SANDEEP MITTAL (AY 2016-17) S/O SHRI PREM PRAKASH MITTAL vs. INCOME TAX OFFICER

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CW/14807/2024HC RajasthanRJHC02077067202408 September 2025Author: K.R. SHRIRAM,MANEESH SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the assessment order and the notice under Section 148 of the Income Tax Act, 1961, were invalid. Firstly, the Tribunal agreed with the assessee's submission that the findings in the impugned order regarding the escapement of income from assessment, specifically the disallowance of long-term capital gain as bogus and its addition under Section 68 read with Section 115BBE, were not even mentioned in the show cause notice. This violated the principles of natural justice and procedural fairness. Secondly, the Tribunal noted that the notice under Section 148 was issued by the Jurisdictional Assessing Officer (JAO) and not the Faceless Assessing Officer (FAO). Relying on its own previous decision in Shree Cement Limited Vs. Assistant Commissioner of Income-Tax & Others, the Tribunal held that such a notice is invalid, and consequently, any assessment order based on an invalid notice cannot be sustained. The Tribunal quashed and set aside the assessment order dated March 27, 2024, the notice dated March 28, 2023, issued under Section 148, and the consequential notice dated March 27, 2024, issued under Section 274 read with Section 271(1)(c). The revenue was granted liberty to revive the notice under Section 148 if the Apex Court were to interfere with the relevant High Court judgments.

What were the facts?

The assessee, Sandeep Mittal, for Assessment Year 2016-17, challenged an assessment order dated March 27, 2024, and a notice dated March 28, 2023, issued under Section 148 of the Income Tax Act, 1961. The assessment order disallowed long-term capital gains of Rs. 57,94,032 claimed under Section 10(38) as bogus, adding it to income under Section 68 read with Section 115BBE. The assessee contended that the show cause notice issued under Section 148A(a) or 148A(b) did not contain any allegation regarding this specific issue or information suggesting escapement of income. Furthermore, the notice under Section 148 was issued by the Jurisdictional Assessing Officer (JAO) and not the Faceless Assessing Officer (FAO), which the petitioner argued was invalid.

What were the issues?

1. Whether the assessment order, which includes a finding that long-term capital gain claimed under Section 10(38) is bogus and to be added under Section 68 read with Section 115BBE, is valid when such allegations were not present in the show cause notice issued under Section 148A(a) or 148A(b) of the Income Tax Act, 1961? (Mixed question of law and fact, concerning Section 148A and Section 68). Assessee's contention: The show cause notice did not contain any allegation of the nature that the long-term capital gain was bogus or that income chargeable to tax had escaped assessment on this ground. The addition was made without proper notice. Revenue's contention: The revenue did not explicitly argue against this point but acknowledged that the judgment in Shree Cement Limited relied on Sharda Devi Chhajer, which in turn followed Hexaware Technologies Ltd. The revenue noted that a Special Leave Petition was filed against Hexaware Technologies Ltd. and notice was issued, suggesting potential future challenges. 2. Whether a notice issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) is invalid? (Question of law, concerning Section 148). Assessee's contention: Such a notice issued by the JAO is invalid, as held by this Court in Shree Cement Limited Vs. Assistant Commissioner of Income-Tax & Others. Revenue's contention: The revenue acknowledged the settled law on this aspect but sought liberty to revive the notice if the Apex Court were to interfere with the judgments in Hexaware Technologies Ltd., Sharda Devi Chhajer, or Shree Cement Limited.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68,Section 115BBE,Section 148,Section 148A,Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JP:35807-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 14807/2024 Sandeep Mittal (Ay 2016-17) S/o Shri Prem Prakash Mittal, Aged About 49 Years, R/o 9, Mathur Vasiya Nagar, Behind Ram Mandir, Tonk Road, Opposite Morani Motors, Sanganer, Airport, Sanganer, Jaipur, Rajasthan - 302011. ----Petitioner Versus 1. Income Tax Officer, Ward 1(2), New Central Revenue Building Bhagwan Dass Road, Jaipur, Rajasthan - 302005. 2. National Faceless Assessment Centre (Nfac), Through The Assessment Unit, Income Tax Department, Ministry Of Finance, Inside Jawahar Lal Nehru Stadium, New Delhi - 110003. ----Respondents For Petitioner : Mr. Vedant Agarwal For Respondents : Mr. Sandeep Pathak HON'BLE THE CHIEF JUSTICE MR. K.R. SHRIRAM HON'BLE MR. JUSTICE MANEESH SHARMA

Order 08/09/2025

1.

Various grounds have been raised in the petition, one of which is that the findings in the impugned order that there has been escapement of income from assessment do not even find mention in the show cause notice.

2.

Mr. Vedant Agarwal, counsel for petitioner submitted that in the assessment order dated 27th March 2024, that is impugned in the petition, there is a finding that long-term capital gain of Rs.57,94,032/-, claimed under Section 10(38) of the Income Tax Act, 1961 (for short ‘the Act’) by the assessee is being disallowed as bogus transaction in the scrips of Yamini Investment Company

[2025:RJ-JP:35807-DB] (2 of 3) [CW-14807/2024] Ltd. Counsel says this has been added to the income of the assessee under Section 68 read with Section 115BBE of the Act. Mr. Agarwal submitted that there is not even an allegation of this nature in the show cause notice issued under Section 148A(a) or Section 148A(b)of the Act, or that, that was the information which suggested that income chargeable to tax for Assessment Year 2016-17 escaped assessment.

3.

Having considered the pleadings filed with the documents annexed thereto, we would agree with Mr. Agarwal’s submissions.

4.

Income-Tax & Others1 has held as invalid. Consequently, the Officer & Another2, which in turn had followed Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income- tax, Circle 15(1)(2)3 and that judgment of Bombay High Court was already in place before the petition was filed, but nevertheless since the law is settled on this aspect, for the moment he wouldn’t insist on a formal amendment to the petition. 1 DB Civil Writ Petition No.10540/2024, dated 05.08.2025 at Jaipur Bench (unreported) 2 2025 SCC OnLine Raj 3386 3 [2024] 162 taxmann.com 225 (Bombay)

[2025:RJ-JP:35807-DB] (3 of 3) [CW-14807/2024]

7.

At the same time, Mr. 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.

8.

In the circumstances, the assessment order dated 27th March 2024 as also notice dated 28th March 2023, issued under Section 148 of the Act are quashed and set aside.

9.

In view of the above, the consequential notice dated 27th March 2024, issued under Section 274 read with Section 271(1)(c) of the Act is also quashed and set aside.

10.

Petition disposed.

11.

Pending application, if any, also stands disposed. (MANEESH SHARMA),J (K.R. SHRIRAM),CJ KAMLESH KUMAR-RAHUL/3

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