Reassessment notice U/S 148 Income Tax Act based on material already adjudicated by CIT(A) is mere change Of opinion: Raj HC

Jaipur: The Rajasthan High Court has held that a notice issued under Section 148 of the Income Tax Act, 1961 seeking to reopen an assessment on the basis of facts and material that have already been examined and adjudicated by the Commissioner of Income Tax (Appeals) is impermissible, being nothing but an exercise in “change of opinion”.

A division bench of Justice Arun Monga and Justice Sandeep Shah was hearing a writ petition filed by Ashok Kumar Manish Kumar HUF challenging the notice dated 23.03.2026 issued under Section 148, the sanction note dated 20.03.2026, and all consequential proceedings.

The petitioner, a Hindu Undivided Family acting through its Karta Mr. Ashok Kumar, had filed its return of income for Assessment Year 2022–23 declaring a total income of Rs. 8,24,770/- and claiming TDS credit of Rs. 7,15,391/-, resulting in a refund claim of Rs. 6,34,840/-. While processing the return under Section 143(1), the Centralized Processing Centre restricted the TDS credit to Rs. 2,83,663/- citing a mismatch with Form 26AS. A rectification application filed under Section 154 was rejected on 04.10.2024.

The petitioner thereafter preferred an appeal before the CIT(Appeals), which was allowed vide order dated 04.12.2025. The appellate authority accepted the petitioner’s reconciliation of interest income — Rs. 73,94,574/- recorded in the books of M/s Ranka Dyeing Mills after netting against interest expenditure of Rs. 74,83,321/-, with a further Rs. 6,47,842/- declared under “Income from Other Sources” — and directed grant of full TDS credit. The Revenue did not challenge this order, and it attained finality.

Notwithstanding the same, the respondents issued a fresh notice dated 23.03.2026 under Section 148 read with sanction note dated 20.03.2026, alleging escapement of income of Rs. 65,51,706/- on the very same Form 26AS discrepancy that had already been adjudicated by the CIT(A). Aggrieved, the assessee approached the High Court under Article 226.

Mr. Sharad Kothari, learned counsel for the petitioner, contended that the impugned notice was ex facie illegal, arbitrary and mechanical, having been issued without any application of mind. It was urged that the reopening was founded solely on a system-generated flag under the “High Risk e-Verification” category on the Insight Portal, ignoring that the entire interest income reflected in Form 26AS had been duly accounted for in the books and disclosed in the return after netting off corresponding interest expenditure. It was further contended that the action was wholly without jurisdiction as it failed to satisfy the mandatory requirement of “information” suggesting escapement of income within the meaning of Section 148, no fresh material under Section 135A having been brought on record. The notice, it was argued, was a clear case of impermissible “change of opinion” on identical facts and material that stood examined and decided in favour of the petitioner by the CIT(Appeals), and the proceedings stood vitiated by borrowed satisfaction and mechanical reliance on system-generated data despite a binding appellate order.

Per contra, Mr. Sunil Bhandari, learned counsel for the respondents, opposed the petition contending that it had been filed prematurely without responding to the impugned notice and was an attempt to short-circuit the statutory scheme of the Income Tax Act. It was submitted that a bare reading of the sanction note dated 20.03.2026 would reveal that the same was based on cogent information found prima facie believe-worthy upon due application of mind, and the petition deserved to be dismissed at the very threshold.

Hearing the matter, the Bench, speaking through Justice Arun Monga, found that no fresh material had come into the possession of the Assessing Officer subsequent to the appellate adjudication. The Court observed:

“The contents of the sanction note leading to issuance of the fresh notice for reassessment, when read in conjunction with and compared against the order dated 04.12.2025 passed by the CIT(Appeals), do nothing more than reveal a change of opinion on the part of the Assessing Officer with respect to facts and materials that had already been examined and conclusively adjudicated by a competent appellate authority. The sanction note raises no fresh ground, discloses no new material, and advances no tangible information beyond what was already on record before the CIT(Appeals).”

Reiterating the settled position on the bar against “change of opinion”, the Court held that the power of reassessment under Section 147 of the Income Tax Act, 1961 cannot be exercised merely on the basis of a different view of facts and materials already on record at the time of the original assessment. The Bench observed:

“Reassessment is not a second innings for the Assessing Officer to reconsider or re-appreciate evidence that was already before him. If the Assessing Officer forms an opinion on a particular issue during the original assessment, whether expressly or by necessary implication, any subsequent attempt to reopen the assessment on the same facts constitutes nothing more than a change of opinion, which is not a valid jurisdictional ground for invoking Section 147.”

Reliance was placed on the Supreme Court’s decision in CIT v. Kelvinator of India Ltd., (2010) 320 ITR 561 (SC), wherein it was authoritatively settled that although the Finance Act, 1989 omitted the requirement of “reason to believe” based on “new tangible material”, the concept of “change of opinion” continues to operate as an in-built check against the arbitrary exercise of the power. Reference was also made to the Delhi High Court’s ruling in CIT v. Eicher Ltd., (2007) 294 ITR 310 (Del) and the Gujarat High Court’s decision in Praful Chunilal Patel v. M.J. Makwana, (1994) 236 ITR 832 (Guj), with the bench recording its respectful agreement with the ratio enunciated therein.

Adverting to the finality of the CIT(A) order, which had not been challenged by the Revenue, the Bench found that the same conclusively established that the income had been duly disclosed and the denial of TDS credit was erroneous. Holding that no fresh information existed within the meaning of Section 148, the Court observed:

“The Assessing Officer is seeking to reopen an assessment on a premise already negated by a binding appellate order, which amounts to a collateral attack on a final adjudication and is wholly impermissible in law.”

Allowing the writ petition, the Court set aside the notice dated 23.03.2026 issued under Section 148 of the Income Tax Act, 1961, the sanction note dated 20.03.2026, and all consequential proceedings arising therefrom. All pending applications, including the stay application, were disposed of.

Case Title: Ashok Kumar Manish Kumar HUF v. Joint Commissioner of Income Tax, Range-3(R), Jodhpur & Ors.

Case No.: D.B. Civil Writ Petition No. 8724/2026

Citation: [2026:RJ-JD:20594-DB]

Counsel for the Petitioner: Mr. Sharad Kothari, Mr. Kalpit Shishodia, Mr. Pranjul Mehta, Mr. Chirag Soni, Mr. Dinesh Kumar Suthar

Counsel for the Respondents: Mr. Sunil Bhandari