Isabella Mariam

The High Court of Calcutta, Single Bench of Justice Om Narayan Rai set aside the notice issued under Section 148 of the Income Tax Act and the reassessment proceedings initiated against a corporate taxpayer for AY 2019–20, and allowed the writ petition. The dispute arose from the revenue’s allegation that amounts paid by the taxpayer to its transporter for transportation were linked to bogus billing, with ₹80.62 lakh allegedly returned in cash. The Court held that reopening was impermissible because it relied on the same survey material already examined in earlier proceedings, where the Assessing Officer had accepted the parties’ explanations, making the fresh reassessment a change of opinion and an impermissible review of the earlier decision.

The writ petition arose from reassessment proceedings initiated against an assessee engaged in the manufacturing of coal tar pitch and carbon black, which had availed transportation services from a private transporter for movement of raw materials. A search and seizure operation at the residential premises of the transporter’s director, along with a survey at the transporter’s office, led the revenue authorities to allege that certain amounts paid through banking channels for transportation were allegedly returned in cash. On the basis of material gathered during the survey, reassessment proceedings were first initiated against the transporter for the assessment year 2019–20, during which the assessee was also issued a notice seeking explanation regarding alleged cash returns. Both the transporter and the assessee denied receipt or return of cash, and the assessment was completed without any addition on that issue.

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Separately, reassessment proceedings were initiated against the assessee for the assessment year 2018–19 on similar allegations, which were also dropped after considering the assessee’s explanation. Subsequently, the assessing authority issued a notice initiating reassessment proceedings for the assessment year 2019–20 against the assessee, relying on the same survey material and allegations of cash return. The assessee challenged this action, contending that the reopening was based on the same material already examined earlier and amounted to a change of opinion, and further raised an objection regarding the manner of issuance of the notice.

The Court examined the sequence of assessments and reassessments involving both the transporter and the assessee and noted that the reassessment of the transporter for the assessment year 2019–20 had specifically examined the allegation of cash return. It recorded that “after considering the replies of the transporter as well as the petitioner the Assessing Officer ultimately passed an assessment order … without making any addition” on the issue of cash return, indicating acceptance of the explanations furnished.

With reference to the assessee’s case for the assessment year 2018–19, the Court noted that reassessment proceedings on identical allegations had also culminated in an order without any addition, observing that “in the petitioner’s case too … the Assessing Officer did not make any addition on the ground of return of cash.” The Court took note of the fact that both assessment orders were passed on the same date by the same assessing authority.

On a comparative reading of the notices issued to the transporter and the assessee, the Court observed that “the reassessment proceedings initiated against the transporter as well as the petitioner … involved the same issue,” and that the material relied upon was identical survey material. The Court found that the impugned reopening sought to revisit the very issue already examined and accepted earlier.

The Court stated that “the impugned reassessment proceedings have thus been initiated after the Assessing Officer accepted the version of the transporter as well as the petitioner,” and concluded that such reopening was impermissible. It held that this amounted to “a clear case of ‘change of opinion’,” explaining that a reassessment on the same point would be “some sort of review of the earlier reassessment and that is prohibited.”

Relying on settled principles, the Court recorded that “the assessing officer has no power to review; he has the power to reassess,” and that reopening on the same material would amount to an unlawful assumption of jurisdiction. It further observed that where jurisdiction is wrongly assumed, interference under writ jurisdiction is justified.

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The Court recorded that “the reopening notice under Section 148 of the 1961 Act and the reassessment proceeding initiated on the basis thereof cannot be sustained.” It therefore directed that “the same are therefore set aside,” thereby quashing both the notice issued under Section 148 and the reassessment proceedings commenced pursuant to it. The writ petition was accordingly disposed of with the direction that “WPA 21228 of 2025 stands allowed. “No costs” shall be payable by either party.

It was expressly clarified that since the writ petition was allowed “on the ground of change of opinion,” the Court had “not examined” the other ground of challenge relating to issuance of the notice by the jurisdictional Assessing Officer instead of in a faceless manner.

Advocates Representing the Parties

For the Petitioners: Mr. J.P. Khaitan, Senior Advocate; Mr. Saumya Kejriwal, Advocate; Mrs. Ananya Rath, Advocate; Mr. Navin Mittal, Advocate; Mr. Debarghya Banerjee, Advocate

For the Respondents: Mr. Aryak Dutt, Advocate; Mr. Soumen Bhattacharjee, Advocate; Mr. Ankan Das, Advocate; Ms. Shradhya Ghosh, Advocate; Ms. Riya Kundu, Advocate

Case Title: Himadri Speciality Chemical Limited v. Assistant/Deputy Commissioner of Income Tax & Ors.
Neutral Citation: 2025: CHC-AS:2215
Case Number: WPA 21228 of 2025
Bench: Justice Om Narayan Rai