While quashing reassessment proceedings in an intra-court appeal, the Calcutta High Court held that there should be tangible material placed by the Revenue Department to show that there was an escapement of income which is conspicuously absent in the case.

The High Court held so, after finding that there are glaring omissions and more particularly the condition precedent for exercise of the power of reopening the assessment are conspicuously absent.

The Division Bench comprising of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya observed that “the assessing officer would state that no prudent businessman will simply withdraw crores of cash from his bank account and again will deposit it at various stage”.

“In our view, this is a personal opinion of the assessing officer. However, for the purpose of reopening an assessment there should be a tangible material placed by the assessing officer to show that there was escapement of income from the payment of income tax”, added the Bench.

Advocate Sutapa Roy Choudhury appeared for the Appellant/ Assessee while the Respondent/ Revenue was represented by Advocate Soumen Bhattacharya.

The brief facts of the case were that the assessee challenged the order passed under Section 148A(d) of the Income Tax Act before the Single Judge, whereby the same was dismissed on the ground that the assessee would be entitled to raise all issues in the re-assessment proceedings. Hence, the correctness of the order of the Single Judge is challenged in the present appeal.

After considering the submission, the Bench observed that unless glaring omissions are demonstrated or conditions precedent for exercise of the power to reopen assessment are not complied with, the writ court would not ordinarily interfere with the order passed under Section 148A(d).

The Bench found that the annexure to the notice is an extract of the relevant particulars which find place in the return of income, and the assessee had furnished details to prove that the cash deposits in the bank arose from past withdrawals.

The Bench also noted the Revenue's observation that the bank statements in respect of the transactions done for the AY 2016-17 were to be mandatorily verified to examine the nature of transactions, however, the same could not be done as the reassessment proceedings were quashed.

Hence, referring to the AO’s observation that no prudent businessman would withdraw crores of cash and again deposit it at various stages, the High Court clarified that this is a personal opinion and not tangible material for reopening assessment.

Cause Title: Dinesh Kumar Goyal HUF v. ITO

Click here to read/ download the Order


Calcutta High CourtChief Justice T.S. SivagnanamJustice Hiranmay Bhattacharyya

Pankaj Bajpai