Income Tax | Reopening Not Hit By Change Of Opinion If Earlier Proceedings Dropped Due To Lack Of Evidence: Calcutta High Court

The Calcutta High Court held that the mere reopening of an assessment under Section 148 of the Income Tax Act cannot be treated as a change of opinion if the earlier proceedings were dropped due to lack of evidence. Justice Raja Basu Chowdhury stated that on the basis of a change of opinion of the assessing officer, a notice under Section 148 of the said Act cannot be issued. For a case of change of opinion to be established an assessing officer must arrive at an opinion that there has been no escapement of income on the ground noted therein. In the case at hand, the assessee/petitioner was engaged in the manufacturing of steel products. The Assessing Officer issued a notice under Section 148A(1) of the Income Tax Act. It was alleged that the income chargeable to tax has escaped assessment in respect of the financial transactions made by the assessee concerning a cash purchase of coal from Majee Group and the information uploaded in the taxpayer annual summary (TAS) report. The jurisdictional assessing officer had passed an order under Section 143(3) of the Income Tax Act read with Section 144B which was dropped. The assessing officer re-opened the proceedings by issuing a notice under Section 148 and in such re-assessment proceedings the transactions made with Majee Group had been considered in the hands of the assessee. An order was passed under Section 148A(3) of the Income Tax Act. As per the assessee because of mere change of opinion, the above proceeding which has been sought to be re-opened, cannot be continued as the same would constitute a change of opinion. The issue before the bench was whether the jurisdictional assessing officer after having dropped the aforesaid issue, though, on the ground of lack of evidence was competent to re-open such issue upon gathering necessary information. The bench observed that the above issue though scrutinized, the jurisdictional assessing officer could not identify data in respect of Majee Group and hence, the alleged business relationship between the Majee Group and the assessee could not be verified. It is on such ground this issue was dropped. Admittedly, the transactions of the petitioner with Majee Group had been considered by the jurisdictional assessing officer. However, the jurisdictional assessing officer was unable to form an opinion in the said case in absence of data and as such was not in a position to verify whether the parties have any business relationship. It is on such ground, the issue was dropped. The above, would not constitute formation of an opinion by the jurisdictional assessing officer, opined the bench. The bench stated that having regard to the aforesaid for formation of some opinion, there has to be materials available before the assessing officer, however, simply because, the transaction details were available at that stage without the available data in relation to Majee Group, the same cannot, tantamount to an opinion. Especially when the assessee disclaims to have any business relationship with the said Majee Group, the verification was not possible. The bench found that in the order impugned, a relationship between the assessee and the Majee Group has been identified on the basis of additional materials, which were non-existent at the time when the scrutiny proceedings were initiated under Section 142(1) of the Income Tax Act. The bench held that the assessee has failed to make out any case of jurisdictional error committed by the jurisdictional assessing officer, on the ground of change of opinion. In view of the above, the bench dismissed the petition. Case Title: Mark Steels Limited v. Assistant Commissioner of Income Tax, Circle 1(1), Kolkata & Ors. Case Number: WPO 584 of 2025 Counsel for Petitioner/Assessee: Abhrotosh Mazumdar, Saumya Kejriwal, Ananya Rath, Navin Mittal, Debarghya Banerjee Counsel for Respondent/Department: Aryak Dutt, Amit Sharma, Abhishek Kr. Agrahari Click Here To Read/Download Order

Income Tax | Reopening Not Hit By Change Of Opinion If Earlier Proceedings Dropped Due To Lack Of Evidence: Calcutta High Court

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