Reassessment proceedings cannot be initiated based on a mere change of opinion regarding facts already adjudicated by an appellate authority. The exercise of such power requires the existence of fresh, tangible material suggesting income escapement, failing which the action is legally unsustainable.

ORDER :

1. Petitioner is before this Court challenging the notice dated 23.03.2026 issued under Section 148 of Income Tax Act, 1961 (Annexure-2), sanction note dated 20.03.2026 and all other consequential proceedings/actions.

2. Brief facts of the case are that the petitioner, a Hindu Undivided Family (HUF) acting through its Karta Mr. Ashok Kumar, resident of Balotra, Rajasthan, filed its return of income for A.Y. 2022–23 on 22.07.2022 declaring total income of Rs. 8,24,770/-. The return included business and interest income, with a tax liability of Rs. 80,552/- and TDS of Rs. 7,15,391/-, resulting in a claimed refund of Rs. 6,34,840/-. Upon processing under Section 143(1), the Centralized Processing Center (hereinafter referred as CPC), vide intimation dated 05.12.2022, restricted the TDS credit to Rs. 2,83,663/- citing mismatch with Form 26AS, without providing adequate opportunity or basis for such adjustment.

2.1 Aggrieved, the Petitioner filed a rectification application under Section 154 explaining that the entire interest income of Rs. 73,94,574/- was duly recorded in the books of M/s Ranka Dyeing Mills, corresponding interest expenditure of Rs. 74,83,321/- was accounted for, and only the net figure was reflected under business income. Additionally, Rs. 6,47,842/- was disclosed under “Income from Other Sources.” However, the CPC rejected the rectification application on 04.10.2024.

2.2 The petitioner then preferred an appeal before the Commissioner of Income Tax (Appeals) on 07.11.2024. Vide order dated 04.12.2025 passed under Section 250, the appellate authority allowed the appeal, accepted the Petitioner’s reconciliation of interest income, and directed grant of full TDS credit after verification with Form 26AS, along with consequential relief. The findings adjudicated the issue of alleged mismatch and treatment of interest income.

2.3 Notwithstanding, the respondents have issued a fresh notice dated 23.03.2026 under Section 148 based on a sanction dated 20.03.2026, seeking to reopen the assessment on the ground of alleged escapement of income of Rs. 65,51,706/- based on the same discrepancy flagged earlier on the Insight Portal.

2.4 Hence, the instant writ petition.

3. Mr. Sharad Kothari, learned counsel for the petitioner argues that the impugned notice dated 23.03.2026 issued under Section 148 of the Income Tax Act, 1961, along with the sanction note dated 20.03.2026, is ex facie illegal, arbitrary, and mechanical, having been issued without proper application of mind to the facts on record. The reopening is founded solely on a system-generated flag under the “High Risk e-Verification” category on the Insight Portal, alleging mismatch of interest income, while completely disregarding that the entire interest income, as reflected in Form 26AS, had already been duly accounted for in the books and disclosed in the return under the head “Business Income” after netting off corresponding interest expenditure. It is further contended that the Respondents failed to furnish the Petitioner with the foundational material and verification reports relied upon, thereby causing serious prejudice and violating principles of natural justice.

3.1 It is further argued by learned counsel for the petitioner that the impugned action is wholly without jurisdiction as it fails to satisfy the mandatory requirement of existence of “inf