RAJESH KUMAR KHANDELWAL,JAIPUR vs. ITO WARD 5(1), JAIPUR

ITA 21/JPR/2026Status: DisposedITAT Jaipur21 October 2026AY 2016-1711 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under Sections 148A and 148 of the Income-tax Act, 1961, were unsustainable in law. The primary issue revolved around the monetary threshold of ₹50 lakh prescribed under Section 149 of the Act for issuing notices beyond three years, which is to be examined with reference to the income chargeable to tax alleged to have escaped assessment, not merely the gross sale consideration. The Tribunal noted that the registered sale deed clearly indicated the property was jointly owned by four persons, making the assessee's one-fourth share in the sale consideration ₹42,25,250, which is below the ₹50 lakh threshold. The assessee's failure to respond to the notice under Section 148A(b) did not justify disregarding the material available on record, specifically the sale deed showing co-ownership. The Tribunal relied on the Madhya Pradesh High Court's decision in Nitin Nema v. Office of the Principal Chief Commissioner of Income-tax and a coordinate bench's decision in Vipendra Ravindra Mandal v. ITO, emphasizing the distinction between gross sale consideration and income chargeable to tax. The Tribunal also invoked the principle laid down by the Hon'ble Supreme Court in CIT v. Vegetable Products Ltd., favoring the view favorable to the assessee when two interpretations are possible. Consequently, the jurisdictional condition for invoking the extended period of limitation was not satisfied, rendering the reassessment proceedings invalid. The grounds challenging the addition on merits were rendered academic.

What were the facts?

The assessee, Rajesh Kumar, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2016-17. The Assessing Officer (AO) initiated reassessment proceedings under Section 148A and 148 of the Income-tax Act, 1961, based on information suggesting the assessee had sold an immovable property for ₹1,69,01,000. The assessee did not file a return of income. The AO issued a notice under Section 148A(b), to which the assessee did not respond. Consequently, the AO passed an order under Section 148A(d) and issued a notice under Section 148 on December 19, 2023. The AO made an addition of ₹34,36,535 towards capital gains, representing the assessee's one-fourth share in the property. The assessee challenged the validity of reassessment and the addition before the CIT(A), who dismissed the appeal due to the assessee's non-appearance.

What were the issues?

1. Whether the reassessment proceedings initiated under Sections 148A and 148 of the Income-tax Act, 1961, are sustainable in law, considering the monetary threshold prescribed under Section 149 of the Act for issuance of notice beyond three years, and if the AO erred in treating the entire sale consideration as income escaped assessment instead of the assessee's proportionate share. Assessee's Contention: The assessee argued that their one-fourth share in the sale consideration was ₹42,25,250, which is below the statutory threshold of ₹50 lakh prescribed under Section 149 for issuing notice beyond three years. The AO erred in treating the entire sale consideration as income when the sale deed clearly indicated co-ownership. The assessee relied on the verdict of the Apex Court in Goetz India (though the specific citation is not provided) and the decision in Nitin Nema v. Office of the Principal Chief Commissioner of Income-tax (2023) 458 ITR 690 (MP). Revenue's Contention: The revenue contended that the assessee failed to respond to the notice under Section 148A(b), leaving the AO without material to ascertain the income chargeable to tax in the assessee's hands. The revenue also referred to the AO's finding that escapement to the tune of ₹71,00,000 from sale proceeds represented an asset as per Section 149(1).

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

Before: SHRI OM PRAKASH KANT & SHRI T. R. SENTHIL KUMAR

For Appellant: Shri Ashish Khandelwal
Hearing: 14.10.2026Pronounced: 21.10.2026

Per Shri Om Prakash Kant, AM :- This appeal by the assessee is directed against order dated 27.11.2025, passed by the National Faceless Appeal Center- Delhi (hereinafter referred to as “Ld. CIT(A)”) for assessment year 2016-17, raising following grounds:-

2 Asst. Year: 2016-17

1.

That both the lower authorities have erred in law as well in facts in not dropping/quashing the proceeding initiated by issue of notice u/s 148 of Act beyond 3 years even when it was crystal clear that information in possession of AO was not capable of suggesting escaped income to be above Rs.50 Lakhs.

2.

That Id CIT-A erred in law as well in fact of the case is not quashing the notice issued u

The order continues below.

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