Arun Kumar Bose Vs ITO (Calcutta High Court)
The Calcutta High Court addressed a writ petition filed by an assessee, Arun Kumar Bose, challenging an order dated February 7, 2025, issued by the Income Tax Officer, Ward No.1 (1), Siliguri. The case originated from the assessment year 2014-2015, where the assessee declared an income of Rs. 10,23,320. Following scrutiny, the Assessing Officer added Rs. 75,18,689 as unexplained sundry creditors, increasing the total income to Rs. 85,42,009. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who directed the deletion of the additions subject to conditions. The Income Tax Appellate Tribunal upheld the CIT(A)’s order. Subsequently, in an appeal under Section 260A of the Income Tax Act, 1961, the Calcutta High Court ruled in favor of the assessee on August 2, 2023, setting aside the orders of both the CIT(A) and the Tribunal concerning the remand for further inquiries, but not the direction to delete the additions.
Consequently, the Assessing Officer issued an order on January 3, 2024, granting the assessee a refund of Rs. 12,18,636, giving effect to the High Court’s decision. However, this order was rectified by a subsequent order dated February 7, 2025, which is the subject of the current writ petition. The Assessing Officer, using powers under Section 154 of the Income Tax Act, 1961, adjusted a penalty demand against the refund, effectively increasing the assessee’s tax liability. The assessee argued that this rectification was done without prior notice, violating Section 154(3) of the Act. The Revenue contended that the High Court’s order revived the original assessment order and that the February 7th order merely rectified a bona fide mistake in the refund order. The Calcutta High Court, after reviewing the sequence of events and the relevant sections of the Income Tax Act, held that the portion of the CIT(A)’s order directing the deletion of the additions was not set aside by the High Court. Therefore, the Assessing Officer rightly gave effect to this by issuing the refund order.
