KANCHAN MANOJ KABRA vs. THE INCOME TAX OFFICER AND OTHERS

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WP/2/2023HC BombayHCBM03046540202212 September 2024Bench: HON'BLE SHRI JUSTICE RAVINDRA V. GHUGE,HON'BLE SHRI JUSTICE Y. G. KHOBRAGADE3 pages
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What did the High Court hold?

The High Court held that the issue raised by the petitioners was no longer res integra. The Court found that the revenue was unable to demonstrate from the record that the impugned notices under Section 148 of the Income Tax Act, 1961, were issued within three years of the relevant assessment year, nor could they establish that the amount of escaped assessment exceeded Rs. 50,00,000/-. Consequently, the Court allowed the writ petitions in terms of prayer clause 'C'. The ratio decidendi is that notices for reassessment under Section 148, when issued beyond three years for an escaped income less than Rs. 50,00,000/-, are invalid as per Section 149(1)(b) of the Income Tax Act, 1961, unless the revenue proves otherwise from the record. The operative direction was to allow the petitions.

What were the facts?

The petitioners, Manoj Jaiprakash Kabra and Kanchan Manoj Kabra, filed writ petitions challenging notices issued under Section 148 of the Income Tax Act, 1961, for reassessment. The assessment year in question is 2016-2017. The core of the grievance is that the notices for escaped assessment, involving an amount less than Rs. 50,00,000/-, were issued beyond three years from the end of the relevant assessment year. The petitioners contend that Section 149(1)(b) of the Act restricts the issuance of such notices beyond three years only if the escaped income exceeds Rs. 50,00,000/-. The respondents, the Income Tax Officer and others, were unable to demonstrate from the record that the notices were issued within the three-year period or that the escaped assessment amount exceeded Rs. 50,00,000/-.

What were the issues?

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, for reassessment for Assessment Year 2016-2017, concerning an escaped income of less than Rs. 50,00,000/-, are valid if issued beyond three years from the end of the assessment year, in light of Section 149(1)(b) of the Act? Assessee's Contentions: The learned advocate for the petitioners argued that Section 149(1)(b) of the Income Tax Act, 1961, stipulates that notices for reassessment can only be issued beyond three years if the escaped income is more than Rs. 50,00,000/-. Since the escaped income in this case is less than Rs. 50,00,000/-, and the notices were issued beyond three years, they are invalid. Revenue's Contentions: The learned advocate for the revenue, Shri. Sharma, was unable to indicate from the record that the impugned notices were issued within three years and that the amount of escaped assessment was more than Rs. 50,00,000/-.

Which sections of the Income-tax Act were involved?

Section 148,Section 149(1)(b),Section 147

AI-generated summary — verify with the full judgment below

- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY

BENCH AT AURANGABAD 913 WRIT PETITION NO. 1 OF 2023 MANOJ JAIPRAKASH KABRA VERSUS THE INCOME TAX OFFICER AND OTHERS AND 914 WRIT PETITION NO. 2 OF 2023 KANCHAN MANOJ KABRA VERSUS THE INCOME TAX OFFICER AND OTHERS Mr.D.R.Jethliya, Advocate for the Petitioners. Mr.Alok Sharma, Advocate for Respondent Nos. 1 and 2. ( CORAM : RAVINDRA V. GHUGE AND Y.G.KHOBRAGADE, JJ.) DATE : SEPTEMBER 12, 2024 PER COURT : 1. The substantive prayers put forth by the Petitioners is in terms of clauses A, B and C. 2. The only issue raised in these Petitions is as regards the escaped assessment of an amount, which is less than Rs.50,00,000/- (Rs. Fifty Lakhs). As regards the issuance of notices for reassessment or khs/Sep.2024/1 2024:BHC-AUG:22065-DB

- 2 - re-computation under Section 147 of the Income Tax Act, 1961, it is undisputed that the notices were issued under Section 148 of the Income Tax Act, 1961. 3. The Petitioners have filed the income tax returns for the Assessment Year 2016-2017. Hence, the grievance of the Petitioners is that the notices under Section 148 cannot be issued in the light of Section 149(1)(b) of the Income Tax Act, 1961, with reference to the escaped assessment, if the notices are issued beyond three years of the Assessment Year and if the amount is less than Rs.50,00,000/- (Rs. Fifty lakhs). The notices in such peculiar circumstances could be issued even within ten years, provided the escaped income is more than Rs.50,00,000/- (Rs. Fifty lakhs). 4. This issue is no longer res-integra. Despite the vehement submissions of the learned Advocate Shri. Sharma, for the Department, he is unable to indicate from the record that the impugned notices were issued within three years and that the amount of escaped assessment was more than Rs.50,00,000/-. khs/Sep.2024/1

- 3 - 5. Therefore, these Writ Petitions are allowed in terms of prayer clause ‘C’. ( Y.G.KHOBRAGADE, J. ) ( RAVINDRA V. GHUGE, J.) khs/Sep.2024/1

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