Notice under Section 148 with order under 148A(d) must be within 3 years if escaped income is under Rs 50 lakhs

The HC held that a notice under Section 148 read with an order under clause (d) of Section 148A must be issued within three years from the end of the relevant assessment year if the escaped income is below Rs. 50 lakhs. The sixth proviso to Section 149(1) allows extension of time for passing the order under clause (d) of Section 148A if the available period is less than seven days due to limitation constraints. However, the Assessing Officer's time to pass the order under clause (d) of Section 148A, including the one-month period after the assessee's response time, is subject to the overall limitation period under Section 149(1). Any notice under Section 148 without the accompanying order under clause (d) of Section 148A issued beyond the prescribed limitation is invalid and non-compliant with the Act.

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Issues:
The judgment involves a review application seeking rectification of an order dismissing a petition challenging a notice issued under Section 148 of the Income Tax Act 1961 for reopening the assessment for the Assessment Year 2019-2020.

Details:
1. The impugned notice indicated transactions related to supplies from two parties, with the petitioner providing evidence that one set of supplies did not pertain to the relevant assessment year. The value of the other supplies was below the threshold for extending the limitation period for reopening the assessment.
2. The court found the impugned notice was issued within the stipulated period after excluding the time for the petitioner to respond to the notice and for passing the order, thus rejecting the petition.
3. The petitioner sought review on grounds including lack of accommodation entries, vagueness of the notice, absence of approval details, and disputing the amount of income allegedly escaping assessment.
4. The court held that the claim of no income escapement is a matter for the Assessing Officer to decide, and the notice was not vague. The petitioner can request approval details separately.
5. The court clarified that the period for issuing the notice was within the limitation period, as per the provisions of the Act, rejecting the petitioner's contentions.
6. The court explained the application of provisos to Section 149(1) of the Act, extending the limitation period for responding to the notice and passing the order under Section 148A.
7. The petitioner's argument against the period of limitation was refuted by the Revenue, emphasizing compliance with the three-year limit for issuing the notice.
8. The court analyzed the provisions of Section 148A and Section 148, highlighting the necessity of an order under Section 148A preceding the notice under Section 148.
9. The court concluded that the notice was issued within the prescribed period, dismissing the application for review based on the petitioner's contentions.

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