Case Law Details
Trishladevi Mukesh Jain Vs ITO (ITAT Mumbai)
In this case, the ITAT Mumbai quashed reassessment proceedings initiated under Section 147/148 on the ground of limitation under Section 149(1)(b).
The Tribunal noted that the notice u/s 148 was issued on 13.07.2022 for A.Y. 2017–18, i.e., beyond the normal 3-year limitation period. For such extended reopening (up to 10 years), the law mandates that the alleged escaped income must be ₹50 lakh or more.
However, in the present case, the entire basis of reopening was an alleged unexplained expenditure of only ₹6 lakh, which is far below the statutory threshold. The Tribunal held that the Revenue failed to satisfy the jurisdictional condition required for extended limitation.
It was therefore held that:
- Notice issued beyond 3 years without meeting ₹50 lakh threshold is invalid
- Such defect goes to the root of jurisdiction
- Once notice is invalid, entire reassessment collapses
Accordingly, the reassessment was declared void ab initio, and the Tribunal did not go into merits of the addition.
Final Outcome:
- Reopening u/s 147/148 quashed
- Entire assessment set aside
- Assessee’s appeal allowed
This ruling is a strong precedent that post Finance Act 2021, extended reopening strictly requires ₹50 lakh escapement-anything less is fatal to jurisdiction.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against order dated 30.09.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reopening of assessment u/s 147 of Income Tax Act, 1961 which is bad-in-law and required to be quashed
2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reopening of assessment without considering the fact that the proceedings for AY 2017–18 are time barred as per section 149(1)(b) of Income Tax Act. 1961
3. On the facts and circumstances of the case and law, the Ld CIT(A) erred in confirming reopening of assessment without considering the fact that the notice for reopening u/s 148 was issued by Jurisdictional assessing oficer which is in violation of Faceless Assessment Scheme formulated under section 151A of Income Tax Act, 1961
4. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming issue of notice u/s 148 without considering the fact that the notice issued without mentioning DIN number on notice which is in violation of CBDT Circular No. 19 of 2019 dated 08.2019
5. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming issue of notice u/s 148 without obtaining proper approval from appropriate authority under section 151 of Income Tax Act, 1961
6. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming addition of 6,00,000/- u/s 69A of the Income Tax Act, 1961 for the cash payment made to M/s Shivam Autozone (India) Pvt Ltd for purchase of Car without considering the fact that the cash was paid from the available cash balance as on 01.11.2016.
7. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in levying tax under the provisions of section 115BBE of Income Tax act, 1961 on addition made under section 69A of Income Tax Act, 1961
8. On the facts and circumstances of the case and law, the L CIT(A) erred in levying penalty u/s 271AAC(1) of Income Tax Act, 1961
9. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in charging interest u/s 234B of Income Tax Act, 1961.
2. The Assessee has raised multiple grounds challenging both the jurisdictional validity of the reassessment and the substantive addition of ₹6,00,000/ – made under Section 69A of the Income -tax Act, 1961 (‘the Act’).
2.1 At the outset, the Ld. counsel for the assessee submitted that there is a delay of 69 days in filing the present appeal. The assessed in sworn affidavit deposed that the delay was occasioned by a bona fide misunderstanding regarding the mandate of his previous Authorized Representative (AR). The Appellant was under the impression that the AR would fulfill the statutory filing requirements; however, it transpired that the AR’s mandate was limited to the first appellate stage. Upon discovering this omission, the assessee promptly engaged new counsel to file the present appeal. We find that the delay was neither intentional nor a result of gross negligence. Applying the doctrine of substantial justice, we accept the explanation as ‘sufficient cause’ and hereby condone the delay of 69 days. The appeal is admitted for adjudication
3. The pivotal issue for our consideration is the jurisdictional validity of the notice issued under Section 148 of the Act. The Appellant contends that the reassessment proceedings are time-barred by virtue of the limitation period prescribed under Section 149(1)(b) of the Act. Before us, the Ld. counsel for the assessee referred to the ground No. 2 of the appeal challenging that in the instant case the information constituting cause for reopening u/s 147 was of Rs.6 lakhs only and therefore, as per the provision of section 149(1)(b) of the Act reopening could not have been initiated beyond the period of three years from the end of the relevant assessment year. The ld. counsel submitted that notice u/s 148 of the Act has been issued on 13.07.2022 whereas assessment year involved is 2017-18 and thus the notice u/s 148 of the Act has been issued beyond the period of three years from the end of the assessment year and hence the notice issued is void ab initio.
4. We find that before the Ld. CIT(A) this issue of challenging validity of reassessment was not raised hence no finding has given by the Ld. CIT(A). During the course of hearing, the ld counsel pleaded orally for admitting the legal ground of the assessee as additional ground. The ld DR did not object for raising the said ground by way of additional ground. As the ground raised is purely legal and not requiring investigation of fresh facts, accordingly after hearing parties, the additional ground was admitted for
5. The undisputed facts are that the notice under Section 148 was issued on 07.2022 for the Assessment Year 2017-18. The singular basis for reopening the assessment was an alleged unexplained cash expenditure of ₹6,00,000/- paid to M/s Shivam Autozone (India) Pvt. Ltd.
5.1 We have heard the rival submissions and scrutinized the statutory provisions governing the limitation period for reopening assessments. The Finance Act, 2021, introduced a rigorous timeline for the issuance of notices under Section 148. On plain reading of Section 149(1)(b) of the Act, it is evident that no notice under Section 148 can be issued after the expiry of three years from the end of the relevant assessment year unless the Assessing Officer has in his possession evidence which reveals that the income escaping assessment, represented in the form of an asset, expenditure, or an entry in the books, amounts to or is likely to amount to fifty lakh rupees or more.
5.2 In the instant case, the relevant Assessment Year is 2017 -18, which ended on 31.03.2018. The normal three-year limitation period expired on 31.03.2021 . To invoke the extended limitation period of up to ten years, the Revenue must demonstrate that the alleged escapement meets the high threshold of ₹50,00,000/ -.
5.3 From a perusal of the information for reopening and the findings on merit, it is manifest that the quantum of the alleged escapement is merely ₹6,00,000/-. This figure falls significantly short of the mandatory ₹50 lakh threshold required to validate a notice issued beyond the three-year mark. The notice issued on 13.07.2022 is clearly outside the three-year window. Since the statutory monetary threshold for the extended period is not met, the Assessing Officer lacked the jurisdiction to initiate reassessment proceedings. It is a settled principle that where a jurisdictional notice is void ab initio , the entire superstructure of the assessment built upon it must collapse.
5.4 Accordingly, the reassessment proceedings are hereby quashed. As the appeal is being allowed on jurisdictional grounds, we find it unnecessary to adjudicate the remaining grounds on the merits of the addition.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 20/04/2026.
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