DUSHYANT PODDAR vs. PR COMMISSIONER OF INCOME TAX DELHI-10 & ANR.

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W.P.(C)/864/2023HC DelhiDLHC01001814202312 March 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA2 pages
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What did the High Court hold?

The Delhi High Court allowed the writ petition. The Court noted that Section 149(1)(b) of the amended Income Tax Act, 1961, provides for an extended limitation period of up to ten years for issuing a notice under Section 148, but this is contingent upon the Assessing Officer possessing evidence that the income chargeable to tax, represented in the form of an asset, amounts to or is likely to amount to fifty lakh rupees or more for that year. The Court observed that after the Finance Act, 2021, if the alleged escaped income was less than Rs. 50 lakhs, a notice under Section 148 could only be issued within the limitation period prescribed by Section 149(1)(a). Given the undisputed fact that the income escaping assessment for AY 2016-17 was INR 81,600/-, which is less than INR 50 lakhs, the condition for invoking the extended period was not met. Consequently, the Court quashed the impugned order dated July 29, 2022, issued under Section 148A(d) and the notice dated July 29, 2022, issued under Section 148. The ratio decidendi is that the threshold of INR 50 lakhs for escaped income in the form of an asset is a mandatory pre-condition for extending the reassessment notice period beyond three years under Section 149(1)(b).

What were the facts?

The petitioner, Dushyant Poddar, challenged the initiation of reassessment proceedings under Section 148 of the Income Tax Act, 1961. The challenge was based on the contention that the alleged income chargeable to tax, represented in the form of an asset, did not amount to INR 50,00,000/- or more. The assessment year in question was 2016-17, and the income escaping assessment was stated to be INR 81,600/-. The impugned order under Section 148A(d) and the notice under Section 148 were both dated July 29, 2022. The petitioner relied on a previous judgment of the Delhi High Court in Ganesh Dass Khanna v. ITO & Anr.

What were the issues?

1. Whether the initiation of action under Section 148 of the Income Tax Act, 1961, is valid when the income chargeable to tax, represented in the form of an asset, is less than INR 50,00,000/- for the relevant assessment year, and more than three years have elapsed from the end of that assessment year. Assessee's contention: The petitioner argued that for reassessment proceedings to be initiated beyond the three-year period but within ten years, the condition stipulated in Section 149(1)(b) of the Act, requiring the escaped income in the form of an asset to be INR 50 lakhs or more, must be fulfilled. Since the escaped income for AY 2016-17 was only INR 81,600/-, the extended period of limitation under Section 149(1)(b) was not applicable, and thus the notice under Section 148 was invalid. The petitioner relied on the judgment in Ganesh Dass Khanna v. ITO & Anr. Revenue's contention: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

$~27 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 864/2023

DUSHYANT PODDAR

..... Petitioner

Through: Mr. Shivang Bansal, Advocate

Versus

PR COMMISSIONER OF INCOME TAX DELHI-10 & ANR. ..... Respondents

Through: Mr. Abhishek Maratha, Sr. SC

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

12.03.2024

1.

We note that the challenge to the initiation of action under Section 148 of the Income Tax Act, 1961 [“Act”] is primarily based on the contention of the writ petitioner that the incriminating material chargeable to tax, does not represent an asset amounting to INR 50,00,000/- or more. 2. It is in the aforesaid context that the learned counsel sought to draw sustenance from the judgment rendered by our Court in Ganesh Dass Khanna v. ITO & Anr, [2023 SCC OnLine Del 7286]. 3. While dealing with the identical question, this Court in Ganesh Dass Khanna had held as follows:- “26. Section 149(1) of the amended 1961 Act mandates that no notice under section 148 would be issued for the relevant assessment year if three (03) years have elapsed from the end of the said assessment year. The Assessing Officer can take recourse to the extended limitation period if the conditions precedent prescribed in clause (b) of sub-section (1) of section 149 are fulfilled. In other words, in a case where three (03) years from the end of the relevant assessment year have elapsed, the Assessing Officer can issue a notice under section 148 provided the conditions prescribed in clause (b) of section 149(1) of the amended 1961 Act are fulfilled. The relevant part of the said provision reads as follows:

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 23:29:12

“149. Time limit for notice.-(1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year.” (emphasis is ours)

27.

A careful perusal of clause (b) of section 149 would show that one of the conditions for triggering the extended period, which goes up to ten (10) years in cases where three (03) years have elapsed, is that income chargeable to tax which has escaped assessment amounts to, or is likely to amount to Rs. 50 lakhs or more for the assessment year in issue.

28.

Therefore, after the coming into force of the Finance Act, 2021, in cases where, for the relevant assessment year, the alleged escaped income was less than Rs. 50 lakhs, notice under section 148 could only be issued for commencement of reassessment proceedings within the limitation period provided in clause (a) of section 149(1) of the amended 1961 Act.”

4.

In view of the aforesaid and the undisputed fact that the income escaping assessment for Assessment Year [“AY”] 2016-17 is INR 81,600, we allow the instant writ petition and quash the impugned order dated 29 July 2022 issued under Section 148A(d) and the impugned notice dated 29 July 2022 issued under Section 148. 5. The petition shall accordingly stand disposed of.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MARCH 12, 2024/p’ma This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 23:29:12

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