Senthilkumar Thangaraj Vs ITO (ITAT Mumbai)
The assessee, a salaried individual, filed a return of income for Assessment Year (AY) 2016-17 declaring a total income of Rs. 7,01,880 and claiming deductions of Rs. 1,55,330 under Chapter VI-A against a gross total income of Rs. 8,57,211. Subsequently, the Assessing Officer (AO) initiated reassessment proceedings by issuing a notice under Section 148 of the Income Tax Act on the ground that income of Rs. 2,03,816 had escaped assessment.
During the reassessment proceedings, the assessee did not appear before the AO. Consequently, an ex parte assessment order was passed, wherein the AO made an addition of Rs. 47,00,000 relating to the purchase of property and also disallowed the assessee’s claim for deduction under Chapter VI-A.
The assessee challenged the assessment order before the Commissioner of Income Tax (Appeals) [CIT(A)] on both legal and merit-based grounds. While the CIT(A) rejected the legal challenge to the reassessment proceedings, the additions made by the AO were set aside to the file of the AO for fresh adjudication.
Before the Income Tax Appellate Tribunal (ITAT), the assessee primarily challenged the validity of the notice issued under Section 148. The assessee argued that the alleged escaped income was only Rs. 2,03,816, which was below the threshold of Rs. 50 lakh. Since the notice under Section 148 was issued on 27 July 2022, more than three years after the end of the relevant assessment year, it was contended that the reassessment proceedings were barred by limitation and the AO lacked jurisdiction to reopen the assessment.
