Calcutta High Court Grants Interim Relief in Reassessment Initiated Under Section 148

The Calcutta High Court, in the matter of IVL Dhunseri Petrochem Industries Private Limited Vs Union of India & Ors., considered a challenge to a reassessment notice issued under Section 148 of the Income Tax Act 1961 for Assessment Year 2021-22. The Court granted interim protection to the assessee after noting that the reassessment appeared to have been initiated without proper consideration of the assessee’s detailed response to a prior Section 133(6) notice and without disposal of its objections to the reassessment.

Since the text is a judicial order, what follows is a structured summary of the key findings, reasoning, and directions issued by the Court.

Background of the Writ Petition

Challenge to Section 148 Notice

• The assessee filed a writ petition questioning the validity of a notice issued under Section 148 of the Income Tax Act 1961, reopening the assessment for AY 2021-22.
• The core challenge was that the notice was allegedly issued:
  • Without any underlying “information” indicating escapement of income, which is a jurisdictional prerequisite under Section 148, and
  • Without considering the assessee’s explanations and objections already placed on record.

Prior Proceedings Under Section 133(6)

• Before the impugned reassessment notice, the Revenue issued a notice dated 03 April 2024 under Section 133(6) of the Income Tax Act 1961.
• This Section 133(6) notice requested:
  1. Clarifications regarding interest from deposits, and
  2. Details relating to interest reflected in the income tax return.
• In response, the assessee submitted a comprehensive reply (Annexure P-4 to the writ petition), together with supporting documents, explaining its position on both issues.

The assessee’s primary grievance was that:

The replies and materials furnished in response to the Section 133(6) notice were never examined or dealt with before issuing the Section 148 notice, indicating absence of application of mind.

Assessee’s Contentions Before the Court

Lack of Jurisdiction Under Section 148

Counsel for the assessee argued that:

• Under Section 148 of the Income Tax Act 1961, the formation of belief that income has escaped assessment must be founded on some tangible information.
• In the present case, there was no such information on record; hence, the issuance of the Section 148 notice suffered from a jurisdictional defect.

Non-Consideration of Reply Under Section 133(6)

• The assessee had painstakingly responded to the Section 133(6) notice, giving a detailed explanation on:
  • The nature and quantum of interest from deposits; and
  • The interest entries in the income tax return.
• Despite this, there was no indication that the Assessing Officer had:
  • Evaluated the reply,
  • Recorded dissatisfaction with the explanation, or
  • Given any reasons for disregarding the assessee’s stand.

The assessee contended that:

Issuing a notice under Section 148 without first considering the explanation given in response to Section 133(6) amounts to non-application of mind. Therefore, the reopening is without a factual foundation and cannot be sustained.

Failure to Supply Information and Dispose of Objections