Income Tax Reassessment Must Be Independent of GST Adjudication: Madras HC

Ramegowdu Mahendra Vs DCIT (Madras High Court)

Summary: The Madras High Court considered a writ petition challenging a notice dated 27.05.2026 issued under Section 148 of the Income Tax Act, 1961 for AY 2023-24. The petitioner submitted that the reassessment notice was founded on an adjudication order dated 03.02.2025 passed under the applicable GST enactments, against which an appeal had already been filed and a deemed stay was in operation. Referring to sub-section (3) of Section 148, the petitioner contended that reassessment could be based on an order of a Tribunal or Court but not on an adjudication order passed by the proper officer under GST law. It was also argued that allowing the Income Tax authorities to proceed could result in conflicting orders.

The Revenue submitted that the contention had already been dealt with in the order under Section 148A(3) and that the Income Tax authorities were required to conduct reassessment independently rather than on the basis of GST adjudication. The High Court observed that under Section 148A(1), initiation of reassessment requires information suggesting that income chargeable to tax has escaped assessment. The expression “information” is exhaustively defined in Section 148(3), including information received in accordance with the CBDT’s risk management strategy. However, nothing was placed on record regarding that risk management strategy or whether it included information in the form of a GST adjudication order.