Limitation on reassessment: extended ten year exception cannot be invoked where escaped assessment falls below the statutory threshold, so notices quashed.

Challenge to notices under reassessment and penalty provisions centred on Section 149(1)(b)'s ten-year exception where books or documents disclose escaped income as an asset, expenditure or book entry; the court applied the statutory condition that the escaped assessment must meet the fifty lakh threshold and found the assessing officer's own order showed escaped income below that threshold, so the extended limitation could not be invoked. Consequently notices under Sections 148/148A, the reassessment under 147 r/w 144B and related penalty notices were quashed and the writ allowed in favour of the assessee.

---

---

Issues: Whether notices, reassessment order and penalty notices issued beyond three years under Sections 148/148A/147/144B and penalty provisions could be sustained where the escaped assessment arrived at is below the threshold of fifty lakh rupees thereby barring invocation of the extended ten year period under Section 149(1)(b) of the Income-tax Act, 1961.

Analysis: The Court examined Section 149 of the Income-tax Act, 1961 which prescribes a three year limitation for issuance of notice under Section 148 with an exception up to ten years under clause (b) where the assessing officer possesses books of account or other documents revealing escaped income represented as an asset, expenditure or book entry and such escaped assessment amounts to fifty lakh rupees or more. The document relied upon by the revenue (bank statement) falls within the class of documents referred to in clause (b) but the statutory power to extend the limitation is conditioned upon the escaped assessment meeting the minimum threshold of fifty lakh rupees. The assessment order itself records the escaped assessment and final assessed income as Rs. 30,23,623/-, which is below the statutory threshold. The Court also considered the contention regarding availability of alternative remedy by appeal under Section 246 and found that requirement of deposit under the appellate process renders that remedy not efficacious for the petitioner given his circumstances. Applying the statutory text and the admitted figures in the assessment order, the Court concluded that the revenue lacked jurisdiction to invoke the extended limitation under Section 149(1)(b) and therefore could not validly issue the impugned notices, orders or initiate penalty proceedings predicated on such jurisdiction.

Conclusion: The writ petition is allowed. The notices under Section 148 and 148A, the reassessment order under Sections 147 r/w 144B and the penalty notices under Sections 271(1)(c) and 271F for the assessment year 2015-16 are quashed. The result is in favour of the assessee.

Ratio Decidendi: Where the escaped assessment as reflected in the assessing officer's order is less than fifty lakh rupees, the exception in clause (b) of Section 149(1) of the Income-tax Act, 1961 permitting issuance of notice beyond three years cannot be invoked and notices or orders issued on that basis are liable to be quashed.

---