Case Law Details
Ashok Gupta Vs DCIT (Rajasthan High Court)
The Rajasthan High Court disposed of a writ petition concerning the validity of reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO). The Court noted that the issue raised had already been conclusively decided by a Coordinate Bench in Sharda Devi Chhajer & Anr. v. Income Tax Officer & Anr. and connected matters decided on 19 March 2025.
In Sharda Devi Chhajer, the Coordinate Bench had held that notices issued under Sections 148 and 148A must conform to the statutory framework requiring automated allocation through algorithm-based random assignment. Referring to Part 2(i)(a) of the Scheme and Section 151A of the Act, the Court observed that assessment and reassessment proceedings must be conducted in accordance with the faceless regime introduced by the legislature. The Court emphasized that the objective behind the faceless system was to enhance transparency, impartiality, and efficiency through technological tools, including artificial intelligence and machine learning. It held that any attempt to retain manual control or bypass the technology-driven mechanism would defeat the legislative intent.
The Coordinate Bench had categorically ruled that Jurisdictional Assessing Officers do not possess the authority to issue notices under Sections 148 and 148A, as doing so would undermine the mandate of Section 151A. Consequently, such notices were held to be without jurisdiction and liable to be quashed. At the same time, liberty was granted to the Revenue to issue fresh notices in compliance with the CBDT Notification dated 29 March 2022 by designating the Faceless Assessing Officer as the assessing authority. The period spent in litigation was directed to be excluded while computing limitation for issuance of fresh notices, where necessary.
The Rajasthan High Court also referred to the decision in Jasjit Singh v. Union of India & Ors., rendered by a Bench that included one of the judges hearing the present case. In that judgment, it was held that circulars and administrative instructions cannot override statutory provisions or render them ineffective. The Court observed that legislative provisions, particularly those having financial implications, must be followed strictly. Authorities exercising powers under Sections 119, 120, and 144B of the Act cannot bypass the statutory framework for administrative convenience. The judgment further held that notices issued by Jurisdictional Assessing Officers under Section 148 and proceedings initiated without adhering to the faceless assessment mechanism under Section 144B were contrary to the Act and liable to be set aside for lack of jurisdiction.
In the present case, the petitioner contended that the notice under Section 148 had been illegally issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer. The Court noted that the notice relating to Assessment Year 2017-18 had been issued on 20 March 2024 and that the assessment order had subsequently been passed on 2 March 2025. The petitioner had challenged the assessment order by filing an appeal before the Commissioner of Income Tax (Appeals) on 6 March 2025, and the appeal remained pending. The same proceedings had also been challenged through the present writ petition.
The Court observed that, in light of the judgments in Sharda Devi Chhajer and Jasjit Singh, the reassessment proceedings could not have been initiated by the Jurisdictional Assessing Officer, nor could subsequent proceedings under the faceless regime cure that defect. However, since the petitioner had already availed the statutory appellate remedy against the final assessment order, the High Court considered that any direct interference in the writ proceedings could render the pending appeal infructuous.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. Issue notice to respondent.
2. Mr. Siddharth Bapna, learned counsel, accepts notice on behalf of the respondent.
3. Both the learned counsel clearly state that the issue raised in the present writ petition stands finally adjudicated by a Co-ordinate 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 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 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.”
4. One of us (Hon’ble Mr. Justice Sanjeev Prakash Sharma) while sitting at Punjab and Haryana High Court passed an order in CWP No.21509/2023 titled as 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 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 Coordinate 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 jurisdiction.
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. Learned counsel for the petitioner submits that the notices were illegally issued by the Jurisdictional Assessing Officer instead of Faceless Assessing Officer.
6. We note that the notice under Section 148 of the Income Tax Act, 1961 (for Assessment Year 2017-2018) was issued on 20.03.2024 and the assessment order was passed on 02.03.2025 and the same has been challenged before the learned Commissioner of Income Tax (Appeals) on 06.03.2025 which is currently pending. The same has been challenged in the present writ petition.
7. Admittedly, in this case, the final order was passed after the notice was issued by the Jurisdictional Assessing Officer. Although the faceless regime has been introduced. In view of the judgments passed in the cases of Jasjit Singh (supra) as well as Sharda Devi Chhajer (supra), the proceedings could not have been initiated by the Jurisdictional Assessing Officer nor the faceless regime could have later on passed orders. However, it is noticed that the appeal has been preferred against the final order and, therefore, it would not be appropriate for this Court to pass orders resulting in making the appeal redundant.
8. In these circumstances, we direct the petitioner to file an application before the concerned Commissioner of Income Tax (Appeal) who will take into consideration and pass appropriate orders accordingly within a period of 15 days following the judgment already rendered by this Court relating to quashing of the proceedings based on the notice issued by the Jurisdictional Assessing Officer.
9. The present Civil Writ Petition stands disposed of.
10. All pending applications also stand disposed of.
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