Income escaped assessment for different years cannot be clubbed for satisfying threshold limit u/s. 149(1)(b)

L-1 Identity Solutions Operating Company Private Limited Vs ACIT (Delhi High Court)

Delhi High Court held that income alleged to have escaped assessment for different previous years cannot be clubbed together for satisfying condition prescribed u/s. 149(1)(b) of the Income Tax Act (i.e. threshold amount of ₹50 lakhs). Hence, notice u/s. 148 issued beyond period of three years cannot be sustained.

Facts- The petitioner has filed the present petition, inter alia, impugning notices dated 21.03.2024 and 28.03.2024 issued u/s. 148 of the Income Tax Act, 1961 in respect of Assessment Year [AY] 2018-19. It is the Assessee’s case that no such notices could have been issued, as according to the Assessing Officer [AO] the income of the Assessee which has escaped assessment for the relevant assessment year [AY 2018-19] is less than ₹50 lakhs. In terms of Section 149(1)(a) of the Act, as applicable at the material time, no such notices could be issued beyond the period of three years from the end of the relevant assessment year, save and except in cases where the conditions specified in Section 149(1)(b) of the Act were satisfied.

Conclusion-

Held that in our view, the AO has erred in proceeding on the basis that it was open for the AO to issue a notice under Section 148 of the Act bearing in mind the cumulative income that has escaped assessment in respect of FYs 2016-17, 2017-18 and 2018-19. It is impermissible for the AO to add income which is alleged to have escaped assessment for different previous years for determining the threshold figure of ₹50 lakhs as specified under Section 149(1)(b) of the Act. In view of the above, we find merit in the contention that the impugned notices have been issued beyond the period of limitation as prescribed under Section 149(1) of the Act. Accordingly, the impugned notices and all proceedings commenced pursuant thereto, are set aside. The petition is allowed in the aforesaid terms. Pending applications are also disposed of.