Second Reassessment on Same Issue Invalid Once Prior Section 147 Order Attains Finality | HC

Case Details: Sanjay Kumar Bijay Kumar vs. Principal Commissioner of Income-tax-I - [2026] 184 taxmann.com 475 (Orissa)

Judiciary and Counsel Details

• Harish Tandon, CJ. & Murahari Sri Raman, J.
• Pranaya Kishore Harichandan & Pragyant Harichandan, Advs. for the Petitioner.
• Subash Chandra Mohanty, Sr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner, a partnership firm, has been carrying on its business dealing in cattle feed and building material on a wholesale and retail basis since 1985-86. It has been furnishing returns under the provisions of the Income Tax Act, 1961, disclosing PAN-2, since Assessment Year 2003-04, but it has never utilised PAN-1 in connection with its business activities. However, due to inadvertence, it disclosed PAN-1 in certain banking transactions with Canara Bank; nonetheless, it requested the Bank to make corrections in its records, listing PAN-2.

On collecting information regarding deposits made with the said Bank, the Deputy Commissioner of Income Tax (DCIT) issued a notice under Section 148 for the assessment of escaped income under Section 147 in respect of PAN-1. Further intimation was also issued in this regard.

The matter reached the Orissa High Court.

High Court Held

The High Court held that the DCIT, while passing an order under Section 148A(3), recorded that the assessee had been filing its returns using PAN AATFS3658P from the Assessment Year 2007-08 onwards. However, the assessee used PAN ABAFS4271L for the bank accounts maintained by it with Canara Bank during the Financial Year 2018-19. It was pertinent to mention that, for a similar ground, the ITO passed an Order under Section 147 read with Section 144, computing the total income of the assessee as nil.

Hence, the reason assigned by the DCIT for initiating the proceeding for assessment was found to be self-contradictory. The DCIT cannot sit over the view expressed on the facts in earlier assessment proceedings on the same subject matter, adjudicated by another quasi-judicial authority. The ITO’s factual narration clearly stated that the assessee had been filing returns using PAN AATFS3658P, but not PAN ABAFS4271L. Thus, the DCIT, while attempting to protect the revenue’s interest, should not be allowed to proceed with the assessment again under Section 147 of the IT Act.

List of Cases Referred to

• CIT v. Chhabil Dass Agarwal [2013] 36 taxmann.com 36 (SC)/[2013] 217 Taxman 143 (SC)/[2013] 357 ITR 357 (SC) (para 5.1)
• Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum Assessing Authority (2023) 3 SCR 871 (para 5.1)
• Muljibhai Patel v. Nandlal Khodidas Barot AIR 1974 SC 2105 (para 5.2)
• State of Tripura v. Manoranjan Chakraborty (2001) 10 SCC 740 (para 5.3)
• VFPL ASIPL JV Company v. Union of India 2020 (III) ILR-CUT 388 (para 5.4)
• CIT v. Sanjay Kumar Garg [2015] 64 taxmann.com 334 (Delhi) (para 6.14)
• Kamdhenu Enterprises Ltd. v. ITO [2023] 146 taxmann.com 417 (Delhi) (para 6.15)
• Kunjan Nair Sivaraman Nair v. Narayan Nair (2004) 3 SCC 277 (para 6.7)
• CCE, Nagpur v. Shree Baidyanath Ayurved Bhawan Ltd. 2009 taxmann.com 1041 (SC)/[2009] 237 ELT 225 (SC) (para 6.8)
• Neelima Srivastava v. State of Uttar Pradesh [2022] 8 taxmann.com 1547 (SC) (para 7.2)
• Experion Developers Pvt. Ltd. v. Himanshu Dewan and Sonali Dewan (2023) 12 SCR 1118 (para 8.1).