Section 148 Notice Beyond 3 Years Barred for Income Under ₹50L: ITAT Bangalore

Income Tax Appellate Tribunal (ITAT) Bangalore allowed the appeal of Neelamma, quashing the reassessment notice issued under Section 148 of the Income Tax Act, 1961. The case pertained to the assessment year 2018-19, where the assessee, engaged in the flower business, was issued a notice under Section 148A(b) after the Income Tax Department found an alleged undisclosed deposit of ₹61,90,000 in her bank account. However, the assessee clarified that only ₹12,38,000 had been deposited, sourced from her business. Despite this clarification, the Assessing Officer (AO) treated the amount as unexplained income under Section 69A and proceeded with reassessment. The CIT(A) upheld the AO’s decision, leading the assessee to file an appeal before ITAT.

The key legal contention in the appeal was the validity of the notice issued under Section 148, which was challenged as being barred by limitation. Under Section 149(1)(b) of the Act, reassessment notices beyond three years from the relevant assessment year are permissible only if the escaped income exceeds ₹50 lakh. In this case, as the undisclosed income was ₹12,38,000, ITAT held that the notice issued in April 2022 was beyond the permissible time limit. The Tribunal relied on judicial precedents, including Sanat Kumar Murali v. ITO (2023) 152 taxmann.com 231 and Prameela Mahadev Tadkase v. ITO (2024) 158 taxmann.com 246, which reinforced the statutory limitation under Section 149.