Rohit Premji Chheda Vs ITO (ITAT Mumbai)
The Mumbai ITAT allowed the assessee’s appeal and quashed the reassessment proceedings initiated under Sections 147 and 148 for Assessment Year 2017-18. The assessee had originally filed a return declaring income of ₹6,28,770, and the case was reopened on the allegation that a cash loan of ₹5,00,000 had been given, leading to an addition under Section 69 as unexplained investment. Before the Tribunal, the assessee argued that the reopening was initiated beyond three years from the end of the relevant assessment year and that the alleged escaped income was only ₹5,00,000, far below the ₹50 lakh threshold prescribed under Section 149(1)(b). The Tribunal accepted this contention, holding that the reopening violated Section 149(1)(b) because the escaped income did not amount to ₹50 lakh or more. Consequently, the sanction granted under Section 151 was held invalid, rendering the reassessment proceedings unsustainable. The assessment order was quashed and all other grounds were left unadjudicated.
Core Issue: Whether reassessment proceedings initiated beyond three years from the end of AY 2017-18 could be sustained when the alleged escaped income was only ₹5,00,000, which was far below the statutory threshold of ₹50 lakh prescribed under section 149(1)(b), and whether the sanction granted under section 151 in such circumstances was valid.
