations of cases through an algorithm, aims to enhance transparency and impartiality. Any attempt to manually control the process or fall back on old methods is an imminent danger that must be thwarted. The Court also referred to a previous decision by one of its judges which held that circulars or instructions cannot override statutory provisions and that authorities cannot usurp legal provisions for their convenience. Consequently, the impugned notice dated 24.06.2025 issued by the JAO and all consequential orders were quashed and set aside for want of jurisdiction. The respondents were granted 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 pendency of the litigation was to be excluded for computing the limitation for issuing fresh notices, if needed.

What were the facts?

The petitioner, Velocity Insurance Broking Service Private Limited, filed a writ petition before the Rajasthan High Court, Jaipur Bench, challenging a notice dated 24.06.2025 issued by the Jurisdictional Assessing Officer (JAO). The respondent is the Income Tax Officer. Both parties agreed that the issue had been adjudicated by a coordinate bench of the same High Court 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 petitioner's counsel accepted notice on behalf of the respondent. The High Court was to decide on the validity of the notice issued by the JAO.

What were the issues?

1. Whether notices issued for assessment and reassessment under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) are valid when the scheme mandates automated allocation based on an algorithm and random assignment of the assessing officer, as per Part 2(i)(a) of the Scheme and Section 151A of the Act? Assessee's Contention: The judgment does not explicitly record separate contentions for the assessee in this specific writ petition, but it relies on the precedent set in D.B. Civil Writ Petition No.11787/2024. The underlying argument, as reflected in the precedent, is that notices issued by the JAO are invalid due to a jurisdictional error and a failure to adhere to the faceless assessment scheme and algorithm-based random allocation mandated by the law. Revenue's Contention: The judgment does not explicitly record separate contentions for the revenue in this specific writ petition, but it notes that the learned counsel for the revenue accepted notice. The precedent case indicates that the revenue might have argued for the validity of the JAO's notices or attempted to distinguish the facts, which the court rejected.

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:38658-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 14670/2025 Velocity Insurance Broking Service Private Limited, 3rd Floor, Maker Tower, Beside Gopalpura Pulia, Tonk Road, Jaipur, Rajasthan, India 302015 Through Abhishek Tiwari S/o Satyendra Kumar Sharma, 4-JA-23, Monilek Hospital, Jawahar Nagar, Jaipur Rajasthan- 302004. ----Petitioner Versus Income Tax Officer of Income Tax Department, ITO WD 6(2), New Central Revenue Building, Bhagwan Dass Road, Jaipur 302005. ----Respondent For Petitioner(s) : Mr. Kamal Kant Vyas For Respondent(s) : Mr. Sandeep Pathak HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJEET PUROHIT

Order 19/09/2025

1.

Issue notice to respondent.

2.

Mr. Sandeep Pathak, learned counsel, accepts notice on behalf of respondent.

3.

Both the learned counsel ad idem clearly state that the issue raised in the present writ petition 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

[2025:RJ-JP:38658-DB] (2 of 4) [CW-14670/2025] notices which have been issued for assessment and reassessment and which are the 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

[2025:RJ-JP:38658-DB] (3 of 4) [CW-14670/2025] 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 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 (Mr. Justice Sanjeev Prakash Sharma, J.), while sitting at Punjab and Haryana High Court passed an order in Civil Writ Petition No.21509/2023 (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

[2025:RJ-JP:38658-DB] (4 of 4) [CW-14670/2025] 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.”

5.

Keeping in view above, the present writ petition is allowed in the aforesaid terms. The observations and order passed above shall apply mutatis mutandis to the present case.

6.

The notice dated 24.06.2025 issued by the Juri ictional Assessing Officer (JAO) and all the consequential orders passed there on the said basis stands quashed and set aside.

7.

Pending application(s), if any, also stand(s) disposed of. (SANJEET PUROHIT),J (SANJEEV PRAKASH SHARMA),J AMIT/273

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