2026 (2) TMI 1381 - HC - Income Tax

Finality of assessment: reassessment cannot proceed on identical material; notices based on same record are void.

Reassessment of bank-deposit transactions already examined and finally adjudicated in a completed assessment cannot be initiated on the same material ... Reopening of assessment - same bank-deposit transactions which had already been investigated and finally adjudicated by the Income Tax Officer (ITO) - reasons to believe based on tangible material - double taxation / double jeopardy - maxim, Nemo debet bis vexari pro una et eadem causa - “reasons to believe” HELD THAT:- This Court is of the considered opinion that for the same transaction relating to deposit in the Canara Bank cannot be subject-matter of assessment u/s 147 twice; one by the ITO and the other by the DCIT. The legal maxim, Nemo debet bis vexari pro una et eadem causa, meaning thereby, no man should be vexed twice over for the same cause would fit to the present context. Petitioner-assessee should not face trial for the same cause (subject-matter) twice. See Commissioner of Central Excise, Nagpur Vrs. Shree Baidyanath Ayurved Bhawan Ltd. [2009 (4) TMI 6 - SUPREME COURT] it is well established that the material on which the Assessing Officer forms his opinion must not be the same material which had been considered at the time of the initial assessment, as in that case, the proceedings under Section 147 of the IT Act would amount to reviewing the Assessment Order merely on a change of opinion, which is not permissible. It is also well settled principle in the context of assessment undertaken u/s 147 that whilst it is not necessary for the AO to arrive at a firm conclusion that the assessee’s income for the relevant Assessment Year has escaped assessment, which is to be drawn during the assessment proceedings, the AO must have “reasons to believe” based on tangible material that has nexus with the belief that income indeed did escape assessment. Concluded and closed assessments cannot be reopened merely on suspicion or ipse dixit of the AO It is well settled that a notice u/s 148 of the Act could not be issued on mere suspicion. In order to form opinion, the AO has to have reasons to believe, and it is necessary for the authority concerned to examine the information and satisfy himself regarding the same. ITO had taken into consideration the explanation of the petitioner that it has been filing returns using PAN-2, but not PAN-1, and accepting such fact on verification of evidence and material on record, the ITO had reduced the assessment to NIL for the relevant Assessment Year. It is pertinent to mention here that for similar ground an Order under Section 147 read with Section 144 passed by the ITO, Ward-1(1), Cuttack on 29.03.2023 computing total income of the assessee as NIL.”, tempted to proceed with the assessment again by issuing Notice under Section 148 on the pretext “to protect the interest of revenue”. The reason so assigned by the DCIT for initiation of proceeding for assessment is, thus, found to be self-conflicting. This Court may observe that a quasi-judicial authority at a subsequent stage should not sit over the view expressed on facts in earlier assessment proceeding on the same subject matter adjudicated upon by another quasi-judicial authority. Factual narration of the ITO, Ward 1(1), Cuttack clearly spelt out that the petitioner has been filing returns using PAN: AATFS3658P, but not PAN: ABAFS4271L. WP allowed. Issues: Whether the Deputy Commissioner of Income Tax (DCIT) was competent to initiate reassessment proceedings under Section 147 by issuing notice under Section 148 in 2025 in respect of the same bank-deposit transactions which had already been investigated and finally adjudicated by the Income Tax Officer (ITO) in assessment order dated 30.03.2023 for Assessment Year 2019-20.Analysis: The Court examined the record and found the self-same cash-deposit transactions with Canara Bank (total Rs. 4,42,47,290/-) had been subject-matter of proceedings before the ITO, who on verification of audited accounts, bank statements and returns filed under PAN-2 had concluded assessment for the relevant year and assessed total income at nil. The DCIT's subsequent Order under Section 148A(3) and notice under Section 148 relied on the same material and sought reassessment without any showing that the ITO's order had been varied, reversed or that fresh and distinct material existed. The Court applied settled principles that reassessment proceedings cannot be a mere re-examination or review of a concluded assessment on a mere change of opinion; the initiation of reassessment requires independent tangible material giving rise to 'reasons to believe' and completed assessments attain finality and cannot be reopened for the same subject-matter, as doing so would amount to vexation twice for the same cause and risk double taxation. The Court further found no dispute on facts and held that alternative statutory remedies did not oust the High Court's jurisdiction to grant relief in this factual matrix.Conclusion: The Order dated 24.06.2025 under Section 148A(3), Notice dated 30.06.2025 under Section 148 and intimation dated 25.07.2025 under Section 144B issued by the DCIT insofar as they seek reassessment of the same transactions already finally adjudicated by the ITO are quashed and set aside; the writ petition is allowed in favour of the assessee.