Facts of the Case

The petitioner filed income tax returns for AY 2017–18 declaring income of ₹28,42,430. The case was selected for scrutiny, and an assessment under Section 143(3) was completed making an addition of ₹28,75,000 on account of unexplained cash deposits during demonetisation.

Subsequently, while an appeal against the assessment order was pending before CIT(A), the department issued a reassessment notice under Section 148 for a separate cash deposit of ₹12,50,000 in different bank accounts (Punjab National Bank and Bank of India).

The reassessment culminated in an order under Section 147 read with Section 144B, adding ₹12,50,000 as unexplained income. The petitioner challenged both the reassessment notice and order before the High Court.

Issues Involved

  1. Whether reassessment proceedings under Sections 147/148 are valid when an appeal is pending before CIT(A).
  2. Whether initiation of reassessment amounts to a change of opinion.
  3. Whether reassessment on a different transaction not considered in original assessment is permissible.
  4. Whether writ jurisdiction under Article 226 is maintainable in such tax matters.

Petitioner’s Arguments

  • The reassessment notice was invalid as the original assessment was completed after full disclosure.
  • Reopening during the pendency of appeal amounted to encroachment on CIT(A)'s jurisdiction under Section 251.
  • The reassessment was based on the same material, hence amounted to change of opinion.
  • All cash deposits were disclosed during assessment proceedings.
  • The reassessment order violated principles of natural justice as replies were not properly considered.

Respondent’s Arguments

  • The reassessment pertained to different cash deposits (₹12,50,000) not examined in original assessment.
  • There was no formation of opinion earlier, hence doctrine of change of opinion does not apply.
  • Powers under Sections 147/148 are independent of appellate proceedings.
  • The petitioner failed to disclose all bank accounts and deposits in the return.

Court’s Findings / Order

  • The Court held that the reassessment was valid and lawful.
  • The original assessment dealt with different deposits (₹34,54,500) and not the ₹12,50,000 in question.
  • Since the issue was not examined earlier, it cannot be termed as change of opinion.
  • Powers under Section 148 are independent and not barred by pending appeal under Section 251.
  • The writ petition was not maintainable, as the Income Tax Act provides an effective alternate remedy.

Final Order:
The writ petitions were dismissed, granting liberty to the petitioner to raise contentions before the appellate authority.

Important Clarifications by Court

  • No Change of Opinion: If an issue was not examined earlier, reopening is valid.
  • Independent Powers: Reassessment under Section 147 is independent of appellate powers under Section 251.
  • Different Transactions: Reassessment can be initiated for transactions not previously scrutinized.
  • Limited Writ Jurisdiction: High Courts should not interfere when statutory remedies exist.
  • Disclosure Requirement: Non-disclosure of bank accounts can justify reassessment.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 143(3) – Scrutiny Assessment
  • Section 144B – Faceless Assessment
  • Section 69A – Unexplained Money
  • Section 251 – Powers of Commissioner (Appeals)
  • Article 226 – Writ Jurisdiction

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2744-DB/MMH22072022CW60362022_190746.pdf

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