Rajasthan High Court – Jodhpur
Santosh Garg vs Principal Commissioner Of Income Tax … on 28 July, 2025
Author: Pushpendra Singh Bhati
Bench: Pushpendra Singh Bhati
[2025:RJ-JD:33035-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 14259/2025
Santosh Garg W/o Kuldeep Gargee, Aged About 67 Years, 13,
Purani Dhan Mandi, Ganganager, Sri Ganganagar, Rajasthan
335001.
----Petitioner
Versus
1. Principal Commissioner Of Income Tax, Jodhpur-I, Aayakar
Bhawan, Paota C Road, Jodhpur.
2. Principal Chief Commissioner Of Income Tax (National E-
Ssessment Centre), 2Nd Floor, E-Ramp, Jawaharlal Nehru
Stadium Delhi - 110003.
3. Central Board Of Direct Taxes, Cbct Headquarters North
Block (Department Of Revenue), New Delhi - 110001
4. Ito Ward-1, Sriganganagar, Ganganagar.
----Respondents
For Petitioner(s) : Mr. Sharad Kothari with
Mr. Deepak Vyas &
Mr. Kalpit Shishodia
For Respondent(s) : Mr. KK Bissa
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
HON’BLE MR. JUSTICE SANDEEP TANEJA
Order
28/07/2025
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.
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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 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
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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,
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
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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
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)
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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 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
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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.
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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.
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
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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 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,
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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 ‘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
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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
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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
petition is squarely covered by the judgment rendered in Sharda
Devi Chhajer (supra), the petition filed by the petitioner is
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 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.
(SANDEEP TANEJA),J. (DR.PUSHPENDRA SINGH BHATI),J.
234-nirmala/-
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