Ashokbhai Anbabhai Kachadiya Vs ITO (ITAT Ahmedabad)
Reopening Beyond 3 Years Fails ₹50-Lakh Test: 8% Estimation on Cash Deposits Can’t Save Time-Barred 148
Ahmedabad ITAT held that reassessment initiated beyond three years was without jurisdiction, as the escaped income did not meet the ₹50-lakh threshold prescribed u/s 149(1)(b).
The Assessee, a commission agent in fruits & vegetables, had not filed return for AY 2013-14, claiming income below basic exemption. Based on information of cash deposits, AO issued notice u/s 148 on 30-07-2022 (beyond 3 years). During reassessment, AO treated bank deposits of ₹1.74 crore as receipts, rejected books u/s 145(3), wrongly treated Assessee as a trader, applied section 44AD, and estimated income at 8% (₹13.98 lakh).
CIT(A) accepted violation of natural justice and remanded the matter to AO, but the Assessee challenged the very jurisdiction of reopening. ITAT held that for reopenings beyond three years, AO must possess material showing that income escaping assessment is ₹50 lakh or more, or likely to be so. In the present case, even on AO’s own estimation, escaped income was only ₹13.98 lakh, far below the statutory limit.
Tribunal clarified that gross cash deposits cannot be equated with escaped income and that AO must carry out a preliminary analysis before forming belief. Relying on Prakash Babulal Bhandari vs. ITO (Ahmedabad ITAT), ITAT quashed the reopening as time-barred, and consequently set aside the reassessment order as well as CIT(A)’s remand directions.
Accordingly, assessee’s appeal was allowed in full, reaffirming that the ₹50-lakh threshold is a jurisdictional condition, not a procedural formality.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
