The encounter lasted past midnight.
The family members of Khan have taken his body, the officials said, adding that family members of Bhat refused to take the body, saying it was charred beyond recognition.
Security forces had launched a cordon and search operation in Pinglish after receiving specific intelligence about the presence of militants in the area.
The operation turned into an encounter after the militants opened fire at the search party who retaliated, the officials said.
Lesser-known JeM terrorist Khan has been identified as the brain behind the audacious terror strike in Pulwama that left 40 Central Reserve Police Force personnel dead on February 14, officials said on Sunday.
The CRPF personnel were killed when a JeM terrorist rammed an explosives-laden vehicle -- a Maruti Eeco minivan -- into their bus.The minivan was bought by Bhat just 10 days before the suicide attack.
Suicide attacker Adil Ahmed Dar, who blew the explosive-laden vehicle next to the bus, had been in constant contact with Khan, officials said.
Piecing together evidence gathered so far, security officials said 23-year-old Khan, an electrician with a graduate degree and a resident of Pulwama, arranged the vehicle and explosives used in the terror strike.
A resident of Mir Mohalla of Tral, Khan joined the JeM sometime in 2017 as an overground worker and was later drawn into the terror outfit by Noor Mohammed Tantrey, alias 'Noor Trali', who is believed to have helped the terror group's revival in the Kashmir Valley.
After Tantray was killed in December 2017, Khan disappeared from his home on January 14, 2018, and was active since then.
After completing his graduation, Khan did a one-year diploma course as electrician from an Industrial Training Institute (ITI).
The eldest son of a labourer, Khan is also believed to be involved in the terror strike at the army camp in Sunjawan in February 2018, in which six personnel and a civilian were killed.
His role has also come under lens in the Lethpora attack on a CRPF camp in January 2018 that left five CRPF personnel dead.
The National Investigation Agency (NIA), which is probing the February 14 terror attack, had carried out searches at the residence of Khan on February 27.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)