AU SMALL FINANCE BANK LIMITED vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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CW/6508/2023HC RajasthanRJHC02032093202309 September 2025Author: K.R. SHRIRAM,MANEESH SHARMA2 pages
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What did the High Court hold?

The High Court quashed and set aside the notice dated March 29, 2023, issued under Section 148 of the Income Tax Act, 1961. The Court held that such a notice issued by a Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO) is bad in law and invalid, following its own judgment in Shree Cement Limited, which in turn relied on Sharda Devi Chhajer and Hexaware Technologies Ltd. The Court granted liberty to the Revenue to revive the notice if the Apex Court were to interfere with the aforementioned judgments. Furthermore, since the notice under Section 148 was held to be invalid, the consequential assessment order dated March 28, 2023, could not be sustained and was also quashed and set aside. The Court accepted the petitioner's statement that an application to withdraw the appeal would be filed within two weeks.

What were the facts?

The petitioner, Au Small Finance Bank Limited, challenged a notice dated March 29, 2023, issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that the notice was issued by a Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO), rendering it invalid. The respondent, the Assistant Commissioner of Income Tax, acknowledged that one of the grounds raised by the petitioner was covered by a previous judgment of the High Court. The respondent also noted that a Special Leave Petition (SLP) had been filed against the judgment in Hexaware Technologies Ltd. and notice had been issued. The respondent sought liberty to revive the notice if the Apex Court interfered with the aforementioned judgments. An assessment order dated March 28, 2023, had also been passed after the petition was filed.

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 valid? (Question of law) Assessee's Contention: The notice dated March 29, 2023, issued under Section 148 of the Income Tax Act, 1961, is bad in law and invalid because it was issued by a JAO and not an FAO. The assessee relied on the High Court's judgment in Shree Cement Limited Vs. Assistant Commissioner of Income-Tax & Others, which followed Sharda Devi Chhajer Vs. The Income Tax Officer & Another and Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income-tax, Circle 15(1)(2). Revenue's Contention: The revenue agreed that one of the grounds raised was covered by a judgment of the Court. However, it was stated that an SLP had been filed against the judgment in Hexaware Technologies Ltd. and notice had been issued. The revenue requested liberty to revive the notice issued under Section 148 if the Apex Court interfered with the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JP:36374-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 6508/2023 Au Small Finance Bank Limited, 19A Dhuleshwar Garden, Ajmer Road, Jaipur, Rajasthan-302001 Through Its Authorized Representative Mr. Manmohan Parnami, S/o Mr. Jugal Kishore Parnami, Aged About 43 Years, R/o Q.no. 301, Gurunanakpura, Adarsh Nagar, Jaipur-302004. ----Petitioner Versus The Assistant Commissioner Of Income Tax, Income Tax Department, Circle-1, Jaipur, New Central Revenue Building, Bhagwan Dass Road, Jaipur-302005, Rajasthan. ----Respondent For Petitioner(s) : Mr. Rajat Sharma Advocate with Mr. Saksham Pandey Advocate. For Respondent(s) : Mr. Sandeep Pathak Advocate with Mr. Palash Gupta Advocate. HON'BLE THE CHIEF JUSTICE MR. K.R. SHRIRAM HON'BLE MR. JUSTICE MANEESH SHARMA

Order 09/09/2025

1.

Mr. Sandeep Pathak, who appears on advance copy, agrees with Mr. Rajat Sharma that one of the grounds raised certainly is covered by a judgment of this Court.

2.

Ground referred to is that the notice dated 29th March 2023 under Section 148 of the Income Tax Act, 1961 has been issued by a Juri ictional Assessing Officer (JAO) and not Faceless Assessing Officer (FAO) and this Court in the case of Shree Cement Limited Vs. Assistant Commissioner of Income-Tax & Others1 following Sharda Devi Chhajer Vs. The Income Tax Officer & Another2 and Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income-tax, Circle 15(1)(2)3, has held that such a notice will be bad and not valid. 1 DB Civil Writ Petition No.10540/2024, dated 05.08.2025 at Jaipur Bench (unreported) 2 2025 SCCOnLine Raj 3386 3 [2024] 162 taxmann.com 225 (Bombay)

[2025:RJ-JP:36374-DB] (2 of 2) [CW-6508/2023]

3.

At the same time, Mr. Sandeep Pathak states that in 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 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.

4.

Mr. Rajat Sharma states that in view of the above, for the present, petitioner will reserve its right to raise other grounds at an appropriate stage.

5.

Therefore, keeping open all rights and contentions of parties, we quash and set aside notice dated 29th March 2023 issued under Section 148 of the Act with liberty as prayed.

6.

Petition disposed.

7.

Consequently, all pending applications, if any, also stand disposed.

8.

We are informed that after the petition was filed, an assessment order dated 28th March 2023 has already been passed. Since we have held that the notice issued under Section 148 of the Act itself is not valid, the consequential assessment order cannot be sustained. The same is also quashed and set aside.

9.

Mr. Rajat Sharma’s statement that application to withdraw

the appeal will be filed within two weeks, is accepted. (MANEESH SHARMA),J (K.R. SHRIRAM),CJ SANJAY KUMAWAT/50

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