Change of Opinion Bars Reopening: Calcutta HC sets aside Income Tax Notice against Coal Manufacturer on alleged Cash Return [Read Order]

The Calcutta High Court has set aside an income‑tax reassessment notice issued to the petitioner, holding that reopening based on identical allegations already scrutinised amounted to impermissible change of opinion.

Himadri Speciality Chemical Limited, a manufacturer of coal tar pitch and carbon black, challenged a reassessment notice dated June 26, 2025, issued under Section 148 of the Income Tax Act, 1961.

The notice alleged that the company had received ₹80.62 lakh in cash from its transporter, Liquid Gold Carriers Pvt. Ltd., against bogus bills. The background of the case traces back to a search and seizure operation conducted on April 9, 2021, at the residence of the transporter’s director and a simultaneous survey at its office premises.

Based on materials gathered during the survey, the revenue initiated reassessment proceedings against the transporter for AY 2019‑20, alleging cash returns to Himadri. Notices were also issued to Himadri under Sections 133(6) and 142(1), seeking explanations on alleged cash receipts.

Both Himadri and the transporter denied the allegations, furnishing detailed replies. On August 26, 2022, the Assessing Officer completed the transporter’s reassessment under Sections 143(3)/147, and did not make any addition for cash payment.

Parallelly, Himadri’s own AY 2018‑19 return had been scrutinised under CASS and reassessed. Again, the AO examined the same allegation of cash return, this time ₹4.75 crore, and accepted Himadri’s explanation, making no addition on that ground. Thus, by August 26, 2022, both Himadri and its transporter had been assessed on the identical issue, with the AO finding no evidence of cash return.

Despite this, in March 2025 the AO issued a show‑cause notice under Section 148A(1), followed by the impugned notice under Section 148(3) dated June 26, 2025, reopening Himadri’s AY 2019‑20 assessment on the same allegation of ₹80.62 lakh cash return. Himadri moved the High Court, arguing that the reopening was barred as a change of opinion and violated the faceless regime under Section 151A.

The petitioner, represented by Senior Advocate J.P. Khaitan, argued that the reopening was barred as a case of change of opinion. He pointed out that the same allegation had already been examined in earlier assessments: For AY 2018‑19, Himadri’s return was scrutinised and reassessed, with no addition made on the alleged cash return. For AY 2019‑20, the transporter’s assessment was completed, again with no addition on the cash return issue.

Both orders were passed on August 26, 2022, by the same Assessing Officer, who had accepted the genuineness of transactions after considering replies from both Himadri and the transporter.

Khaitan submitted that once the AO had examined the records, raised queries, and accepted the assessee’s version, reopening on the same facts was impermissible.

He placed his reliance on the Bombay High Court’s ruling in Marico Ltd. v. ACIT [2020] , affirmed by the Supreme Court in ACIT v. Marico Ltd. (2020) , which held that reassessment on identical information amounts to a change of opinion.

The revenue, represented by Aryak Dutt, countered that the writ petition was premature since reassessment was not yet completed. He argued that AY 2018‑19 and AY 2019‑20 were distinct, and therefore, reopening could not be termed a change of opinion.

He relied on the Supreme Court’s decision in Anshul Jain v. PCIT (2022) , cautioning that writ courts should not interfere at the notice stage. He also cited Calcutta High Court rulings in Britannia Industries Ltd. v. UOI (2024) for the proposition that the Writ Court should not interfere in cases where statutory remedies are available unless there is either a clear violation of any of the fundamental rights or there is a lack of jurisdiction or any procedural perversity leading to manifest injustice.

The Calcutta High Court, after a comparative reading of the notices and assessment orders, held that the reassessment proceedings against Himadri Speciality Chemical Limited were founded on the same allegation of cash return of ₹80.62 lakh from its transporter, Liquid Gold Carriers Pvt. Ltd., which had already been scrutinised in earlier assessments.

Justice Om Narayan Rai observed that both the transporter’s AY 2019‑20 assessment and Himadri’s AY 2018‑19 reassessment had been completed on August 26, 2022 by the same Assessing Officer, and in both cases, no addition was made on the cash return issue. The Court noted: “It is thus clear that while there was an addition in respect of the first issue [cash payments under Section 40A(3)], there was no addition on the second issue of return of cash.” .

Building on this, the Court highlighted that reopening on identical facts already examined amounted to an impermissible change of opinion. It relied on the Bombay High Court’s ruling in Marico Ltd. v. ACIT [2020] 425 ITR 177 (Bom), where it was held that once queries are raised and answered in a regular assessment, reassessment on the same information is barred.

The Court quoted the Supreme Court’s affirmation in ACIT v. Marico Ltd. (2020) , underscoring that “reassessment cannot be initiated on the selfsame information.”

It was also observed that the law on such score was clearly laid down by the Supreme Court in the case of Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. as follows:-

“6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place.”

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The revenue’s reliance on Anshul Jain v. PCIT (2022) , cautioning against writ interference at the notice stage, was distinguished. The Court held that Himadri’s case fell within the exception where reopening was patently without jurisdiction, since the AO had already adjudicated the same issue.

Concluding it was held that for all the aforesaid reasons, the Court is of the view that the reopening notice under Section 148 of the 1961 Act and the reassessment proceeding initiated on the basis thereof cannot be sustained. The same are therefore set aside. The court allowed the Writ petition

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