Calcutta High Court Upholds Taxpayer Rights, Rejects Reassessment Based on Conjecture
The Calcutta High Court has annulled a reassessment order issued by the Income Tax department, citing the department's reliance on personal opinions rather than concrete evidence as grounds for its decision. The bench, comprising Chief Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya, reiterated that unless glaring omissions are evident or the conditions precedent for exercising the power to reopen an assessment is not met, the writ court will ordinarily not intervene with orders passed under Section 148A(d) of the Income Tax Act.
The appellant/assessee contested the order issued under Section 148A(d) of the Income Tax Act pertaining to the assessment year 2017-18.
The Single Bench initially dismissed the writ petition, acknowledging that the assessee would have the opportunity to address all concerns related to the reassessment proceedings.
The assessing officer initiated proceedings to reopen the assessment for the assessment year 2016-17, corresponding to the financial year 2015-16. These reopening proceedings were challenged by the writ petitioner, and the court ruled in favour of the petitioner.
The previous order stands as final, as the department has not filed any further appeal against it. In relation to the assessment year 2017-18, corresponding to the financial year 2016-17, the assessee received a notice under Section 148A(b). The notice cited credible information obtained through the insight portal regarding cash deposits, interest receipts, debenture purchases, etc., as the basis for the reassessment.
The assessee asserted that the department had not provided any evidence to substantiate the claim of income tax evasion. In response to the notice regarding cash deposits, the assessee clarified that the deposits originated from withdrawals from their bank account.
In its ruling, the Court held that the assessing officer must provide concrete evidence, or 'tangible material,' to demonstrate income tax evasion before initiating reassessment proceedings. The Court further underscored that mere suspicions or personal opinions are insufficient grounds for reopening an assessment.