Maharashtra Foods Processing & Cold Storage Vs DCIT (ITAT Delhi)
Delhi ITAT: Reassessment Beyond 3 Years Invalid Where Escaped Income Is Below ₹50 Lakh — AYs 2014-15 & 2015-16 Notices Quashed Following Rajeev Bansal
For AY 2014-15, the assessee had filed its original return declaring Nil income. Reassessment was subsequently completed on 21.03.2025 at ₹34.77 lakh, after making an addition of ₹34,77,056 under Section 69C. The CIT(A) dismissed the assessee’s appeal.
Before the ITAT, the assessee raised the fundamental jurisdictional objection that the Section 148 notices dated 20.03.2024 for AYs 2014-15 and 2015-16 were barred by limitation under Section 149.
The alleged escaped income was:
AY 2014-15 – ₹34,77,056
AY 2015-16 – ₹49,79,231
Thus, in both assessment years the escaped income was below ₹50 lakh. The assessee contended that such cases fell within the three-year limitation under Section 149(1)(a) and could not be reopened under the extended limitation contemplated by Section 149(1)(b).
Reliance was placed on the Supreme Court’s decision in Union of India v. Rajeev Bansal concerning the interaction between the amended reassessment regime and TOLA. Since the statutory three-year period had already expired and the alleged escaped income was below ₹50 lakh, the notices issued only on 20.03.2024 were contended to be hopelessly time-barred.
The ITAT accepted the contention. It specifically noted that the escaped income of ₹34.77 lakh and ₹49.79 lakh respectively was below ₹50 lakh, and therefore the cases fell within the three-year limitation contemplated by Section 149(1)(a). Applying Rajeev Bansal, the Tribunal held that the notices issued on 20.03.2024 were barred by limitation and invalid.
Consequently, the ITAT quashed the Section 148 notices as well as the entire consequential reassessments for both AYs 2014-15 and 2015-16. Since the jurisdictional ground itself succeeded, all other grounds on merits became academic. Both appeals were allowed.
Key takeaway: The ₹50-lakh threshold under Section 149 is jurisdictionally crucial. Where the alleged escaped income is below ₹50 lakh, Revenue cannot invoke the extended reopening period. Thus, for old assessment years such as AYs 2014-15 and 2015-16, a Section 148 notice issued as late as March 2024 cannot be rescued by TOLA; following Rajeev Bansal, the notice and the entire consequential reassessment are liable to be quashed.
Cases Discussed:
- UOI vs. Rajeev Bansal (Supreme Court), Civil Appeal No. 8629 of 2024
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals by the assessee are emanating from the respective orders of the Ld. Commissioner of Income Tax (Appeals-29), New Delhi relating to assessment years 2017-18. Since common issues have been raised in both the appeals, thus, we are dealing with the facts of Assessment year 2014-15 as a lead case by passing a consolidated order for the sake of convenience.
2. The assessee has raised as many as 16 Grounds of Appeal, but Ld. AR has only argued the following Ground no. 2 which is legal in nature:-
“2. On the facts and circumstances of the case, the Ld. CIT(A) erred in law and facts by disregarding the facts that the impugned proceedings are barred by limitation as prescribed under section 149 of the Act thus rendering the entire proceedings and consequential additions unsustainable in law and liable to be quashed/deleted.”
3. The brief facts of the case are that the assessee filed its return of income u/s. 139(1) of the Act for the year under consideration i.e. AY 2014-15 on 31.3.2015 declaring total income NIL. Thereafter, assessment u/s. 147 of the Act has been completed on 21.03.2025 at assessed income of Rs. 34,77,060/- after making addition of Rs. 34,77,056 u/s. 69C of the Act. Against the same, assessee preferred the appeal before the Ld. CIT(A) who dismissed the appeal of the assessee. Being aggrieved the order of the Ld.CIT(A) the assessee is in appeal before the Tribunal.
4. Ld. AR for the assessee has raised the legal issue and stated that the limitation proceedings are barred by limitation and thus void ab initio. It was submitted that the notice u/s. 148 of the Act was issued on 20.03.2024 for AY 2014-15 & 2015-16. It was further contended that alleged income escaped assessment is only Rs. 34,77,056/- for AY 2014-15 & Rs. 49,79,231/- for Ay 2015-16 which is less than Rs. 50 lacs, which falls within the three year time limit prescribed under section 149(1)(a) of the Act, because as per the provisions of Section 149(1)(b) (as amended by Finance Act, 2021), the permissible time limit for issuance of notice for AY 2014-15 & AY 2015-16 has been expired. As per the directions issued by the Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal (Civil Appeal No. 8629 of 2024), it has been clarified that if the statutory period of three years from the end of the relevant assessment year was to expire within 20.03.2020 to 30.06.2021, then such notices issued under the old regime during that period shall be treated as valid if reissued under the new regime within the “surviving time”. Accordingly, in the present case, since the income escaped assessment is less than Rs. 50 lacs, the period of three years from the end of AY 2014-15 & 2015-16 has been expired, hence, the case squarely falls within the category governed by the Hon’ble Supreme Court’s decision in the case of UOI vs. Rajeev Bansal (supra). Since the notice under section 148 was issued only on 20.03.2024 is time-barred and therefore invalid and thus the assessment orders deserves to be annulled.
5. Ld. DR relied upon the orders of the authorities below.
6. We have heard the rival contentions and perused the records. we find considerable cogency in the contention of the Ld. AR that notice u/s. 148 of the Act was issued on 20.3.2024 for AY 2014-15 & 2015-16, relying on the relaxation under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the alleged income escaped assessment is only Rs. 34,77,056 & Rs. 49,79,231/- for AY 2014-15 & AY 2015-16 respectively which is less than Rs. 50 lacs, thus, falls within the three year time limit prescribed under section 149(1)(a) of the Act. Accordingly, in the present case, since the income escaped assessment is less than Rs. 50 lacs, hence, the case squarely falls within the category governed by the Hon’ble Supreme Court’s decision in the case of UOI vs. Rajeev Bansal (supra). Respectfully following the decision of the Hon’ble Supreme Court, as aforesaid, we hold that the notice issued u/s 148 of the Act on 20-03-2024 is time barred by limitation and thus invalid and therefore, the same is quashed and accordingly, consequent reassessment also stand quashed. Accordingly the legal issue raised by the assessee is allowed in both the appeals.
7. Since we have decided the legal ground in favour of the assessee in both the appeals, the other grounds have become academic, hence, need not be adjudicated.
8. In the result, both the appeals of the assessee is allowed.
Order pronounced in the open court on 14/08/2026.
