Mohd Athar Anjum Vs ACIT (Delhi High Court)
The Delhi High Court has set aside an income tax reassessment order, notice, and a preliminary order, clarifying the conditions for reopening an assessment beyond the standard three-year period. In the case of Mohd Athar Anjum vs. ACIT, the court ruled that to extend the limitation period to ten years, the income alleged to have escaped assessment must be represented by a single asset or relate to a single event with a value exceeding ₹50 lakh. The court determined that the tax department’s attempt to aggregate multiple, unrelated cash transactions across several years did not meet the legal requirements for reopening the case.
The petitioner, Mohd Athar Anjum, had filed his income tax return for Assessment Year (AY) 2018-19, declaring an income of ₹19,11,290. The tax authorities later initiated reassessment proceedings based on information from a survey conducted on a third party, alleging that the petitioner had engaged in unexplained cash transactions. The Assessing Officer (AO) issued a notice proposing to reopen the assessment for AY 2018-19, claiming that the petitioner’s unexplained cash transactions amounted to ₹37,63,528 for that year. Since this amount was below the ₹50 lakh threshold required to reopen an assessment after three years, the AO aggregated the alleged escaped income from multiple years (AY 2015-16 to AY 2020-21) to justify the action under Section 149(1)(b) of the Income Tax Act, 1961.
