Case Law Details
Gaze Fashion Trade Limited Vs ACIT (Rajasthan High Court)
Wrong Officer, Wrong Notice – Rajasthan HC Quashes Sec.148 Reassessment by JAO Instead of FAO
In a significant ruling, the Rajasthan High Court at Jodhpur struck down a reassessment notice issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO). The Division Bench held that once the faceless assessment regime has been brought into force, any notice u/s 148 must emanate from the FAO & not from the traditional JAO.
Petitioner challenged the notice dated 15.03.2024 on the ground that it was issued by JAO, thereby vitiating the very foundation of reassessment proceedings. Counsel for petitioner relied heavily on judicial precedents including Hexaware Technologies Ltd. Vs. ACIT (Bombay HC) [2024] 162 taxmann.com 225, Sharda Devi Chhajer Vs. ITO (Rajasthan HC, 2025 SCC OnLine Raj 3386) & Shree Cement Ltd. Vs. ACIT (Rajasthan HC, Jaipur Bench, 05.08.2025). All these rulings consistently recognized that reassessment notices must come from FAO post implementation of the faceless scheme.
On behalf of the Revenue, it was argued that an SLP has already been filed in Hexaware Technologies Ltd. before the Hon’ble Supreme Court & notice has been issued therein. The department therefore sought liberty to revive the notice if the Apex Court were to upset the settled legal position. The Court accepted this submission & while quashing the notice dated 15.03.2024 issued u/s 148 by JAO, it specifically reserved liberty for the department to revive such notice depending on the outcome of the pending appeal before the Supreme Court.
The petition was thus disposed of by quashing the impugned notice, with all pending applications also treated as disposed.
It may be noted that a similar approach was adopted by the same High Court in Paras Ram Vs. PCIT-1, Jodhpur & Others (CW-15789/2025, order dated 27.08.2025) where once again a Sec.148 notice issued by JAO was quashed on identical reasoning. In both matters, the Rajasthan High Court has aligned itself with the consistent view that reassessment notices issued by JAO in the faceless regime cannot be sustained in law, subject to the final word of the Supreme Court.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1.At the outset, respondent is seeking ten days’ time to file reply, but we are not inclined to grant any further time for the reason being counsel for revenue was present before this Court on 11th March 2025 when interim order was granted to petitioner. Even on 28th July 2025 when interim order was continued, counsel for revenue had sought one week’s to file reply. That one week’s time got over on 4th August 2025.
2. One of the primary grounds raised is that notice under Section 148 of the Income-tax Act, 1961 has been issued by Jurisdictional Assessing Officer (JAO) and not Faceless Assessing Officer (FAO).
3. Indisputably, the notice to petitioner has been issued by the charged JAO and not FAO.
4. Mr. Jhanwar, senior counsel for petitioner is correct in submitting that this issue has been extensively dealt with in Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income-tax, Circle 15(1)(2)1 , Sharda Devi Chhajer Vs. The Income Tax Officer & Another2 and Shree Cement Limited Vs. Assistant Commissioner of Income-Tax & Others3 .
5. Shri Bissa submitted 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.
6. Therefore, keeping open rights and contentions of parties, we quash and set aside notice dated 15.03.2024 issued under Section 148 of the Act with liberty as prayed.
7. Petition disposed.
8. Consequently, all pending applications, if any, also stand disposed.
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