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:
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.
