SHREYANSH NAVINBHAI SHAH,AHMEDABAD vs. THE ITO, WARD-5(3)(2), AHMEDABAD

The Assessee has raised following grounds of appeal: 1. The Ld. CIT(A) has erred, both in law and on facts, in confirming the action of Ld. AO in reopening the assessment under section 147 of the Act.

The relevant facts in brief are that for the Assessment Year 2019-2020 reassessment proceedings and notice under Section 148 of the Act was issued on 20/06/2023.

According to the Assessee the period of 3 years from the end of the relevant assessment year expired on 31/03/2023. The notice under Section 148 of the Act was issued on 20/06/2023, after the expiry of the aforesaid period of 3 years from the end of relevant assessment year. Consequently, provisions contained in Section 149(1)(b) of the Act were attracted. It was contended on behalf of the Assessee that reassessment proceedings were bad in law since requisite approval under Section 149(1)(b) of the Act read with Section 151 of the Act was not taken from Principal Chief Commissioner of Income Tax. Even otherwise, the amount of income that is said to have escaped assessment was below the threshold limit of 50 Lacs specified in Section 149(1)(b) of the Act and therefore, no notice under Section 148 of the Act could have been issued after 31/03/2023 in the present case.

Per contra, the Learned Departmental Representative submitted that the time given to the Assessee to file reply to notice issued under Section 148A(b) of the Act is to be excluded while determining the aforesaid period of 3 years. Therefore, it would be incurred to contended that the period of 3 years from the end of the relevant assessment year expired on 31/03/2023

Perusal of record shows that 3 notices were issued under Section 148A(b) of the Act by the Assessing Officer on 31/03/2023, 18/04/2023 and 26/04/2023. The Assessee was granted (a) time till 18/04/2023 by way of notice, dated 31/03/2023, (b) thereafter, time till 23/04/2023 by notice, dated 18/04/2023, and (c) thereafter, time till 28/04/2023 by notice dated 26/04/2023 in terms of Section 148A(b) of the Act. Taking into consideration the 3 notices issued by the Assessing Officer under Section 148A(b) of the Act the Assessee was granted 25 days (18 days + 5 days + 2 days) to file response in terms of Section 148A(b) of the Act. We note that even if the aforesaid period [along with period of 7 days specified in 6th Proviso to Section 149(1) of the Act] is excluded, the notice under Section 148 of the Act issued on 20/06/2023 falls outside the period of 3 years of the relevant Assessment Year. Therefore, accepting the contention of the Assessee we hold that the provision of Section of 149(1)(b) of the Act would apply in the facts and circumstances of the present case. As per the applicable provisions contained in Section 149(1)(b) of the Act, reassessment proceedings could have been initiated only if the income escaping assessment was likely to be INR.50 Lakhs or more. Since in the present case the income escaping assessment was only INR.100,000/-, the notice issued under Section 148 of the Act could not be sustained in terms of Section 149(1)(b) of the Act. Accordingly, the notice, dated 20/06/2023, issued for the Assessment Year 2019- 2020 is quashed as being bad in law. Consequently, the Assessment Order, dated 27/01/2025, also stands quashed. Thus, Ground No. 1 raised by the Assessee is allowed. All the other grounds raised by the Assessee are dismissed as having been rendered academic and infructuous.

In result, present appeal preferred by the Assessee is partly allowed.