Reassessment Notice Set Aside for Lack of Timely Communication | HC

Case Details: J.M. Global Equities v. Deputy Commissioner Income-tax - [2025] 177 taxmann.com 676 (Calcutta) 

Judiciary and Counsel Details

• Smita Das De , J.
• S.C. Tiwari , Ms Hitoshree Biswas , Ms Manju Agarwal & Ms Anju Manot for the Petitioner
• Aryak Dutt for the Respondent

Facts of the Case

The assessee, an individual, filed its return of income for the relevant assessment year, which was processed under Section 143(1). Subsequently, information was received from the Directorate of Income Tax (Intelligence and Criminal Investigation) regarding the booking of loss by the assessee through client code modification. Based on such information, a notice under section 148 was issued after recording the reasons for reopening the case.

On request, the reasons for issuing the notice were communicated to the assessee. The assessee raised an objection to the issuance of the notice, but it was not considered. Later, the Assessing Officer (AO) passed the assessment order under Section 147, read with Section 143(3). Aggrieved by the order, the assessee filed a writ petition to the Calcutta High Court.

The High Court disposed of the writ petition with specific directions to the AO to dispose of the assessee’s objections within four weeks. However, the order of assessment was communicated to the assessee without disposing of the assessee’s objection. Aggrieved by the said assessment order, the assessee preferred the instant writ petition to the High Court.

High Court Held

The High Court held that the main ground of challenge was the order of assessment passed under section 147/143(3). There was a specific observation to consider the representation by passing a reasoned order and communicating the same to the assessee within a period of four weeks. Upon such failure to communicate within the time, the notice under section 148 would stand set aside.

Thus, the assessment order passed under Section 147/143 lacked jurisdiction and could not survive, as it was based on a notice issued under Section 148, which was itself bad, illegal, and arbitrary and not sustainable in the eyes of the law. It is made clear that any lackadaisical approach by the revenue authorities is not warranted at any stage.

Henceforth, the Revenue Department is expected to be more vigilant and diligent before any Court of Law with regard to furnishing adequate particulars and instructions to the departmental counsels for assisting the Court at the time of hearing. Any adverse order passed for want of instructions bears a cascading effect on the Department, prejudicing the interest of Revenue.

Thus, the notice issued under section 148 and the order dated 30-03-2016, all other consequential proceedings relating thereto, including the order of bank attachment, if any, were quashed and set aside.

List of Cases Reviewed

• GKN Driveshafts (India) Ltd. v. ITO [2003] 179 CTR 11/259 ITR 19/[2002] 125 Taxman 963 (SC) (para 10) – followed.

List of Cases Referred to

• GKN Driveshafts (India) Ltd. v. ITO [2003] 179 CTR 11/259 ITR 19/[2002] 125 Taxman 963 (SC) (para 10).