Income Tax | “Nemo Debet Bis Vexari”: Assessee Cannot Be Vexed Twice for the Same Cause: Orissa High Court Quashes Second Reassessment

“Same Cash Deposit Cannot Be Reopened Twice Under Section 147……A Quasi-Judicial Authority Cannot Sit in Appeal Over a Concluded Assessment on the Same Transaction”, In a significant ruling on the limits of reassessment powers under the Income Tax Act, 1961, the Orissa High Court held that the same transaction cannot be subjected to reassessment twice under Section 147.

The Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman quashed the Order dated 24.06.2025 passed under Section 148A(3), the consequential Notice dated 30.06.2025 issued under Section 148, and the intimation under Section 144B, holding the fresh reopening to be “bad in law” as the earlier reassessment on identical material had already attained finality.

The Court emphatically observed that once an assessment on the same subject-matter had been concluded by a competent Assessing Officer, a subsequent authority could not initiate fresh proceedings on the very same transaction “to protect the interest of revenue.”

Two PANs, One Transaction, Two Reassessments

The petitioner, a partnership firm engaged in wholesale and retail business since 1985-86, had two Permanent Account Numbers — PAN-1 and PAN-2. Though it had been filing returns under PAN-2 since Assessment Year 2003-04, certain banking transactions with Canara Bank reflected PAN-1 due to inadvertence.

For Assessment Year 2019-20, cash deposits amounting to Rs. 4,42,47,290/- in Canara Bank became the subject of reassessment proceedings.

In 2023, the ITO, Ward-1(1), Cuttack, initiated proceedings under Section 147 after issuing notice under Section 148A(b). Upon verification of the audited accounts, returns filed under PAN-2, bank statements, and cash books, the ITO concluded that the deposits had already been disclosed in returns filed under PAN-2 and assessed the income at NIL by Order dated 30.03.2023.

The said order was never challenged and attained finality.

However, in 2025, the DCIT issued a fresh notice under Section 148A(1) on the same cash deposits, and by Order dated 24.06.2025 under Section 148A(3), held that Rs. 4,42,47,290/- remained unexplained and had escaped assessment. A fresh notice under Section 148 was issued on 30.06.2025.

This second reopening became the subject of challenge before the High Court.

“Existence of Alternative Remedy Is Not an Absolute Bar”

At the threshold, the Revenue contended that the writ petition was not maintainable since the Income Tax Act provides a complete statutory mechanism.

Rejecting this contention, the Court relied on Chhabil Dass Agarwal and Godrej Sara Lee Ltd., reiterating that existence of an alternative remedy is not an absolute bar where jurisdictional error is apparent and facts are undisputed.

The Bench observed that relegating the petitioner to another round of reassessment on the same cause would cause prejudice and unnecessary multiplicity of proceedings.

“Same Transaction Cannot Be Assessed Twice Under Section 147”

The Court carefully compared the earlier reassessment proceedings before the ITO and the subsequent proceedings initiated by the DCIT. It noted that both proceedings were based on the identical transaction — cash deposits of Rs. 4,42,47,290/- in Canara Bank for AY 2019-20.

The DCIT himself acknowledged in the impugned order that the ITO had earlier passed an order under Section 147 computing total income at NIL. Yet, he proceeded to treat the same amount as escaped income “to protect the interest of revenue.”

The Court found this reasoning self-conflicting and arbitrary.

It categorically held:

“For the same transaction relating to deposit of Rs.4,42,47,290/- in the Canara Bank cannot be subject-matter of assessment under Section 147 twice; one by the ITO and the other by the DCIT.”

“Nemo Debet Bis Vexari”: Assessee Cannot Be Vexed Twice for the Same Cause

Invoking the maxim “Nemo debet bis vexari pro una et eadem causa”, the Court observed that no person should be vexed twice for the same cause.

The Bench clarified that though res judicata does not apply in strict terms to taxation matters, finality of adjudication and orderly administration of tax law require that a concluded assessment on identical facts cannot be reopened mechanically.

It was noted that nothing on record showed that the earlier assessment order dated 30.03.2023 had been challenged, varied, or reversed by any higher forum.

Therefore, the DCIT could not initiate another reassessment on the same material.

“Reopening on Identical Material Amounts to Review”

In its concluding analysis, the Court reiterated the settled principle that reassessment under Section 147 cannot be based on the same material that was considered during earlier proceedings.

The Bench observed:

“The material on which the Assessing Officer forms his opinion must not be the same material which had been considered at the time of the initial assessment, as in that case, the proceedings under Section 147 would amount to reviewing the Assessment Order merely on a change of opinion, which is not permissible.”

It further emphasized that the Assessing Officer must have “reasons to believe” based on tangible material having nexus with escaped income. Suspicion or ipse dixit is insufficient.

Since the DCIT relied on identical facts already examined by the ITO, the fresh reopening was held to be legally untenable.

Doctrine of Finality: Quasi-Judicial Discipline Must Prevail

The Court made a significant observation on judicial discipline within tax administration:

“A quasi judicial authority at a subsequent stage should not sit over the view expressed on facts in earlier assessment proceeding on the same subject matter adjudicated upon by another quasi judicial authority.”

Finality of adjudication, the Court noted, is essential for functionality and certainty in tax law.

The High Court quashed: “Order dated 24.06.2025 under Section 148A(3), Notice dated 30.06.2025 under Section 148, and intimation dated 25.07.2025 under Section 144B.”

The writ petition was allowed, with no order as to costs. Questions of law, if any, were left open.

This ruling reinforces critical safeguards against mechanical reopening of assessments. It makes clear that reassessment is not a tool for re-reviewing concluded findings on identical material, nor can the Revenue justify duplication of proceedings under the pretext of protecting its interests.

By applying principles of finality, change of opinion, and protection against double vexation, the Orissa High Court has drawn a firm boundary around the exercise of powers under Sections 147 and 148 of the Income Tax Act.

Date of Decision: 24/02/2026