Salim Aboobacker Vs ITO (Kerala High Court)
In a significant ruling for income tax assessees, the Kerala High Court has set aside a reassessment order, emphasizing that proceedings under Section 148A of the Income Tax Act, 1961, are unsustainable if the alleged escaped income is below ₹50 lakhs and the notice is issued after the standard three-year limitation period. The judgment, delivered in the case of Salim Aboobacker Vs ITO, underscores the strict adherence required to statutory time limits for reopening assessments.
The petitioner, Salim Aboobacker, an income tax assessee, was challenged by the Income Tax Department for not filing returns for the assessment year (AY) 2016-17. Initially, he received a notice under Section 133(6) of the Income Tax Act, 1961, seeking information. Mr. Aboobacker responded, explaining that his income for AY 2016-17, derived from an auction of a panchayat public market and comfort station, fell below the threshold for compulsory return filing. He clarified that a substantial portion of the total transaction amount, specifically ₹26,47,575/-, had been remitted to the panchayat, thus reducing his actual income to a level below the taxable limit.
Despite this explanation, the Income Tax Officer (ITO) proceeded to issue a notice under Section 148A(b) of the Income Tax Act, initiating reassessment proceedings. Mr. Aboobacker filed a detailed objection to this notice, primarily contending that the proceedings were barred by limitation under Section 149(1) of the Act. The reassessment process eventually culminated in a final assessment order, Ext.P6, which prompted Mr. Aboobacker to file a writ petition before the Kerala High Court, challenging the legality of the entire proceedings on the ground of being time-barred.
