Income Tax Appellate Tribunal: In the present case, an appeal was filed by the appellant-assessee against the impugned order dated 16-6-2025, passed by the NFAC, Delhi relating to assessment year (‘A.Y.’) 2017-18, whereby NFAC confirmed the action of the Assessing Officer (‘AO’) in upholding the validity of reassessment proceedings initiated under Section 147 read with Section 148 of the Income Tax Act, 1961 (‘Act’), although the reopening was barred by limitation as escaped income was less than Rs 50 lakhs and did not fall under the extended time limitation under Section 149(1)(b).
Mahavir Singh (Vice President), observed that the escaped income in the present case was below Rs 50 lakhs and as per Section 149(1)(a), the notice under Section 148 could be issued only within 3 years from the end of relevant assessment year, i.e., upto 31-03-2021, whereas in the present case, the notice was issued on 09-02-2024. Thus, the Tribunal allowed the appeal and held that the notice under Section 148 was issued beyond the permissible period of limitation under Section 149(1)(a), therefore, the reassessment was void ab initio.
Background:
The assessee had not filed his Income Tax Return under Section 139(1) of the Act. Subsequently, the Assessment Unit completed the assessment at an income of Rs 35,91,700 out of which Rs 35,12,500 was assessed as short-term capital gain. A notice under Section 148-A(b) was issued, stating that income had escaped assessment under the provisions of Section 147, regarding sale, purchase of properties and contractual receipts.
Against the assessment, the assessee preferred an appeal before the CIT(A)/NFAC, who vide its order dated 16-06-2025, partly allowed the assessee’s appeal. Aggrieved by the order, the assessee filed the present appeal before the Tribunal.
Analysis, Law, and Decision:
The Tribunal noted that the notice under Section 148 for A.Y. 2017-18 was issued on 09-02-2024, wherein it was recorded that income chargeable to tax had escaped assessment and that the order under Section 148-A(d) was passed. The Tribunal agreed with the assessee’s submission that in the present case, the income escaped assessment was below Rs 50 lakhs, therefore, the notice dated 09-02-2024 was issued for A.Y. 2017-18 whereas the last date for issuing the notice under Section 148-A(b) was upto 31-03-2021 as the income escaped assessment for the said year was much below Rs 50 lakhs.
The Tribunal stated that the notice was issued considering that the income escaped assessment for more than Rs 50 lakhs as per the provisions laid down under Section 149(1)(b) which was against the facts of the present case as the information based on which the notice was issued under Section 148 was incorrect and as per the correct information the income which could be considered as escaped assessment during the year under consideration was Rs 35,91,700 only, i.e., sale consideration of immovable property Rs 35,12,50 and contractual receipts Rs 72900. The Tribunal stated that the assessment was ultimately completed at an income of Rs 35,91,700, which proved that the escaped income was below Rs 50 lakhs.
The Tribunal took note of the contention that at the time of framing the assessment, the AO himself admitted that information available with the department was not correct. The Tribunal observed that as per the provisions of Section 149(1)(a), the notice under Section 148 could be issued only within 3 years from the end of relevant assessment year, i.e., upto 31-03-2021, whereas in the instant case, the notice was issued on 09-02-2024, which was after the date mentioned in the Act. Therefore, the notice issued under Section 148 and assessment framed under Section 147 read with Section 144 and 144-B was barred by time as per the law, and thus, deserved to be quashed.
The Tribunal thus allowed the appeal and held that the notice under Section 148 of the Act was issued beyond the prescribed period of limitation, therefore, assessment proceedings under Section 147 were invalid and subsequent action initiated by AO was void ab initio.
[Malkiat Singh v. CIT, ITA No. 4366/Del/2025, decided on 8-10-2025]
Advocates who appeared in this case :
For the Appellant: P.K. Bansal, Advocate abd Tarun Sharma, CA
For the Respondent: Harpreet Kaur Hansra, Sr. DR