Reassessment made on Entirely a New Set of Facts which were not known to Assessee: Calcutta HC quashes Assessment Order [Read Order]

A Division Bench of the Calcutta High Court quashed the income tax assessment order since the reassessment was made on entirely a new set of facts which were not known to the assessee.

Kunal Daga, the writ petitioner challenged the order passed by the Single Bench which was on appeal challenging an order passed by the assessing officer under Section 148A(d) of the Income Tax Act, 1961 dated 30th March 2022.

The assessing officer completed the reassessment proceedings and passed the order on 24.03.2023. The Single Bench dismissed the writ petition on the ground that the appellant if advised can file an appeal against the assessment order.

It was argued that the correctness of the order passed under Section 148A(d) of the Income Tax Act, 1961 cannot be questioned by the appellant in an appeal that he may prefer against the reassessment order dated 24.03.2023.

The appellant questions the said order stating that no enquiry was conducted by the enquiry officer independently and the assessment could not have been even proposed to be reopened. The correctness of the Contention of the appellant needs to be decided and the only remedy available to an assessee to test the correctness of an order under Section 148A(d) of the Act is by filing the writ petition before the High Court.

The assessing officer issued a show cause notice dated 18.03.2022 under Section 148A(b) of the Income Tax Act. Subsequently, a corrigendum was issued with a different allegation or in other words alleging that the assessee had entered bogus transactions with a different person than the person who was named in the show cause notice dated 18.03.2022. Subsequently, another show cause notice was issued on 22.03.2022 and it is not clear as to whether the first show cause notice dated 18.03.2022 was dropped or otherwise.

The assessee submitted two replies dated 24.03.2022 to both the show cause notices denying knowledge of the alleged person with whom the assessee is alleged to have had transactions. On 30th March 2022, the order was passed under Section 148A(d) of the Income Tax Act.

Thereafter notices under Sections 143 and 142(1) of the Income Tax Act were issued for which a detailed reply was given by the assessee on 21.02.2023. Subsequently show cause notice was issued on 23.02.2023 giving less than three days to the assessee to respond.

The reopening of an assessment is a very serious matter and if such power is resorted to the assessee is entitled to an adequate opportunity to put forth their submissions.

The two-judge bench comprising T S Sivagnanam, Acting chief justice and Justice Hiranmay Bhattacharyya held that “the reassessment proceedings have to be redone and even if the assessment order has been passed, the same is required to be set aside and the matter is to be restored to the assessing officer for fresh consideration.”

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