Rajasthan High Court - Jodhpur

M/S Aishwarya Granites vs Income-Tax Officer (Ito) ... on 3 November, 2025

Author: Pushpendra Singh Bhati

Bench: Pushpendra Singh Bhati

[2025:RJ-JD:47206-DB]

      HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
                       JODHPUR
                D.B. Civil Writ Petition No. 21439/2025

M/s    Aishwarya        Granites,       A    Partnership            Firm    Having    Its
Registered Office At Dhoinda, Rajsamand, Rajasthan Through Its
Partner Mr. Prem Prakash Kumawat S/o Mangi Lal Kumawat Aged
About 44 Years, R/o Dhoinda, Kailash Chouraya, Rajsamand,
Rajasthan, 313324.
                                                                           ----Petitioner
                                       Versus
1.       Income-Tax Officer (Ito), Ward 1, Rajsamand, Commerce
         House, Collectorate Road, Rajsamand, Rajasthan
2.       Principal Commissioner Of Income Tax, Udaipur, 313002.
3.       Union Of India, Through Secretary, Ministry Of Finance,
         Department Of Revenue, North Block, New Delhi 110001.
                                                                      ----Respondents


For Petitioner(s)            :     Mr. Priyansh Arora.
For Respondent(s)            :     Mr. K.K. Bissa.



      HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

HON'BLE MR. JUSTICE ANUROOP SINGHI

Order

03/11/2025

1. Mr. Arora submits that petitioner is unhappy with notice

dated 26th March 2025 issued under Section 148 of the Income

Tax Act, 1961 (for short 'the Act').

2. Mr. Arora further submits that apart from various grounds

taken in the petition, one of the grounds is that notice has been

issued by Jurisdictional Assessing Officer (JAO) and not Faceless

Assessing Officer (FAO). He also submits that this Court in Shree

Cement Limited vs. Assistant Commissioner of Income-Tax

& Others (DB Civil Writ Petition No.10540/2024, dated

05.08.2025 at Jaipur Bench) and Sharda Devi Chhajer vs.

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The Income Tax Officer & Another (2025 SCCOnLine

Raj3386) following judgment of Bombay High Court in

Hexaware Technologies Ltd. vs. Assistant Commissioner of

Income-Tax, Circle 15(1)(2) [2024] 162 taxmann.com 225

(Bombay) has held that such a notice issued by JAO will be

invalid.

3. Mr. Bissa submits that there is a Gujarat High Court

judgment in the case of Talati and Talati LLP vs. Office of

Assistant Commissioner of Income Tax, Circle 4(1)(1),

Ahmedabad (R/Special Civil Application Nos.13198 of 2024

and 13225 of 2024, dated 01.10.2024) wherein Court

considered validity of show cause notice issued under Section 148

of the Act and the proceedings initiated under Section 153A of the

Act. He further submits that Gujarat High Court did not interfere

with notice but directed assessee to file reply to notice.

4. We find that facts of the Gujarat High Court case in Talati

and Talati LLP (supra) are entirely different from the facts of

present case.

In Talati and Talati LLP (supra), Gujarat High Court has held

that notification dated 29th March 2022 (prescribing e assessment

scheme) does not cover a case where notice under Section 148 is

issued by the JAO, the information received by him in the matter

of search and seizure under Section 132 of the Act, 1961, or

requisitioned under Section 132A.

5. The Gujarat High Court has relied on Explanation 2 to

Section 148 (as it existed at the relevant time) to approve the

contention of the Revenue that the concept of automated

allocation, i.e. application of algorithm for randomized allocation of

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cases by using suitable technological tools including Artificial

Intelligence and Machine Learning, as defined in Clause 2(1)(b) of

the Scheme dated 29th March 2022, cannot be applied in a case

of search and seizure under Section 132.

6. While upholding the said contention the Gujarat High Court

was perhaps under an understanding that the FAO does not draw

a satisfaction note before proceeding to issue a notice under

Section 148 in search cases. The Gujarat High Court has taken

cognizance of the contention that pre-requisite conditions before

issuance of notice under Section 148, as provided in Explanation 2

of Section 148 would require human application of mind and

cannot be fulfilled by algorithm under the Faceless Regime.

7. The decision of the Division Bench of the Bombay High Court

in the case of Hexaware Technologies Ltd. (supra) has been

distinguished as having been rendered in a case, which falls within

the arena of Explanation 1 to Section 148 and not where

Explanation 2 to Section 148 of the Income Tax Act' 1961, would

be attracted.

8. It is pertinent to note that the Gujarat High Court was not

made aware of the reasoning adopted by Bombay High Court in

the case of Abhin Anilkumar Shah vs. Income Tax Officer,

International Tax Ward Circle-4(2)(1), Mumbai and Ors.

[2024]468ITR350(Bom) where the orders dated 31st March

2021 and 06th September 2021 issued by the CBDT creating

exception for the assessment proceedings undertaken by the

International taxation charges/Central Charges were subject

matter of deliberation.

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9. In Abhin Anilkumar Shah (supra) the Court held that said

orders dated 31st March 2021 and 06th September 2021 issued

by the CBDT only carve out exception in relation to the

assessment proceedings. What has been done by order dated 06th

September 2021 is to modify the order dated 31st March 2021 to

the extent of what is set out in paragraph 3 thereof, namely, that

in addition to such exceptions to the applicability of the faceless

mechanism to assessment orders in relation to Central Charges

and International Tax Charges, an additional exception was added,

namely, to the assessment order in cases where pendency could

not be created on ITBA because of technical reasons or cases not

having a PAN, as the case may be. Thus, the scheme as framed

under section 151A and notified under the notification dated 29th

March 2022 does not include the applicability, inclusion or even

reference to the orders dated 31st March 2021 and 06th

September 2021. It was further held that it would be doing

violence to the language of the notification/scheme dated 29th

March 2022 to read into such notification what has not been

expressly provided for and/or something which is kept outside the

purview of the said notification, namely, the orders dated 31st

March 2021 and 06th September 2021. It would be uncalled for to

read into the scheme dated 29th March 2022, something which is

not included.

10. The Bombay High Court also relied upon the order passed by

the Telangana High Court in the case of Venkataramana Reddy

Patloola Vs. Deputy Commissioner of Income Tax, Circle

1(1) and Ors. [2024]468ITR181.

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11. The Revenue filed an SLP against another order passed by

Telangana High Court based on the aforesaid Order in

Venkataramana Reddy Patloola (supra). The said SLP came to be

dismissed by the Hon'ble Supreme Court vide order dated 16th

July 2025 in SLP (Civil) Diary No. 33956/2025 stating the

following-

1. "Delay condoned.

2. Exemption Application is allowed.

3. Having heard the learned counsel appearing for the petitioners - Revenue and having gone through the materials on record, we find no good reason to interfere with the impugned order passed by the High Court.

3. The Special Leave Petition is, accordingly, dismissed.

4. Pending applications, if any, shall also stand disposed of."

12. Thus the judgment passed by the Gujarat High Court is not

based on the reading of notification dated 29th March 2022 along

with orders dated 31st March 2021/ 06th September 2021 but is

based on the simple reading of Explanation 2 to Section 148 along

with understanding that the pre-requisites for issuing notice under

Section 148 in search cases cannot be met by the FAO. With due

respect, we do not agree.

13. In these circumstances, impugned notice dated 26th March

2025 issued under Section 148 of the Act is liable to be quashed

and set aside.