Mukesh Mohanlal Bhatia Vs ITO (ITAT Mumbai)
Escaped Income Below ₹50 Lakh? Reopening After 3 Years Is Dead on Arrival: ITAT Quashes NRI Reassessment
The Mumbai ITAT quashed reassessment proceedings against a UAE-based NRI and held that no notice under Section 148 can be issued beyond three years where the alleged escaped income is below ₹50 lakh.
The assessee, a non-resident individual residing in the UAE, had not filed any return in India for AY 2017-18 as no income was claimed taxable in India. The AO later initiated reassessment proceedings alleging unexplained expenditure of ₹7.10 lakh under Section 69C and issued notice under the new reassessment regime after passing an order under Section 148A(d).
Before the Tribunal, the assessee challenged the reopening itself by relying upon the Supreme Court rulings in Union of India vs. Ashish Agarwal and Union of India vs. Rajeev Bansal, contending that the mandatory conditions under Sections 149 and 151 were violated.
The ITAT accepted the contention and observed that under the amended reassessment regime introduced by the Finance Act, 2021, reassessment beyond three years is permissible only where the alleged escaped income exceeds ₹50 lakh and specified higher-level approvals are obtained. In the present case, the alleged escaped income was only ₹7.10 lakh, which itself barred reopening beyond three years.
The Tribunal further noted that even the sanctioning process suffered from jurisdictional defects under Section 151. Relying extensively on the Supreme Court’s detailed interpretation of the new reassessment framework in Rajeev Bansal, the ITAT held that compliance with Sections 149 and 151 is mandatory and goes to the very root of jurisdiction.
Accordingly, the notice issued under Section 148, the order under Section 148A(d), and the entire reassessment proceedings were quashed as void ab initio.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
