Calcutta High Court Upholds Reassessment Against Chirania Projects, Orders Personal Hearing

The Calcutta High Court on 18 August upheld reassessment proceedings initiated against Chirania Projects Private Limited for Assessment Year (AY) 2019-20, while directing the Assessing Officer to provide the company an opportunity of personal hearing during the reassessment.

Justice Smita Das De passed the order while hearing the company's writ petition challenging the 30 June 2025 order under Section 148A(3) of the Income Tax Act and the consequential notice under Section 148. She observed:

"At the stage of Section 148A (3), the Assessing Officer is only required to form a prima facie opinion. The deeper scrutiny of documents regarding genuineness of loan is a matter to be undertaken during the reassessment proceedings under Section 148 read with Section 147"

The case concerned alleged escapement of income of Rs. 3.13 crore for AY 2019-20, comprising Rs. 1.68 crore received as an unsecured loan and Rs. 1.45 crore in cash deposits.

Chirania Projects argued that the Assessing Officer had travelled beyond the issues set out in the show-cause notice by referring to the Rs. 1.45 crore cash deposits only in the final order.

The company also submitted that it had specifically sought a personal hearing, but the Assessing Officer did not grant one. It maintained that the Rs. 1.68 crore loan was received through banking channels and that it had submitted documents to establish the identity and creditworthiness of the lender.

The Revenue argued that the Assessing Officer had considered the material available on record and that a personal hearing was not mandatory at the preliminary stage under Section 148A. It submitted that the company would have a full opportunity to explain its case during reassessment.

The Court found that the Assessing Officer had followed the procedure under Section 148A by issuing the show-cause notice, considering the company's reply and passing a reasoned order. It held that failure to grant an oral hearing at the preliminary stage would not, by itself, invalidate the reassessment proceedings. It held:

"…the interest of justice would be met by directing the Assessing Officer to afford a meaningful opportunity of hearing to the petitioner during the course of reassessment proceedings, to enable them to rebut the allegations and produce further evidence in support of their case"

The Bench also rejected the company's contention that the Assessing Officer had travelled beyond the show-cause notice. It observed that the Rs. 1.68 crore loan and Rs. 1.45 crore cash deposit were connected with the information concerning the alleged escapement of income.

It further observed that the Assessing Officer was required to form only a prima facie view at the Section 148A(3) stage, while detailed examination of the loan documents and other evidence could be undertaken during reassessment proceedings.

Accordingly, the High Court upheld the order under Section 148A(3) and the consequential notice under Section 148, but directed the Assessing Officer to provide Chirania Projects a meaningful opportunity of personal hearing and consider the documents and explanations submitted by the company. It left all issues on the merits open for consideration during the reassessment proceedings.

For Petitioner: Himangshu Kumar Ray, Saptak Sanyal, Subhasis Podder, and Shiwani Shaw, Advocates

For Respondent: Shiv Shankar Banerjee and Amit Sharma, Advocates