Sanjay Champalal Jaiswal Vs ITO (ITAT Pune)
Reopening Beyond Three Years Invalid Where Escapement Is Below ₹50 Lakh — ITAT Pune Quashes Reassessment
The Pune SMC Bench of the ITAT quashed the reassessment for AY 2016-17, holding that the notice under section 148 dated 27-07-2022 was without jurisdiction, as the alleged income escaping assessment was ₹49.01 lakh, i.e. below the statutory threshold of ₹50 lakh prescribed under section 149.
Key findings of the Tribunal:
- Statutory bar under section 149: After expiry of three years from the end of the relevant assessment year, a notice u/s 148 can be issued only if the escapement of income is ₹50 lakh or more. In the present case, the department itself recorded escapement of ₹49.01 lakh, falling short of the threshold.
- Incorrect sanction under section 151: Since the notice was issued beyond three years, approval of the Principal Chief Commissioner/Principal Director General was mandatory. However, approval was obtained merely from the Principal Commissioner, rendering the notice invalid.
- Jurisdictional defect not curable: The defect went to the root of jurisdiction; hence the reassessment could not survive.
- Judicial support: The Tribunal relied on recent High Court rulings including ITO v. Sanath Kumar Murali (Karnataka HC) and Core Logistic Co. v. ACIT (Madras HC), which have consistently held that both the ₹50-lakh threshold and correct sanction are mandatory.
Accordingly, the ITAT quashed the assessment order passed u/s 147 r.w.s. 144 dated 29-03-2023. Since the reassessment itself was held invalid, all other grounds on merits were treated as academic.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Income Tax Act, 1961 for the A.Y.2016-17 dated 18.07.2025 emanating from the Assessment Order passed under section 147 r.w.s 144 of the Act, dated 29.03.2023. The Assessee has raised the following grounds of appeal :
“1) The learned CIT (A) erred in upholding the reopening of assessment vide notice u/s. 148 of the Act dated 27/7/2022 Le. After expiry of three years from the end of the assessment year 2016-17 without appreciating that notice under 148 can be issued beyond 3 years only if income escapement is above 50 lacs, in fact of present case the impugned notice issued for A.Y. 2016-17 is for income escaped below Rs.50 lacs. Le Rs 49,01,630/-, therefore reopening is bad in law.
2) Without prejudice to ground no. 1 above. The learned CIT(A) erred in upholding the treating of entire cash deposits of 149,01,630/- in the appellant’s bank account as unexplained income u/s69A of the Income Tax Act 1961, without appreciating that the appellant was merely acting as a broker of cotton, routing amounts received from buyers to sellers, and earning only a commission income of 1-1.5% as per the prevalent market rates thereon.
3) The Ld CIT(A) has erred in forming his opinion regarding the nature of the business of the appellant and upheld the highpitched addition made by the LFAO without examining the nature of transactions appearing in the bank account of the appellant.
4) The Ld CIT(A) has erred in forming his opinion regarding the nature of the business of the appellant as a trader instead of a commission agent merely due to the fact that he was involved in buying/purchasing from market and then selling them to the customers on commission basis.
5) The learned CIT(A) failed to appreciate that only the commission element, if any. could be brought to tax in the appellant’s hands, and not the entire amount of deposits which represented third-party funds passing through the appellant’s account.
6) The learned CIT(A) failed to appreciate that the appellant’s real income was limited to commission earnings which were below the basic exemption limit, and therefore, no taxable income arose for the relevant assessment year.
7) The appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal at the time of hearing.”
Findings & Analysis :
