Calcutta HC Strikes Down Reassessment Notice Against Himadri Speciality Chemical, Upholds ‘Change of Opinion’ Doctrine [Read Order]

Kolkata: In a decisive judgment delivered on December 8, 2025, the Calcutta High Court allowed a writ petition filed by Himadri Speciality Chemical Limited, challenging the Income Tax Department’s move to reopen its assessment for the Assessment Year (AY) 2019–20. The Court, presided over by Justice Om Narayan Rai, ruled that the reassessment proceedings were invalid as they amounted to an impermissible “change of opinion” by the Assessing Officer (AO).

The core of the dispute originated from a search and survey operation conducted on April 9, 2021, at the premises of the company’s transporter, Liquid Gold Carriers Private Limited. Based on the material gathered, the Income Tax Department alleged that Himadri Speciality Chemical had received an unaccounted cash return of ₹80,62,000 from the transporter against bogus transportation bills.

Crucially, the Court observed that the identical issue— involving the same alleged cash return amount for AY 2019–20—had already been raised and examined by the same Assessing Officer during the earlier reassessment of the transporter’s income. In that proceeding, a notice under Section 133(6) of the Income Tax Act, 1961, was issued to Himadri Speciality Chemical, which categorically denied receiving any cash return. The transporter’s assessment was subsequently completed on August 26, 2022, without the AO making any addition on account of the alleged cash return, thereby accepting the submissions of both parties.

Justice Rai highlighted the significance of this prior acceptance, observing:

“The impugned reassessment proceedings have thus been initiated after the Assessing Officer accepted the version of the transporter as well as the petitioner during the inquiry conducted by the said Assessing Officer for the purpose of reassessment of the income of the transporter for the assessment year 2019–20.”

The petitioner, represented by Mr. J.P. Khaitan, Senior Advocate, successfully argued that initiating a fresh reassessment against Himadri Speciality Chemical on the very same material and transaction constituted a review of an earlier decision—an exercise prohibited under income tax law.

The Court relied heavily on the settled legal principle laid down by the Supreme Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd., quoting:

“A reassessment on the same point would indeed be some sort of review of the earlier reassessment and that is prohibited. Law on such score was clearly laid down by the Hon’ble Supreme Court… We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions, and if the concept of ‘change of opinion’ is removed, then, in the garb of reopening the assessment, review would take place.”

The judgment also noted parallel circumstances relating to AY 2018–19, where reassessment proceedings initiated against Himadri Speciality Chemical on similar allegations were closed by the same AO—again without making any addition—through an order passed on August 26, 2022, the same date as the transporter’s assessment. The Court emphasized that the AO had all relevant information regarding the transactions for AY 2019–20 at that time but chose not to reopen the assessment, indicating that an opinion had already been formed.

Addressing the Revenue’s objection that the High Court should not interfere at the notice stage, the Bench held that the present case fell within an “exceptional circumstance” warranting constitutional intervention. The Court observed:

“If a notice under Section 148 of the 1961 Act is issued to reopen a case, such reopening must be done strictly in accordance with law.”

It concluded that the AO’s action amounted to a “wrong assumption of jurisdiction”, as the reopening was based on a review of existing material rather than any fresh tangible evidence.

Accordingly, the order passed under Section 148A(3) dated June 26, 2025, along with the consequential notice issued under Section 148 of the Income Tax Act, 1961, was set aside.

Case Details:

Case Name: Himadri Speciality Chemical Limited (formerly known as Himadri Chemicals & Industries Ltd.) v. Assistant/Deputy Commissioner of Income Tax, Central Circle 3(4) & Ors.

Case No.: WPA 21228 of 2025

Court: High Court at Calcutta, Constitutional Writ Jurisdiction, Appellate Side

Bench: Justice Om Narayan Rai
Judgment Date: 08.12.2025

Advocates for the Petitioner:
Mr. J.P. Khaitan, Sr. Adv.; Mr. Saumya Kejriwal, Adv.; Mrs. Ananya Rath, Adv.; Mr. Navin Mittal, Adv.; Mr. Debarghya Banerjee, Adv.

Advocates for the Respondents:
Mr. Aryak Dutt, Adv.; Mr. Soumen Bhattacharjee, Adv.; Mr. Ankan Das, Adv.; Ms. Shradhya Ghosh, Adv.; Ms. Riya Kundu, Adv.

[Read Order]