Income Tax | Reassessment Cannot Be Initiated On Identical Survey Material Already Accepted In Earlier Proceedings: Calcutta High Court

Justice Om Narayan Rai stated that the reassessment proceeding is clearly impermissible………It would be a clear case of “change of opinion”. Indeed, the principle that assessment of a given assessee for a given assessment year cannot be reopened by the relevant Assessing Officer on the ground of change of opinion is usually applied in the case of the same assessee for the same assessment year but there is no reason why such a principle cannot be extended and applied to a case like the one at hand.

In the case at hand, the assessee/petitioner is engaged in the business of manufacturing coal tar pitch, carbon black, etc. The assessee had engaged Liquid Gold Carriers Private Limited as a transporter.

A search and seizure operation was conducted at the residential premises of the Director of Liquid Gold Carriers Private Limited (transporter). On the same day, a survey operation was also conducted at the office premises of the said company.

Based on the information/material gathered during the said survey operation, the Assessing Officer initiated reassessment proceedings in respect of the income of the transporter for the Assessment Year (AY) 2019-20 by issuing a notice under Section 148 of the 1961 Act.

The Assessing Officer completed the assessment of the transporter by an order passed under Section 143(3)/147 of the 1961 Act.

Subsequently, a notice under Section 148 of the 1961 Act was issued to the assessee with a view to reassessing the assessee's income for the assessment year 2018-19.

Such reopening of the assessment was also based on the same information gathered by the revenue authorities during the survey proceedings conducted at the office premises of the transporter.

The Assessing Officer passed an order of assessment under Section 147 of the 1961 Act without making any addition on the ground of cash return of Rs.4,75,00,000/- that formed the basis for reassessment of the assessee's income for the assessment year 2018-19.

The Assessing Officer thereafter initiated reassessment proceedings in respect of the assessee's income for the assessment year 2019-20, by issuing a notice under Section 148A(3) of the 1961 Act. Such notice was issued upon overruling the assessee's objection to the notice to show cause under section 148A(1) of the 1961 Act.

Pertinently, the said notice is also based on information gathered from the survey operation conducted at the office premises of the transporter.

The assessee argued that, firstly, the reassessment proceeding is actually based on a change of opinion. Secondly, the impugned reopening notice has been issued by the jurisdictional Assessing Officer, whereas the same ought to have been issued in a faceless manner in terms of the scheme notified under Section 151A of the 1961 Act.

The bench noted that the impugned reassessment proceedings have thus been initiated after the Assessing Officer accepted the version of the transporter as well as the assessee during the inquiry conducted by the said assessing officer for the purpose of reassessment of the income of the transporter for the assessment year 2019-20.

If a notice under Section 148 of the 1961 Act is issued to reopen a case, such reopening must be done in accordance with the law, added the bench.

The bench held that the reopening notice under Section 148 of the 1961 Act and the reassessment proceeding initiated on the basis thereof cannot be sustained.

In view of the above, the bench allowed the petition.

Case Title: Himadri Speciality Chemical Limited v. Assistant/Deputy Commissioner of Income Tax, Central Circle 3(4) & Ors.

Case Number: WPA 21228 of 2025

Counsel for Petitioner/Assessee: J.P. Khaitan, Saumya Kejriwal, Ananya Rath, Navin Mittal and Debarghya Banerjee

Counsel for Respondent/Department: Aryak Dutt, Soumen Bhattacharjee, Ankan Das, Shradhya Ghosh, Riya Kundu

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