Narayan Ram Luhar Vs ITO (ITAT Mumbai)
Mumbai ITAT: Reassessment Beyond Three Years Quashed Where Escaped Income Was Below ₹50 Lakh
The Mumbai ITAT quashed the reassessment proceedings for AY 2016-17, holding that no notice under section 148 can be issued beyond three years from the end of the relevant assessment year where the alleged escaped income is less than ₹50 lakh. The Tribunal also held that approval from the wrong authority vitiated the reopening.
The Tribunal first condoned a 463-day delay in filing the appeal, accepting the assessee’s explanation that the delay occurred due to bona fide reliance on the advice of the previous Chartered Accountant to await the outcome of the consequential assessment proceedings. The Tribunal observed that there was sufficient cause and no mala fide or deliberate inaction.
On merits, the assessee challenged the validity of the reassessment on the ground that the notice under section 148, issued pursuant to an order under section 148A(d) dated 29.07.2022, related to AY 2016-17 and sought to tax alleged escaped income of only ₹25.13 lakh, which was below the statutory threshold of ₹50 lakh prescribed under section 149(1)(b).
The Tribunal relied on its earlier decision in Manish Jagdish Joshi v. CIT and held that after the expiry of three years from the end of the relevant assessment year, reopening is permissible only where the escaped income represented in the specified forms amounts to ₹50 lakh or more. Since the alleged escapement was only ₹25.13 lakh, the statutory condition was not satisfied.
The Tribunal further held that the reopening also suffered from a jurisdictional defect because the approval for issuance of notice under section 148 had been obtained from the Principal Commissioner of Income-tax (PCIT) instead of the higher authority prescribed under section 151 for cases where more than three years had elapsed.
Accordingly, the ITAT held that the notice under section 148 was time-barred and without valid sanction, quashed the reassessment proceedings, and set aside the consequential assessment order. Having allowed the jurisdictional ground, the Tribunal left the other grounds on merits open.
Cases Discussed
- Manish Jagdish Joshi vs. CIT (ITAT Mumbai), (2024) 165 taxmann.com 836 (Mumbai – Trib.)
- Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors. (SC), (1987) 2 SCC 107
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), NFAC, Delhi, dated 23.10.2024 for the assessment year 2016-17.
