I applied under s.144A and the Additional Commissioner directed the Assessing Officer in my favour. Two years later the department has issued a s.148 notice on exactly the same point. Can it do that?
No. A direction issued under s.144A binds the Assessing Officer, and once the assessment has been framed in accordance with it the department cannot reopen the same issue on the same facts under s.147/148 — that is a mere change of opinion. If the department thought the s.144A direction was prejudicial to the revenue its remedy was s.263; not having taken it, the direction became final.
Decided by the High Court (Soumitra Pal J) on 2011-04-04, reported as W.P. No. 1347 of 2006 (High Court at Calcutta, Constitutional Writ Jurisdiction, Original Side). It bears on section 144A, section 147, section 148, section 263, section 73, section 143(3) of the Income Tax Act 1961, in Assessment & Scrutiny, Reassessment & Reopening and Revision & Rectification matters.
This is the entry that makes s.144A worth applying under. Practitioners treat s.144A as a courtesy the Range head may or may not extend; this decision shows what it actually buys — a determination on the disputed issue that binds the Assessing Officer at assessment stage AND survives afterwards, because the only route to displace it is revision under s.263. On a recurring issue where the Assessing Officer has taken a position you know to be wrong (here, the Explanation to s.73 on share-trading loss), an application under s.144A converts a fight with a subordinate officer into a determination by his superior. Two limits worth stating to a client: the direction operates on the facts before the Joint Commissioner, so genuinely fresh material is not shut out (the court's route was that the facts had not changed and were 'similar'); and s.144A(2) requires that no direction prejudicial to the assessee be issued without an opportunity of being heard, which cuts both ways — an application can produce a direction you do not want.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee company carried on delivery-based purchase and sale of shares and speculation business in shares. For AY 2001-02 it returned a total income of Rs 94,68,640, after a loss of Rs 11,49,39,400 in share dealing and Rs 5,50,95,999 in speculation business, against short-term capital gain of Rs 1,57,23,404, long-term capital gain of Rs 10,86,84,635 and dividend income of Rs 9,26,000. In the assessment proceedings the Income Tax Officer proposed to apply the Explanation to s.73 to the share dealing loss. The assessee wrote on 6 November 2003 that s.73 did not apply, and when the officer insisted, invoked s.144A by letter of 18 December 2003, asking the Additional Commissioner of Income Tax, Range-4, Kolkata to call for the record and issue directions. The Additional Commissioner called for a draft assessment order, which the officer sent proposing to include the speculation loss for deciding the applicability of s.73. The assessee filed written submissions on 20 February 2004 and was heard orally. By direction under s.144A the Additional Commissioner decided the Explanation to s.73 issue, directing the officer not to treat the share trading loss of Rs 11,11,77,739 as deemed speculation loss and to frame the assessment in the light of that direction. Assessment was completed on 31 March 2004 under s.143(3)/144A. On 31 March 2006 the Assistant Commissioner issued a notice under s.148 for the same year. The recorded reasons went to the same treatment of the share loss, the speculation loss and the separate disclosure of capital gains and dividend. The assessee objected that the issue had been decided by the higher authority under s.144A and could not be reopened, and moved a writ petition on 19 September 2006.
The writ petition was allowed. A direction under s.144A has a binding effect on the Assessing Officer; where an assessment has been framed pursuant to such a direction and the department has not revised that direction under s.263, the direction becomes final and the same issue cannot be reopened by a notice under s.148 on the same set of facts. The notice dated 31 March 2006 and all consequential proceedings were set aside and quashed.
The court set out the relevant portion of s.144A and underlined that the Joint Commissioner not only has a discretion to issue directions for the guidance of the Assessing Officer to enable him to complete the assessment, but that such directions are 'binding' on that officer. On the facts, it was an admitted position that the assessee had objected at the assessment stage to the Explanation to s.73 and had invoked s.144A, and that the Additional Commissioner had, after considering the provisions, directed the Assessing Officer not to treat the share trading loss as deemed speculation loss and to frame the assessment in the light of the directions. From the recorded reasons it was evident that the officer was trying to reopen the assessment on the very ground on which he had proposed to proceed before the s.144A order was passed; there had been no change in the facts, which were 'similar'. Reopening on the same set of facts was therefore a mere change of opinion. Secondly, if the department considered the s.144A order prejudicial to the interests of the revenue it could have invoked s.263, which it did not; the order therefore became final. The width of the jurisdiction was drawn from the statutory words themselves, that the Joint Commissioner 'may issue such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment'. The court applied CIT v. Rao Thakur Narayan Singh, 56 ITR 234 (SC), where an officer sought to reopen an assessment on the same set of facts and the Supreme Court held that a binding finding could not be gone behind, for otherwise there would be an unrestricted power of review in the hands of an Income-tax Officer 'with his changing moods'.
Therefore, the order passed under section 144A, which has a "binding" effect on the Assessing Officer, became final and cannot be reopened by issuing the impugned notice under section 148.
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Handle my notice → Ask a CA on WhatsAppNo. A direction issued under s.144A binds the Assessing Officer, and once the assessment has been framed in accordance with it the department cannot reopen the same issue on the same facts under s.147/148 — that is a mere change of opinion. If the department thought the s.144A direction was prejudicial to the revenue its remedy was s.263; not having taken it, the direction became final. This was decided by the High Court (Soumitra Pal J) and bears on section 144A, section 147, section 148, section 263, section 73, section 143(3) of the Income Tax Act 1961. It is reported as W.P. No. 1347 of 2006 (High Court at Calcutta, Constitutional Writ Jurisdiction, Original Side). This is the entry that makes s.144A worth applying under. Practitioners treat s.144A as a courtesy the Range head may or may not extend; this decision shows what it actually buys — a determination on the disputed issue that binds the Assessing Officer at assessment stage AND survives afterwards, because the only route to displace it is revision under s.263. On a recurring issue where the Assessing Officer has taken a position you know to be wrong (here, the Explanation to s.73 on share-trading loss), an application under s.144A converts a fight with a subordinate officer into a determination by his superior. Two limits worth stating to a client: the direction operates on the facts before the Joint Commissioner, so genuinely fresh material is not shut out (the court's route was that the facts had not changed and were 'similar'); and s.144A(2) requires that no direction prejudicial to the assessee be issued without an opportunity of being heard, which cuts both ways — an application can produce a direction you do not want. If it applies to you, the first step is this: When the Assessing Officer signals a position you cannot live with, write to the Joint/Additional Commissioner of the Range under s.144A before the assessment is completed, asking him to call for and examine the record and issue directions; do not wait for the assessment order and an appeal.
The assessee company carried on delivery-based purchase and sale of shares and speculation business in shares. For AY 2001-02 it returned a total income of Rs 94,68,640, after a loss of Rs 11,49,39,400 in share dealing and Rs 5,50,95,999 in speculation business, against short-term capital gain of Rs 1,57,23,404, long-term capital gain of Rs 10,86,84,635 and dividend income of Rs 9,26,000. In the assessment proceedings the Income Tax Officer proposed to apply the Explanation to s.73 to the share dealing loss. The assessee wrote on 6 November 2003 that s.73 did not apply, and when the officer insisted, invoked s.144A by letter of 18 December 2003, asking the Additional Commissioner of Income Tax, Range-4, Kolkata to call for the record and issue directions. The Additional Commissioner called for a draft assessment order, which the officer sent proposing to include the speculation loss for deciding the applicability of s.73. The assessee filed written submissions on 20 February 2004 and was heard orally. By direction under s.144A the Additional Commissioner decided the Explanation to s.73 issue, directing the officer not to treat the share trading loss of Rs 11,11,77,739 as deemed speculation loss and to frame the assessment in the light of that direction. Assessment was completed on 31 March 2004 under s.143(3)/144A. On 31 March 2006 the Assistant Commissioner issued a notice under s.148 for the same year. The recorded reasons went to the same treatment of the share loss, the speculation loss and the separate disclosure of capital gains and dividend. The assessee objected that the issue had been decided by the higher authority under s.144A and could not be reopened, and moved a writ petition on 19 September 2006. The matter was decided on 2011-04-04 by the High Court (Soumitra Pal J). On those facts the High Court held as follows. The writ petition was allowed. A direction under s.144A has a binding effect on the Assessing Officer; where an assessment has been framed pursuant to such a direction and the department has not revised that direction under s.263, the direction becomes final and the same issue cannot be reopened by a notice under s.148 on the same set of facts. The notice dated 31 March 2006 and all consequential proceedings were set aside and quashed.
The court set out the relevant portion of s.144A and underlined that the Joint Commissioner not only has a discretion to issue directions for the guidance of the Assessing Officer to enable him to complete the assessment, but that such directions are 'binding' on that officer. On the facts, it was an admitted position that the assessee had objected at the assessment stage to the Explanation to s.73 and had invoked s.144A, and that the Additional Commissioner had, after considering the provisions, directed the Assessing Officer not to treat the share trading loss as deemed speculation loss and to frame the assessment in the light of the directions. From the recorded reasons it was evident that the officer was trying to reopen the assessment on the very ground on which he had proposed to proceed before the s.144A order was passed; there had been no change in the facts, which were 'similar'. Reopening on the same set of facts was therefore a mere change of opinion. Secondly, if the department considered the s.144A order prejudicial to the interests of the revenue it could have invoked s.263, which it did not; the order therefore became final. The width of the jurisdiction was drawn from the statutory words themselves, that the Joint Commissioner 'may issue such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment'. The court applied CIT v. Rao Thakur Narayan Singh, 56 ITR 234 (SC), where an officer sought to reopen an assessment on the same set of facts and the Supreme Court held that a binding finding could not be gone behind, for otherwise there would be an unrestricted power of review in the hands of an Income-tax Officer 'with his changing moods'. In the words reproduced by the source cited on this page: "Therefore, the order passed under section 144A, which has a "binding" effect on the Assessing Officer, became final and cannot be reopened by issuing the impugned notice under section 148." The decision followed or applied Commissioner of Income Tax v. Rao Thakur Narayan Singh, 56 ITR 234 (SC) — relied on and quoted.
It was decided by the High Court on 2011-04-04 and is reported as W.P. No. 1347 of 2006 (High Court at Calcutta, Constitutional Writ Jurisdiction, Original Side). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 144A, section 147, section 148, section 263, section 73, section 143(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed. A direction under s.144A has a binding effect on the Assessing Officer; where an assessment has been framed pursuant to such a direction and the department has not revised that direction under s.263, the direction becomes final and the same issue cannot be reopened by a notice under s.148 on the same set of facts. The notice dated 31 March 2006 and all consequential proceedings were set aside and quashed. It arises in Assessment & Scrutiny, Reassessment & Reopening and Revision & Rectification matters, on section 144A, section 147, section 148, section 263, section 73, section 143(3) of the Income Tax Act 1961, and was decided by Soumitra Pal J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the legal issue, not the quantum, in the application, and ask expressly for a hearing before any direction is issued — s.144A(2) gives you that right where the direction would be prejudicial to you. Once a direction is issued, check the assessment order recites it (here the order was passed under s.143(3)/144A) — the recital is what ties the assessment to the binding direction. If a s.148 or s.147 notice later arrives on the same issue, take the s.144A direction as your first ground: put the direction, the assessment order framed under s.143(3)/144A and the recorded reasons side by side and show the reasons re-agitate the very ground the Joint Commissioner decided. Check whether the department ever revised the s.144A order under s.263. If it did not, say so in the objections — the court treated that omission as decisive. Keep the objections to the recorded reasons on file: this reopening was struck down on a writ petition, and the objection letter dated in the assessment record was what the court worked from.
Validity check could not be completed. Later treatment was NOT checked. A title search on indiankanoon for 'Amrit Sales Promotion' returned only interlocutory orders of the Calcutta High Court in this same matter, an unrelated Calcutta appellate-side suit and a 2025 Bombay High Court matter with a similarly named respondent which was not read and is not assumed to be the same company. No decision following, doubting or overruling this order was located, and none was looked for beyond that single search. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Two dates inside the order do not agree. The narrative of facts records the direction under s.144A as 'direction dated 23rd March, 2004', while the court's own discussion says 'on 19th March, 2004 the Additional Commissioner ... had passed an order under section 144A'. Nothing in the reasoning turns on which is right. The order itself is headed 'Date: 4TH/5th APRIL, 2011'; indiankanoon indexes it as 4 April 2011, which is the date used here. The order carries no paragraph numbers, so the key quote is located by its opening words rather than by a paragraph number. The transcript was pulled twice from the same URL; the operative passage came back identically both times. No ITR/CTR citation for this order was located, so only the writ petition number is given. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed. A direction under s.144A has a binding effect on the Assessing Officer; where an assessment has been framed pursuant to such a direction and the department has not revised that direction under s.263, the direction becomes final and the same issue cannot be reopened by a notice under s.148 on the same set of facts. The notice dated 31 March 2006 and all consequential proceedings were set aside and quashed.
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