Case Law Details
Pinnacle Enterprises Private Limited and Anr. Vs Union of India and Ors. (Calcutta High Court)
In the case of Pinnacle Enterprises Private Limited and Anr. Vs Union of India and Ors., the petitioners challenged the legality and validity of the order dated 28.06.2025 passed under Section 148A(3) of the Income Tax Act for Assessment Year 2021-22. The principal grievance raised by the petitioners was that despite repeated requests, no opportunity for personal hearing was granted before passing the impugned order reopening the assessment. The petitioners contended that the proceedings related to an alleged transaction of Rs.16.60 crore with M/s Lemongrass Investment Private Limited and that the documents relied upon by the authorities to link the petitioner with the said entity were vague and legally untenable.
The petitioners argued that the Assessing Officer passed the order without proper consideration of the reply and supporting documents submitted by them. Reference was made to an affidavit dated 02.04.2025 seeking a detailed investigation before initiation of proceedings. The petitioners also referred to a bank statement annexed to the pleadings to contend that the statement did not disclose the name of the account holder. Reliance was placed on the judgment in Pranav Ramesh Parikh vs. Deputy Commissioner of Income-tax, where it was held that although courts cannot examine adequacy of reasons, they can examine whether there exists a rational nexus between the reasons and the belief formed by the Assessing Officer before issuance of notice under Section 148.
The Revenue opposed the writ petition on the ground of maintainability, contending that the petition had been filed at a premature stage since no final assessment order had yet been passed. It was argued that the order under Section 148A(b) was based on the subjective satisfaction of the Assessing Officer for reopening the assessment. Reliance was placed on the decisions in Anhui Jain vs. Principal Commissioner of Income-tax and Anshul Jain vs. Principal Commissioner of Income-tax, where courts held that writ jurisdiction ordinarily should not be exercised at a premature stage and that issues on merits should be agitated before the Assessing Officer during reassessment proceedings.
The matter was thereafter listed again to enable the petitioners to distinguish the judgments cited by the Revenue. On further hearing, the High Court noted that the petitioners had repeatedly requested a personal hearing to explain the anomalies referred to in the show cause notice. However, despite such requests, the Assessing Officer passed the impugned order dated 28.06.2025 under Section 148A(3) without granting any personal hearing.
The Court observed that the notice dated 27.03.2025 could not be treated as a notice of personal hearing. It held that passing the impugned order without granting such opportunity amounted to violation of principles of natural justice, particularly because the statute contemplated granting an opportunity before reopening an assessment.
The Court relied upon the Division Bench judgment in Nitin Agarwal Vs Income Tax Officer Ward 4(6)(1), Kolkata and Others, where it had been held that non-consideration of replies and failure to grant a personal hearing before passing an order under Section 148A(d) violated principles of natural justice. The Division Bench had further directed that such orders be treated as notices under Section 148A(b), thereby permitting the assessee to submit additional objections and documents before fresh consideration by the Assessing Officer.
Following the principles laid down in Nitin Agarwal and considering the CBDT Guidelines, the High Court held that the petitioners had established a prima facie case of gross and flagrant violation of natural justice due to non-grant of personal hearing. Consequently, the Court quashed and set aside the order passed under Section 148A(d) along with the notice issued under Section 148.
The matter was remanded to the Assessing Officer for passing a fresh order under Section 148A(d) after granting a personal hearing to the petitioners on 03.06.2026 at 12 noon. The Court directed the Assessing Officer to consider the replies and documents furnished by the petitioners and thereafter pass a reasoned order in accordance with law within one week. The Court further clarified that if additional documents were required during hearing, the petitioners should be permitted to file a comprehensive reply to substantiate their case. It was also clarified that if the petitioners failed to appear on the scheduled date, the Assessing Officer would be at liberty to proceed in accordance with law.
Advocate for Petitioner: Himangshu Kumar Ray & Others
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. The petitioner in the instant case challenges the legality and validity of the order dated 28.06.2025 in the assessment year 2021-22 passed under Section 148A Sub-Section (3) of the Income Tax Act, 1961 (hereinafter referred to as the Said Act).
2. Learned counsel for the petitioner submits that the petitioner’s main grievance is the non-consideration of the plea for a personal hearing which has been raised in response to the show-cause notices. The personal hearing has been sought to refute the allegations in the show cause notice concerning a transaction with M/S Lemongrass Investment Private Limited amounting to Rs. 16,60,00,000/- for the period in question.
3. It is further submitted that the documents relied upon by the authority concerned to link the petitioner with M/s. Lemongrass Investment Private Limited are vague and not tenable in the eye of law. The authority concerned passed the order without considering the petitioner’s reply and arrived at a finding without due and proper application of mind. The order does not corroborate with the documents attached to the reply furnished by the petitioner.
4. The petitioner invites the attention of this Court to page 135 of the pleadings, which contains an affidavit affirmed on 2nd April, 2025 wherein the petitioner has sought for a thorough and meticulous investigation prior to initiation of proceedings against the petitioner company. Further attention is drawn to page 140 being the bank statement, to demonstrate that the statement of transactions pertaining to the current account for the period 01.04.2014 to 21.10.2021 does not disclose the name of the account holder.
5. Learned Counsel for the petitioner places reliance upon paragraph 18 of judgment in the case of Pranav Ramesh Parikh vs. Deputy Commissioner of Income-tax reported in (2025) 174 com384 which is reproduced below:-
“It is also trite law that while the Court cannot investigate into the adequacy of sufficiency of the reasons, which have weighed with the Income Tax Officer in coming to the belief, the Court can certainly examine whether the reasons are relevant and have a bearing on the matter in regard to which the Assessing Officer is required to entertain the belief before he can issue notice under Section 148 of the Act. If there is no rational or intelligible nexus between the reasons and the belief the exercise undertaken by the Income Tax Officer can be interfered with.”
6. Learned Counsel appearing for the respondent raises an objection to the maintainability of the writ petition and on the ground that the same has been filed at a pre-mature stage. The Assessing Officer is yet to arrive at a conclusive finding by passing any order of assessment. The Section 148A (b) order has been passed based on the subjective satisfaction of the assessing officer for reopening the assessment.
7. In this context learned counsel for the respondent relies upon paragraph 11 of the judgment of Anhui Jain vs. Principal Commissioner of Income-tax and Anr. reported in (2022) 449 ITR 251 which is reproduced below:
Thus, the consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such premature stage. Moreover, it is not a case whether from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of the order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided.”
8. He further places reliance on another judgment of the Hon’ble Apex Court in Special Leave to Appeal being no. 14823 of 2022 in the case of Anshul Jain vs. Principal Commissioner of Income-tax and Anr. wherein it has been held that for the if the petitioner has any grievance on merits the same must be agitated before the assessing officer in the reassessment proceedings. The relevant exhibit is reproduced below:-
“What is challenged before the High Court was the re-opening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the re-assessment proceedings.
Under the circumstances, the High Court has rightly dismissed the writ petition.
No interference of this Court is called for.
The present Special Leave Petition stands dismissed. Pending applications stand disposed of.”
9. The learned Counsel appearing for the petitioner seeks time to consider the judgment relied upon by the respondents.
10. Let this matter appear on 21.05.2026 under the heading “For Orders”.
11. Affidavit-of-service filed by the petitioner be kept on record.
1. Pursuant to the order dated 19.5.2026, this matter has been directed to appear in the list for consideration to enable the petitioner to distinguish the judgment relied upon by the respondent authorities.
2. The petitioner’s main grievance is with regard to non-consideration of the plea for a personal hearing which has been raised in response to the show cause notice prior to the passing of the order dated 28th June, 2025 passed under Section 148A(3) of the said Act.
3. The petitioner, on various occasions, prayed for personal hearing in order to substantiate the anomalies shown in the show cause notice. Despite such requests being made, the Assessing Officer has passed the impugned order dated 28.06.2025 under Section 148A (3) of the said Act without granting any opportunity of personal hearing.
4. An Order dated 28.06.2025 passed under Section 148A(3) of the said Act without granting any opportunity of personal hearing. As pointed by the petitioner that the Notice dated 27.03.2025 is not a notice of personal hearing. Therefore, the authority, while passing the order impugned in the writ Petition, has violated the principles of natural justice inasmuch as the statute provides that opportunity be granted to the assessee before the assessment is reopened.
5. Having heard the parties and considering the submissions already recorded in the Order dated 19.05.2026, this court is of the view that the petitioner has been able to make out a prima facie case since non-granting of personal hearing is the gross and flagrant of violation of natural justice.
6. The Division Bench of this Court has been pleased to observe on the principles of personal hearing in the case of Nitin Agarwal Vs Income Tax Officer Ward 4(6)(1) Kolkata and Others reported in 2024 (1) TMI 754 Calcutta High Court in paragraph 3 which is reproduced hereunder.
“3. Once again , the assessee sought for the relevant documents and liberty to file an additional objection. The reply given by the assessee on 12.04.23 has not been taken into account in the manner it should have been done , though the assessing officer refers to the said reply in pages 3 and 4 of the order dated 13.4.23. As pointed out earlier , the notice dated 27.3.23 is not a notice of personal hearing. Therefore , the authority while passing the order impugned in the writ petition has violated and principles of natural justice and inasmuch as the statute also provided that opportunity be granted to the assessee before an assessment is reopened. Therefore, we are satisfied that there has been violation of principles of natural justice and, therefore, the assessee has to be provided an opportunity of personal hearing and also be given liberty to furnish additional documents to support their stand. For the above reasons, the order impugned in the writ petition dated 13.4.23 passed under section 148A(d) of the Act is directed to be treated as a notice under Section 148A(b) of the Act and assessee be directed to file further objection along with supporting documents and on receipt of the further objection and supporting documents , the assessing officer is directed to fix a date for personal hearing to hear the authorized representative of the assessee and pass fresh orders on merits and in accordance with law. The assessee is directed to file their reply within a period of 30(thirty) days from the date of receipt of the server copy of this order.”
7. In light of the order of the Division Bench dated 13.10.2023 on principles of natural justice and the aforesaid CBDT Guidelines, the order passed under Section 148A(d) along with the notice issued under Section 148 are hereby quashed and set aside.
8. The matter is remanded back to the respondent No. 4, being the Assessing Officer, to pass a fresh Order under 148A(d) after granting a personal hearing to the petitioner on 03.06.2026 at 12 noon. After duly considering the reply and the documents filed by the petitioner, the respondent No. 4 shall pass a reasoned order in accordance with law and communicate such decision within a week thereafter.
9. With the above observations and directions the writ petition is disposed of.
10. Since the affidavits have not been invited, the allegations contained in the writ petition are deemed not to be admitted.
11. However, it is made clear that if the petitioner fails to represent before the authority concerned on the date mentioned, the respondent no. 4 shall be at liberty to take necessary steps in accordance with law.
12. It is further made clear that in course of hearing, if further documents are required to be furnished, the respondent No. 4 shall permit the petitioner to file a comprehensive reply in order to substantiate the issues involved for reopening the assessment.
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