Loading judgment…
Facts
The assessee filed an appeal against the order of the Ld.ACIT(IT) for AY 2016-17. There was a delay of 113 days in filing the appeal, which was attributed to the assessee pursuing the Vivad Se Vishwas Scheme, which was later rejected. The preliminary issue was the validity of the assumption of jurisdiction for reopening the assessment.
Held
The Tribunal held that the reopening of assessment was barred by limitation as the escaped income was less than Rs. 50 lakhs and the notice was issued beyond 3 years from the end of the relevant assessment year. The assumption of jurisdiction by the AO was found to be flawed.
Key Issues
Whether the assumption of jurisdiction by the Assessing Officer for reopening the assessment was valid, considering the provisions of Section 149 of the Income Tax Act, 1961, regarding the time limit for issuing notices.
Sections Cited
144C(5), 148A(b), 148A(d), 148, 149(1)(a), 149
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI M. BALAGANESH & SHRI S.S. VISWANETHRA RAVI
सुनवाईकीतारीख/Date of Hearing : 15.10.2025 घोर्णाकीतारीख/Date of Pronouncement: 15.10.2025 आदेश /O R D E R
PER M. BALAGANESH, AM :
This appeal by the assessee is filed against the order of the learned Assistant Commissioner of Income Tax, International Taxation Circle, MDU, (in short Ld.ACIT(IT) for the assessment year 2016-17, vide order dated 21.03.2024.
ITA. No:2025/Chny/2025 2. At the outset, there is a delay in filing of appeal by the Assessee before us by 113 days. The Learned AR submitted that Assessee is a non-resident Assessee and after the draft assessment order was passed, the Assessee went before the Learned Dispute Resolution Panel by filing its objections. The Learned Dispute Resolution Panel issued directions under section 144C(5) of the Act and before the finalization of the final assessment order, the Assessee opted for Vivad Se Vishwas Scheme. The said Vivad Se Vishwas Scheme application stood rejected by the Learned Principal Commissioner of Income Tax. Thereafter, the Assessee filed a rectification petition before the Learned PCIT which was stated to be not disposed of by the Learned PCIT. Since the time was running out, the Assessee sought to waive the right of availing the Vivad Se Vishwas Scheme and proceeded to file an appeal before this tribunal with a delay of 113 days. Hence, it could be seen that Assessee was pursuing an alternative legal remedy to resolve the dispute involved in the instant case. Hence, in our considered opinion, this constitutes sufficient cause for the Assessee for explaining the delay and accordingly, we are inclined to condone the delay and admit the appeal of the Assessee for adjudication.
The preliminary issue raised by the assessee is challenging the validity of assumption of jurisdiction for reopening the assessment in the instant case.
We have heard the rival submissions and perused the materials available on record. We find that the assessment was sought to be reopened based on the information obtained by the Learned AO that Assessee had made investment in immovable property for Rs 90 lakhs. This information was passed on to the Assessee along with the show cause notice issued under section 148A(b) of the Act dated 3-3-2023. The Assessee filed her reply in response to the said show cause notice stating that Rs 70,50,000/- was obtained as housing loan from a bank and Rs18 lakhs was obtained as jewel loan from a bank and Rs 2 lakhs obtained as loan from her relative. The Page 2 of 5 ITA. No:2025/Chny/2025 assessee also enclosed the housing loan sanction letter along with this reply. The said reply is enclosed in pages 6 and 7 of the Paper Book. The Learned AO on due verification of the said reply passed an order under section 148A(d) of the Act on 30-3-2023 clearly specifying that income to the extent of Rs 18 lakhs had escaped assessment which warrants reopening of assessment. This order was later followed by a notice issued under section 148 of the Act dated 30-3-2023 by the Learned Jurisdictional AO. The evidence in this regard is enclosed in page 17 of the Paper Book.
Since the reopening reasons clearly state that the income of the Assessee that had escaped assessment is only Rs 18 lakhs, which is less than rupees 50 lakhs and in view of the fact that the reopening in the instant case is made beyond 3 years from the end of the relevant assessment year, as per the provisions of section 149(1)(a) of the Act, the notice issued under section 148 of the Act had to be held as barred by limitation. For the sake of convenience, the provisions for section 149 of the Act are reproduced below:-
Time limit for notices under sections 148 and 148A. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years and three months, but not more than five years and three months, 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 related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more. (2) No notice to show cause under section 148A 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 five years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts to or is likely to amount to fifty lakh rupees or more.]
Page 3 of 5 ITA. No:2025/Chny/2025 6. It is pertinent to note that the requirement of income escaping Rs 50 lakhs was present in the said provision as is applicable for the year under consideration before us. On perusal of the said provision, it is very clear that unless the income escaping assessment is more than 50 lakhs, the assessing officer is not empowered to issue notice under section 148 of the Act beyond 3 years from the end of the relevant assessment year. In the instant case, the satisfaction recorded in the reasons by the Learned AO stating that only a sum of Rs18 lakhs had escaped assessment and the ultimate addition made by the Learned AO in the reassessment order was also only Rs 18,70,300/-. The provisions of section 149(1)(a) of the Act kicks in and accordingly, the notice issued under section 148 of the Act on 30-3- 2023 is to be held as barred by limitation. Consequentially, the assumption of jurisdiction by the Learned AO for reopening the assessment is flawed. Accordingly, we have no hesitation to quash the reassessment proceedings. Since the entire reassessment proceedings are quashed for invalid assumption of jurisdiction, the adjudication of other legal and factual grounds become academic in nature and they are left open.
In the result, the appeal of the assessee is allowed.