Reassessment On Transaction Already Scrutinised Amounts To Change Of Opinion: Delhi HC [Read Order]

New Delhi: The Delhi High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act, 1961, holding that where the very transaction forming the basis of the notice had already been examined in detail during a completed scrutiny assessment for the same year, the reassessment amounted to nothing more than a change of opinion and fell outside the scope of Sections 147/148 of the Act.

A Bench of Justices Dinesh Mehta and Vimal Kumar Yadav was hearing a writ petition filed by Mrs. Neeru Sehgal challenging a notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961, against the Principal Commissioner of Income Tax 15, New Delhi, and others.

The petitioner had been assessed under Section 143(3) of the Act for the same assessment year, and that assessment culminated in an order dated 20.03.2025. A show-cause notice dated 28.02.2025 and the assessment order revealed that the Assessing Officer had, during scrutiny, specifically examined a transaction involving Rs. 85,00,000 stated to have been given in cash to Mr. Sachiv Sahni through Mr. Arjun Malhotra. The Assessing Officer had issued a questionnaire on this transaction and, being satisfied with the petitioner's reply, made no addition on that count. The impugned notice under Section 148 was issued on 31.08.2024 in respect of this very transaction and reason, even though the scrutiny assessment had already concluded on the point.

Counsel for the petitioner, Mr. Upvan Gupta, submitted that at the time the impugned notice was issued, assessment proceedings under Section 143(3) for the same assessment year were already underway, and that the transaction in question was under the Assessing Officer's active consideration. He pointed out that the Assessing Officer had, in fact, issued a specific questionnaire on the cash transaction and examined it in detail before accepting the petitioner's explanation without making any addition. On this basis, he argued that the subsequent reassessment notice, founded on the same transaction and the same reason, could not be sustained in law and amounted to an impermissible change of opinion rather than a case of any fresh or tangible material justifying reopening of assessment under Sections 147 and 148 of the Act.

Mr. Indruj Singh Rai, learned Senior Standing Counsel appearing with Mr. Sanjeev Menon, Mr. Rahul Singh and Ms. Priya Sarkar for the Revenue, did not dispute the petitioner's version of facts, including that the transaction had already been scrutinised and no addition made during the original assessment proceedings.

On a perusal of the assessment order and the show-cause notice, the Court found that the transaction underlying the impugned notice had indeed been examined in detail during the scrutiny assessment, and that the Assessing Officer had consciously chosen not to make any addition after considering the petitioner's reply. The Court held that reopening the assessment on the same transaction and reason thereafter was nothing more than a change of opinion and was beyond the scope of Sections 147 and 148 of the Act of 1961.

Accordingly, the Court allowed the writ petition and quashed the impugned notice dated 31.08.2024, along with disposing of the pending applications.

Appearances:

For the Petitioner: Mr. Upvan Gupta, Advocate.

For the Respondents: Mr. Indruj Singh Rai, Senior Standing Counsel with Mr. Sanjeev Menon, Mr. Rahul Singh and Ms. Priya Sarkar, Junior Standing Counsel, and Mr. Gaurav Kumar and Mr. Prateek Bhati, Advocates for the Revenue.

Case Title: Mrs. Neeru Sehgal vs. The Principal Commissioner of Income Tax 15, New Delhi & Ors., W.P.(C) 1886/2026, CM APPL. 9158/2026 & CM APPL. 9159/2026.

 [Read Order]