Ikramudin Mohammed Vs ITO (ITAT Hyderabad)
Summary: The ITAT Hyderabad quashed reassessment proceedings on the ground that the notice issued under Section 148 was barred by limitation and based on incorrect facts. The Assessing Officer issued the notice on 07.04.2022 for AY 2015–16, which was beyond the permissible time limits under Section 149. The Tribunal observed that the actual alleged escaped income was below ₹50 lakh, making the applicable limitation period three years, which had already expired. It further noted that the AO had artificially inflated the escapement amount by duplicating entries, an approach held to be legally untenable. Relying on judicial precedents, the Tribunal held that limitation must be determined based on correct and actual facts, not on erroneous assumptions. Since the notice itself was invalid, the entire reassessment proceedings were vitiated. Consequently, the Tribunal set aside the notice and reassessment order, allowing the appeal without examining other grounds on merits.
Core Issue:-The central issue before the Tribunal was whether the reassessment proceedings initiated under Section 147/148 were valid, particularly when the notice under Section 148 was issued beyond the prescribed limitation period and based on incorrect computation of alleged escaped income exceeding ₹50 lakh.
Facts of the Case:-The assessee’s case for AY 2015–16 was reopened by issuance of notice under Section 148 dated 07.04.2022 on the basis of information flagged under the risk management system relating to bank deposits and financial transactions. The Assessing Officer alleged escapement of income based on deposits aggregating to more than ₹50 lakh. However, on factual verification, the total deposits considered for addition amounted only to ₹49,17,939. The AO had erroneously duplicated one transaction of ₹17 lakh under two different reporting categories, thereby artificially inflating the figure beyond ₹50 lakh.
