Rajasthan High Court - Jodhpur
Lalit Purohit vs Additional/Joint/Deputy/Assistant ... on 8 August, 2025
Author: Vinit Kumar Mathur
Bench: Vinit Kumar Mathur
[2025:RJ-JD:35368-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 18991/2022
Lalit Purohit S/o Jagdish Chandra Purohit, Aged About 59 Years,
Resident Of 1, Basant Vihar, Sundarwas, Girwa, Udaipur,
Rajasthan - 313001.
----Petitioner
Versus
1. Additional/joint/deputy/assistant Commissioner, Income
Tax Officer, National Faceless Assessment Centre, North
Block New Delhi - 110001.
2. Principal Commissioner Of Income Tax, Udaipur
(Rajasthan)
3. Income Tax Officer (Ito), Ward 1, Chittor (Rajasthan).
----Respondents
Connected With
D.B. Civil Writ Petition No. 19034/2022
Lalit Purohit S/o Jagdish Chandra Purohit, Aged About 59 Years,
Resident Of 1, Basant Vihar, Sundarwas, Girwa, Udaipur,
Rajasthan 313001.
----Petitioner
Versus
1. Additional/joint/deputy/assistant Commissioner, Income
Tax Officer, National Faceless Assessment Centre, North
Block New Delhi - 110001.
2. Principal Commissioner Of Income Tax, Udaipur
(Rajasthan)
3. Income Tax Officer (Ito), Ward 1, Chittorgarh
(Rajasthan).
----Respondents
For Petitioner(s) : Dr. Vikas Balia, Sr. Advocate assisted
by Mr. Priyansh Arora.
For Respondent(s) : Mr. K.K. Bissa.
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HON'BLE MR. JUSTICE VINIT KUMAR MATHUR
HON'BLE MR. JUSTICE ANUROOP SINGHI
Judgment / Order
08/08/2025
1. Learned counsel for the petitioner makes a limited
submission that the controversy is covered with the judgment
rendered by this Court in D.B. Civil Writ Petition
No.11787/2024 (Sharda Devi Chhajer Vs. The Income Tax
Officer & Anr.), decided on 19.03.2025, along with the other
connected matters and thus, the respondents ought to have acted
in compliance with the said judgment by giving a Faceless as
enshrined in the CBDT Notification dated 29.03.2022. The
operative portion of the order dated 19.03.2025 reads as under :-
"6. This Court observes that before delving into the nitty-
gritty of the instant case and the challenge in question, it is
pertinent to understand the nature, intention and the
mechanics underlying the Faceless Regime and how it has
contributed to the paradigm shift in administration of the
Income-tax law in India.
6.1. The Government of India launched 'Transforming
taxation - Honouring the honest' platform, on On 13
August 2020. The same was done with an objective of
simplifying India's tax system and increasing trust of
taxpayers.
6.1.1. Pursuant to the same, the Government introduced a
'faceless' mechanism for Income-tax proceedings and the
same was done with an objective to reduce the physical
interface between the Income-tax Department and taxpayers,
introduce team-based assessment, enable optimal utilisation
of resources (and thereby reduce arbitrary exercise of
discretion by tax officers in making assessments and
appeals).
6.1.2. Technology is at the very heart of the faceless
mechanism and the main intention of the Income tax
Department is to harness the power of data through collation
of information from various sources, along with the use of
various data analytics techniques. This is expected to ensure
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effective and efficient collection of tax revenues by the
Income-tax Department.
6.1.3. The Taxpayers' Charter' introduced in the Income-tax
Act, 1961 (the Act) makes a commitment whereby the
Income Tax Department will ensure fair administration of
taxation for taxpayers.
6.2. The introduction of the faceless regime is a landmark
moment in the tax administration's history in India. The e-
governance scheme of Government of India And the Income-
tax-related initiatives can be traced back to 2006, when the e-
filing of Income-tax returns was enabled by the department.
6.3. A short journey through the key e-Governance
initiatives introduced by the Government of India are as
follows:
Year Initiative
2006 Launch of a project for e-filing
returns
2007 Mandatory e-filing of returns for
corporate taxpayers and taxpayers
who are required to have their
accounts audited under Section 44AB
of the Act, and thereafter, for other
taxpayers at different points in time
2009 Establishment of the Centralised
Processing Centre Online (CPC) and
viewing of Form 26AS
2015 Online verification of tax returns
through Aadhaar and Electronic
Verification Code
2017 CBDT launched an e-Proceeding
facility to enable electronic tax
assessments.
6.4. In 2015, the Central Board of Direct Taxes (CBDT),
promoted the paperless environment for tax assessment
proceedings and launched an optional facility for designated
taxpayers in certain cities, whereby they could respond
questionnaires and notices via emails.
6.5. Whereafter, in April 2017 the CBDT launched an e-
Proceeding facility to enable electronic tax assessments. By
way of this facility, a tax officer or assessing officer could
communicate with a taxpayer through the e-Filing portal and
could upload a notice on the income tax e-filing portal. It also
in the same proceedings gave an option to the tax-payer to
respond to it. The same lead to the expansion of electronic
assessment proceedings and thereby, eliminated the need for
taxpayers to send their responses either via email or as hard
copies. The CBDT, in August 2018, made it mandatory to
conduct all assessments framed in the financial year 2018-19,
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through the e-Proceeding facility, subject to certain
exceptional circumstances.
6.6. The Hon'ble Finance Minister introduced the 'faceless
assessment procedure' in his Budget Speech in 2018, (earlier
called, e-Assessment scheme). The objectives of the scheme
and the intention expounded in the memorandum to the
Finance Bill, 2018, viz., "the objective of reducing the
interface between the department and the taxpayers" closely
resembles the faceless assessment scheme.
6.7. Subsequently, the Finance Act, 2018 amended the
Income-tax law (Amendment to Section 143(3A) and insertion
of sub-Section (3B) and (3C)), to achieve the aforesaid
objective of the Central Government and to empower the
government to prescribe a new scheme for electronic and
faceless tax assessments and add significantly to its
efficiency, transparency and accountability.
6.8. Accordingly, the e-Assessment scheme was notified on 12
September 2019, vide SO 3264 (Notification No. 61/2019 (F
No. 370149/154/2019-TPL] dated 12 September 2019) and
SO 3265 (Notification No. 62/2019 (F No. 370149/154/2019-
TPL)] dated 12 September 2019)through which various
assessment procedures mandated under the Act were
automated.
6.9. Hon'ble Prime Minister, on 13th August, 2020,
introduced a revamped scheme for tax assessments.
Accordingly, the e-Assessment scheme was renamed as the
faceless assessment scheme. Notifications were also issued
i.e., No. 2745(E) (Notification No. 60/2020 (F No.
370149/154/2019-TPL)] dated 13.08.2020) and No. 2746(E)
(Notification No. 61/2020 (F No. 370149/154/2019-TPL)]
dated 13 August 2020) with the details of the faceless
scheme. With this scheme, the Government introduced
'Faceless Appeal' and the 'Taxpayers' Charter'.
6.10. Under the Faceless Assessment Scheme, all cases for
tax assessments, other than those allotted to central and
international tax charges, are selected by an automated
allocation system through the use of artificial intelligence (AI)
and machine learning tools. The same suggests a 360-degree
profiling of taxpayers, and aims to enable more focused and
meaningful assessments than in the past. This system,
comprises of a team-based assessment mechanism having
multiple layers of units formed by the CBDT. The same has
also been extended to CIT (A) proceedings. This has made
appeal proceedings being governed in a similar manner as
faceless assessments. It involves the concept of dynamic
jurisdictions to increase the objectivity of appeal orders and
instil transparency and efficiency in such proceedings.
6.11. The Taxpayers' Charter seeks to strengthen the
relationship between the Income-tax Department and the
taxpayer in the new regime. Its objective is to inculcate a
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trust-based relationship between the two, and enhance the
department's service delivery system's efficiency.
6.12. The Government by way the aforesaid aims to reduce
the trust deficit between taxpayers and the Income-tax
Department; introduce policy-driven governance minimising
grey areas to rule out alleged discretion in administrative
processes and by putting in place unambiguous policies; limit
human interface; reduce litigation related to tax; integrate the
elements of 'efficiency, integrity and sensitivity' in the
governance system; improve ranking of India on the 'Ease of
doing business' rankings.
6.13. The faceless assessment scheme was codified in
Income-tax Law in India (Section 144B of the Act) andwas
thereby introduced vide 'The Taxation and Other Laws
(Relaxation and Amendment of Certain Provisions) Act, 2020',
effective 1 April 2021.
6.14. Before the introduction of the faceless regime, the
notices were issued by the JAO, and the same led to multiple
issues, such as, the system often entailed multiple physical
meetings between the taxpayer and Income-tax Department
officials, leading to long waiting times for the taxpayer;
issuance of notices, through the system and manually made
record- keeping difficult and often led to disputes between the
taxpayer and the Department; the discretionary power vested
with tax officers led to a subjective approach and varying
interpretations; large percentage of Department personnel
were involved only in the tax assessment process.
6.15. In order to overcome these limitations, it was necessary
to transform the assessment mechanism to enable
transparency, efficiency, accountability and optimal utilisation
of technology and thus, the faceless scheme was introduced.
The GoI has created a parallel jurisdiction for assessment
proceedings by vesting the power to conduct assessments
with the National Faceless Assessment Centre (NFAC) and
transferred all existing assessment proceedings to it.
6.16. Under the Faceless Assessment, a tax officer does not
have any discretion in selection of cases, which are completely
automated, a taxpayer has to authenticate submissions, and
in the case of a corporate entity, this can be done by the
authorised person assigned to sign a tax return. Further,
every submission filed by a taxpayer under the faceless
regime is authorised by a digital signature certificate or by
using an electronic verification code. Furthermore, a
taxpayer's case is randomly allocated to Assessment Units. All
notices are issued electronically with a valid Document
Identification Number. The scheme will save time for
taxpayers and their representatives by freeing them from
multiple visits to a tax office.
6.17. With introduction of faceless assessments, India has
become a pioneer in embracing technology and AI in tax
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administration, to enhance transparency, accountability and
efficiency in the system.
6.18. This Court observes that the case laws relied by the
learned counsel for the respondents are a form of
interpretation, wherein the Courts have adopted a literal
interpretation of the relevant provisions in question thereby
giving way to Jurisdictional Assessing Officer as well to issue
the notice. However, the same when interpreted in the cases
relied upon by the counsel on behalf of the petitioners, does
not work in tandem with the broader legislative purpose and
the pragmatic approach adopted vis-aá-vis the taxation
scheme in India. Thus, this Court does not fall in agreement
with the judgments relied upon by the respondents as the
same shall not serve the broader purpose of the taxation
scheme which emanates out of the statutory requirement
under Sections 144B & 151A of the Act of 1961 and the CBDT
Circular conjointly read with other steps taken by the Union of
India at the highest level for transforming the taxation regime
through technology.
7. Article 265 of the Constitution of India, prohibits the
State from extracting tax from the citizens without authority
of law. It is axiomatic that taxation statute has to be
interpreted strictly because State cannot at its whims and
fancies burden the citizens without authority of law, as has
been held in Commissioner of Customs (Import), Mumbai
Vs. M/s. Dilip Kumar and Company & Ors., 2018 (361)
E.L.T. 577 (SC).
7.1. In a taxing statute, one has to look at the text as it is.
There is no equity in taxation law. There is no intendment and
presumption as to tax. Nothing is to be read in and nothing is
to be implied.
7.2. The basic principle of charge under Tax Statutes is, "No
tax can be imposed on the subject without words in the Act
clearly showing an intention to lay a burden upon him."
7.3. Burden of proof of bringing someone under a charge is
on the revenue and that of bringing assessee under
exemption/deduction is on the assessee itself.
7.4. If an interpretation of a fiscal enactment is open to doubt
and two views are reasonably possible then the one more
beneficial or favourable to the assessee should be adopted.
7.5. Provisions related to machinery of assessment or
collection should be construed to make it workable and
effectuate the levy and advance the objection of provisions.
7.6. Construction of machinery provisions that disables the
taxing machinery, and enables the person to escape taxation
shall be avoided.
7.7. In case of provisions creating rights, courts must lean in
favour of construction that saves the right instead of the one
defeating it.
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8. The judgments which were rendered in the case of
Hexaware Technologies Ltd. (supra) provides ample light
as to how the applicability of the Scheme has to be made in
strict sense, and the concurrent jurisdictions have to be
avoided so as to ensure a smooth travel of the revenue
assessments. The liberal interpretation made by the Hon'ble
Delhi High Court in T.K.S. Builders Private Ltd. (supra)
and the Hon'ble Madras High Court in Mark Studio India
Private Limited (supra) have to be scrutinized in light of
the settled legal position that the Tax Statutes have to be
strictly interpreted.
9. Learned counsel for the petitioners have heavily relied
upon the judgment rendered by the Hon'ble Bombay High
Court in the case of Hexaware Technologies Ltd. (supra),
wherein while dealing with the issue as to whether the
impugned notice was invalid or bad in law being issued by the
jurisdictional Assessing Officer as the same was not in
accordance with Section 151A of the Income Tax Act; the
Court delved into the nitty-gritty of the faceless regime in
India, conducted a critical study of Faceless Assessment of
income escaping assessment as provided under Section 151A,
power of CBDT to notify Scheme vis-à-vis faceless assessment
and nature of such notification and concluded that the
Scheme framed by the CBDT, which covers both the aspect of
the provisions of Sectio 151A of the Act cannot be said to be
applicable only for one aspect, i.e., proceedings post the issue
of notice under Section 148 of the Act being assessment,
reassessment and re-computation under Section 147 of the
Act and inapplicable for issuance of notice under Section 148
of the Act and accordingly, it is only the FAO which can issue
the notice under Section 148 of the Act and not the JAO.
Accepting an argument against the above position of law
would render Clause 3(b) of the Scheme otiose and to be
ignored or contravened; and, implicitly would thereby make
the whole Scheme otiose.
10. Further it is also noteworthy that if clause 3(b) of the
Scheme is not applicable, then only clause 3(a) of the Scheme
remains. What is covered in clause 3(a) of the Scheme is
already provided under Section 144B(1) of the Act which
provides for faceless assessment and covers assessment, re-
assessment or re-computation under Section 147 of the Act.
Therefore, in absence of Clause 3(b), there is no purpose of
framing the Scheme only for Clause 3(a) as the same is
anyways covered under Section 144B, would make the whole
Scheme redundant. Such an interpretation of law renders the
Scheme and its purpose superfluous, and shall not be
adopted.
11. This Court further observes that the phrase "to the
extent provided in Section 144B of the Act" in the Scheme is
with reference to only making assessment and reassessment
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of the total income or loss of the assessee and therefore does
not go with issuance of notice. The Scheme provides that the
notice under Section 148 of the Act, shall be issued through
automated allocation, in accordance with risk management
strategy formulated by the Board as referred to in Section 148
of the Act and in a faceless manner. Further, the exceptions
provided in sub-sections (7) and (8) of the Section 144B of
the Act and would also be applicable to the Scheme.
12. A reference to random in the Scheme is with reference
to selection of Assessing Officer at random and not selection
of Section 148 cases as random. If the cases for issuance of
notice under Section 148 of the Act are selected based on
criteria of risk management strategy, then obviously, the
same are not randomly selected. The term 'randomly' by
definition mean something which is chosen by chance rather
than according to a plan. Therefore, if the cases are chosen
based on risk management strategy, they certainly cannot be
said to be random. The Computer/System cannot select cases
on random but selection can be based on certain well-defined
criteria.
13. This Court observes that Statute so created, was
required to eliminate the interface between the income tax
authorities and the assessee, while optimizing the utilization
of the resources and also creating a harmonious atmosphere
with a dynamic jurisdiction. The Scheme of the Central
Government, in the opinion of this Court, was also to further
fortify the legislative intention of strengthening the process of
assessment, reassessment & re-computation. This Court
further observes that even the strong rigors, having been
provided for the purpose of Sections 148, 148A of the Act of
1961 and the sanction under Section 151A coupled with the
CBDT Scheme, were meant to strengthen the system of
revenue assessment.
14. This Court further observes that the automated
allocation in a faceless manner was to be given effect to, as
far as possible, and any deviation from the same, would not
only hamper the legislative intention behind the revenue
assessment to be made faceless, but will also create a
concurrent and a parallel jurisdiction, thereby leading to
conflict between the two jurisdictions.
15. This Court also observes that the FAO has been
assigned specific jurisdiction and the Scheme dated
29.03.2022 also clearly indicates that the FAO has to be the
jurisdictional authority. The opening of multiple jurisdictional
avenues will not only lead to confusion, but will also result
into a failure on the part of the Revenue, to give a concrete
opportunity to the assessee. The concurrent jurisdiction of
FAO and the JAO, if accepted, would defeat the very purpose
of statutory provisions i.e. Sections 151A & 144B of the Act of
1961. The words carefully chosen by CBDT, include
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'automated allocation', and the baseline for the same being
'algorithm for randomized allocation', clearly show that the
technology was supposed to be used for the purpose of
allocating jurisdiction to a random officer.
16. This Court is of the opinion that Section 151A of the Act
of 1961 deals with the assessment, reassessment and re-
computation provided in Sections 147 & 148 of the Act of
1961, and therefore, the same has to be faceless and the FAO
has to have an exclusive jurisdiction to issue the notices.
17. The Scheme to the extent of Section 144B of the Act of
1961 for issuance of notice cannot be said to be relevant for
the purpose of issuing notices under Section 147 & 148 of the
Act of 1961. Sections 147 & 148 have been kept separately.
The restrictions provided for the purpose of Section 144B shall
be relevant.
18. This Court further observes that any jurisdictional 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 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 wisdom. The
legislature in its own vision and wisdom, 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
wisdom 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
wisdom 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
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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 jurisdiction 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 jurisdiction 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."
2. Learned counsel for the respondents is unable to oppose the
applicability of the judgment of Sharda Devi Chhajer (supra).
3. In view of above, as the issue raised in the present writ
petitions are squarely covered by the judgment rendered in
Sharda Devi Chhajer (supra), the petitions filed by the petitioner
are disposed of with a similar direction as given in the case of
Sharda Devi Chhajer (supra) while directing the respondents to
abide and adhere to the aforequoted judgment. Accordingly, the
impugned Notices as well as Assessment Order are quashed and
set aside, as far as the jurisdiction 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
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fresh notices in compliance of the CBDT Notification dated
29.03.2022, by keeping the FAO as assessing officer. 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. However, both
the parties shall be at liberty to raise their respective issues before
the Assessing Authority.
(ANUROOP SINGHI),J (VINIT KUMAR MATHUR),J
52-53-Shahenshah/sunils/-
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