Sanchayita Lahkar

The High Court of Calcutta, Single Bench of Justice Raja Basu Chowdhury declined to quash an income-tax reassessment notice issued to an assessee-company after it challenged the reopening as a change of opinion. The dispute arose from allegations that the assessee made cash payments linked to coal purchases from a third-party group and that related transactions reflected in departmental data warranted reassessment. The Court held that a reassessment under Section 148 cannot be founded on a mere change of opinion, and that such a plea requires the assessing officer to have earlier formed a view that no income had escaped assessment. Since the earlier scrutiny was dropped for want of supporting material, the reopening was not treated as a change of opinion. The proceedings may continue, but any decision is not to be implemented without the Court’s leave.

The writ petition was instituted by an assessee company challenging an order passed under Section 148A(3) of the Income Tax Act, 1961 and the consequential notice issued under Section 148 for the assessment year 2021–22. The challenge was founded on the allegation that the reassessment proceedings were initiated on the basis of a mere change of opinion.

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The assessee contended that during the original scrutiny assessment, the assessing officer had examined alleged cash transactions relating to the purchase of coal from a third-party group and had thereafter dropped the issue while passing the assessment order under Section 143(3). It was submitted that reopening the assessment on the same issue was impermissible.

The revenue opposed the writ petition, asserting that the issue was not decided earlier on merits but was dropped only due to lack of corroborative material. It was contended that subsequent information and materials justified reopening the assessment. The reassessment proceedings were stated to be based on fresh and tangible material, obtained after the original assessment, and therefore not barred by the doctrine of change of opinion.

The Court noted that scrutiny proceedings for the relevant assessment year had already been initiated and that the transactions forming the basis of the reassessment notice were part of the earlier verification process. It recorded that “the transactions which have been noted and formed part of the show cause under Section 148A(1) of the said Act were under scrutiny.”

Referring to the original assessment order, the Court extracted the findings of the assessing officer and observed that “no data in respect of Anup Majee/Majee Group could be gathered” and that “it could not be verified whether these parties have any business relation with the assessee or not.”

The Court held that the issue had been dropped earlier due to inability to verify facts and not because any opinion was formed in favour of the assessee. It observed that “the jurisdictional assessing officer was unable to form an opinion in the said case in absence of data.”

On the doctrine of change of opinion, the Court stated that “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.” It further recorded that “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.”

The Court also noted that the reassessment proceedings were based on additional material that was not available during the original scrutiny and recorded that “the subsequent notice issued under Section 148 of the said Act is based on an order which takes note of new and tangible material.”

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The Court held that “the petitioner has failed to make out any case of jurisdictional error committed by the jurisdictional assessing officer, on the ground of change of opinion. Although, the issue of the competence of the jurisdictional assessing officer to issue a notice under section 148 of the said act, after the scheme having been notified and published under section 151A of the Act, had not been argued, however, taking into consideration the fact that the same goes to the root of jurisdiction of the jurisdictional assessing officer to issue the notice, and since, several matters have been entertained on such ground, I am of the view that the aforesaid issue may require a detailed consideration. In the light of the observations made herein above while permitting the proceedings to go on, I am of the view that though a decision may be taken by the jurisdictional assessing officer, such decision shall not be implemented without express leave of this Hon’ble court.”

Advocates Representing the Parties

For the Petitioners: Mr. Abhrotosh Mazumdar, 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. Amit Sharma, Advocate; Mr. Abhishek Kr. Agrahari, Advocate

Case Title: Mark Steels Limited v. Assistant Commissioner of Income Tax & Ors.
Case Number: WPO 584 of 2025
Bench: Justice Raja Basu Chowdhury