RAJU,NEW DELHI vs. INCOME TAX OFFICER WARD 58(7), DELHI, NEW DELHI

Shri Sumit Lalchandani, appearing on behalf of the assessee submits that the notice dated 06.03.2024 u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) in the instant case was issued beyond the period of three years and the addition was made only to the tune of Rs.29,89,866/-. The ld. Counsel contended that as per section 149(1)(b) of the Act, where three years have elapsed from the relevant assessment year, the assessment cannot be reopened if the income escaped assessment is less than Rs.50,00,000/-. In support of his submissions, he placed reliance on the decision in the case of Centurion Laboratories P. Ltd. vs. ACIT in ITA No.2292/Del/2025 decided on 11.02.2026 for AY 2019-20.

Both sides heard, orders of the lower authorities examined. The limited issue in the present appeal for consideration is the validity of notice u/s.148 of the Act issued after elapse of more than three years from the date of end of the relevant assessment year. The notice u/s.148 of the Act in present case was issued on 06.03.2024. A perusal of the assessment order reveals that the addition has been made on an estimated basis i.e.@ 10% of the total turnover of the assessee that works out to be Rs.29,89,866/-. A bare perusal of section 149(1)(b) of the Act shows that where the income chargeable to tax which has escaped assessment is less than Rs.50,00,000/-, notice u/s.148 of the Act cannot be issued after the elapse of three years from the relevant assessment year.

The Division Bench of the Tribunal in the case of Centurion Laboratories P. Ltd. vs. ACIT (supra) on similar set of facts has held as under: “8.1. Perusal of the audited books of account and ledger statements placed on record, it is evident that the assessee has debited only a sum of Rs.3,47,25,650/- to the purchase account, while the balance amount of Rs.62,50,617/- represents IGST at 18%, which has been separately accounted for under the Input Tax Credit ledger and has not been claimed as an expenditure. Therefore, the actual value of purchases, for the purpose of computation of any alleged income escaping assessment stands at Rs.3,47,25,650/- and not Rs.4,09,76,267/-. Applying the GP rate of 13.85% as adopted by the Assessing Officer himself, the alleged escaped income works out to Rs.48,09,503/-, which is admittedly below the monetary threshold of Rs.50,00,000/- prescribed under section 149(1)(b) of the Act. In our considered view, the expression “income chargeable to tax which has escaped assessment” used in section 149 refers to the real income sought to be brought to tax and not the gross value of transactions. Since the alleged escaped income in the present case does not satisfy the statutory threshold, the very assumption of jurisdiction under section 148 is invalid and the consequential reassessment proceedings are liable to be quashed.” [Emphasized by us] 6. Thus, in light of the facts of the case and the decision of Division Bench of the Tribunal referred above, I hold that the notice issued u/s.148 of the Act is without jurisdiction, hence, assessment proceedings arising therefrom are unsustainable.