2026 (2) TMI 1360 - AT - Income Tax

Reopening beyond three years requires escaped income above the statutory threshold; notice invalid if recorded income is below threshold.

Reopening assessments beyond three years requires the alleged escaped income for the relevant assessment year to exceed the statutory monetary threshold; ... Validity of reopening of assessment - approval by the specified authority - conditions laid down in Section 149(1)(b) and 149(1A) - escaped assessment in excess of Rs. 50 lakhs - Threshold for income escaping assessment for reopening beyond three years - HELD THAT:- Admittedly, the allegation in the said notice is only of an escapement of income to the extent of Rs. 35,00,000/- which certainly falls below the threshold of Rs. 50,00,000/- and the assumption of jurisdiction for reopening is vitiated. Accordingly, the additional ground is sustained and the impugned assessment order is quashed. The appeal of the assessee allowed. Issues: Whether the notice under Section 148 read with Section 149 of the Income-tax Act, 1961 for assessment year 2017-18 was validly issued where the alleged income escaping assessment shown in the notice was Rs. 35,00,000 which is below the threshold of Rs. 50,00,000 for reopening assessments beyond three assessment years.Analysis: The issue was determined on admitted facts in the notice and the approval proforma. The approval proforma records the escaped income as Rs. 35,00,000 and invokes reopening under Section 149(1)(b) and Section 149(1A) of the Income-tax Act, 1961 for a period beyond three years but not exceeding ten years. The statutory framework requires that reopening beyond three years is permissible only where the alleged escaped income exceeds the prescribed monetary threshold. The Assessing Officer and the approving authority did not rely on any composite or cumulative calculation across multiple assessment years to justify invocation of the extended limitation; instead the recorded figure for the relevant assessment year falls below the statutory threshold. On these admitted facts, the assumption of jurisdiction for reopening is vitiated.Conclusion: The notice under Section 148 read with Section 149 of the Income-tax Act, 1961 is invalid insofar as the alleged escaped income for AY 2017-18 is Rs. 35,00,000 which is below the Rs. 50,00,000 threshold required to reopen assessments beyond three years; accordingly the assessment order is quashed and the appeal is allowed in favour of the assessee.