ITO Vs Nishan Govindbhai Thakkar (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has dismissed the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had quashed the reassessment notice issued under Section 148 of the Income Tax Act. The notice was issued by the Assessing Officer (AO) beyond the prescribed time limit under Section 149(1)(a) for Assessment Year (AY) 2017-18. The case involved allegations that the assessee, Nishan Govindbhai Thakkar, had booked fictitious profits from trading shares of Shivansh Finserv Ltd. The CIT(A) ruled that since the escaped income was below Rs. 50 lakh, the reopening was barred by limitation.
The Revenue argued that the reassessment notice was valid under the Taxation and Other Laws (Relaxation and Amendments of Certain Provisions) Act, 2020, and subsequent CBDT notifications. They also contended that CIT(A)’s ruling conflicted with the Supreme Court’s decision in Union of India v. Ashish Agarwal, which upheld the extension of reassessment timelines due to the COVID-19 pandemic. However, ITAT upheld CIT(A)’s view that Section 149(1)(a) limits reopening to three years unless the escaped income exceeds Rs. 50 lakh, which was not the case here.
ITAT relied on the Delhi High Court’s ruling in Ganesh Dass Khanna v. ITO [2023] 156 taxmann.com 417 (Delhi), which clarified that under the amended reassessment regime, notices issued beyond three years require proof of concealed income exceeding Rs. 50 lakh. The court held that the intention behind the amendment was to reduce litigation and provide certainty to taxpayers. In this case, the AO issued the notice in July 2022, while the three-year limit expired on March 31, 2021. ITAT ruled that the extension provisions did not apply since the income in question was below the Rs. 50 lakh threshold.
