Limitation on reassessment notices: notices beyond the three-year period are barred where escaped income is below the statutory threshold.

A notice initiating reassessment cannot be validly issued beyond the three-year limitation period from the end of the relevant assessment year unless the income escaped assessment meets the statutory high-income threshold that triggers an extended limitation proviso. Where the admitted escaped income is below that threshold, the extended period is not available; applying that rule, the three-year period expired before the impugned notice and the notice is therefore time-barred. The document records that the notice dated 12.4.2022 for the assessment year 2018-19 was held barred by limitation and the appeal permitted in favour of the assessee.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 on 12.4.2022 for assessment year 2018-19 is barred by limitation under section 149(1)(b) of the Income-tax Act, 1961.

Analysis: The relevant legal framework provides that a notice under section 148 of the Income-tax Act, 1961 cannot be validly issued after three years from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment is likely to amount to Rs. 50,00,000 or more, thereby permitting an extended period of limitation only where the escaped income meets that threshold. In the present matter the admitted escaped income is Rs. 12,38,000, which is below the Rs. 50,00,000 threshold; accordingly the extended limitation proviso is not attracted. Applying this principle to the facts shows that the statutory three-year period expired on 30th March 2022 and the impugned notice dated 12th April 2022 falls beyond that period. The Tribunal follows the view of the jurisdictional High Court and consistent coordinate-bench decisions establishing that absence of escaped income of Rs. 50,00,000 or more precludes action beyond three years.

Conclusion: The notice issued under section 148 of the Income-tax Act, 1961 dated 12.4.2022 for assessment year 2018-19 is barred by limitation under section 149(1)(b) of the Income-tax Act, 1961; appeal is allowed in favour of the assessee.

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