Seven-day reply rule and escaped-income threshold govern validity of reassessment notices under the Income-tax Act.

A notice under section 148-A(b) must allow at least seven days for reply; the text states that a shorter period defeats the statutory hearing opportunity and invalidates the notice. It also states that reassessment under section 149(1)(b) depends on the escaped-income threshold being met, and where section 48 deduction reduces the amount below the statutory limit, the extended reassessment regime cannot be invoked. On that basis, the commentary concludes that the notice, reassessment proceedings, and consequential penalty orders were unsustainable.

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Issues: (i) Whether a notice under section 148-A(b) of the Income-tax Act, 1961 granting less than seven days for reply was vitiated. (ii) Whether the reassessment proceedings could be sustained having regard to the threshold under section 149(1)(b) of the Income-tax Act, 1961.

Issue (i): Whether a notice under section 148-A(b) of the Income-tax Act, 1961 granting less than seven days for reply was vitiated.

Analysis: The statutory scheme requires an opportunity of being heard by serving a show-cause notice with a time not less than seven days and not exceeding thirty days from the date of issuance. The notice in question afforded less than seven days. Non-compliance with the minimum period necessarily caused prejudice, since the assessee was deprived of the statutorily mandated opportunity to respond effectively.

Conclusion: The notice under section 148-A(b) was invalid and liable to be set aside.

Issue (ii): Whether the reassessment proceedings could be sustained having regard to the threshold under section 149(1)(b) of the Income-tax Act, 1961.

Analysis: The material placed before the Court indicated that the amount taken for computation was Rs. 60,00,000/-, but after giving effect to the deduction under section 48, the escaped income would fall below Rs. 50,00,000/-. On that basis, the statutory precondition for invoking the extended reassessment regime was not made out.

Conclusion: The reassessment proceedings were not sustainable on the threshold requirement under section 149(1)(b).

Final Conclusion: All consequential notices, reassessment orders, and penalty orders were vitiated and could not be sustained in law.

Ratio Decidendi: A notice under section 148-A(b) must grant at least seven days for reply, and reassessment cannot be sustained unless the statutory threshold for escaped income under section 149(1)(b) is satisfied.

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