Reassessment limitation turns on material at notice stage, not final assessment, where prima facie threshold is shown.

The article explains that the extended limitation for issuing a reassessment notice depends on the material available to the Assessing Officer at the time of initiation, not on the income ultimately assessed. For Section 149(1)(b), the officer must possess books, documents, or evidence indicating escapement of income represented in the form of an asset of Rs. 50 lakhs or more. On the facts discussed, cash-withdrawal information and the absence of a return were treated as sufficient prima facie material to justify the notice, and the later assessment below that threshold did not invalidate it. The notice was therefore treated as within limitation and the reassessment challenge failed.

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Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961, beyond three years from the end of the relevant assessment year was barred by limitation under Section 149(1)(b) of the Income-tax Act, 1961.

Analysis: The statutory condition for invoking the extended limitation under Section 149(1)(b) requires the Assessing Officer, at the time of issuing notice, to possess books of account, documents, or evidence showing that income chargeable to tax, represented in the form of an asset, amounting to or likely to amount to Rs. 50 lakhs or more, has escaped assessment. The validity of reassessment has to be judged on the material available at the stage of initiation and not on the income ultimately assessed. Here, the Assessing Officer had information of cash withdrawals aggregating to Rs. 1,57,85,000 and the return for the relevant assessment year had not been filed. That material was treated as sufficient tangible material to form a prima facie belief that the statutory threshold was crossed. The later assessment of income below Rs. 50 lakhs did not retrospectively invalidate the notice. The authorities relied upon by the assessee were held distinguishable on facts because, in those cases, the jurisdictional threshold itself was absent.

Conclusion: The notice under Section 148 was held to be valid and not barred by limitation under Section 149(1)(b), and the challenge to reassessment failed.

Ratio Decidendi: For invoking the extended limitation under Section 149(1)(b), the Assessing Officer's jurisdiction depends on the material available at the time of issuance of notice, and not on the income ultimately assessed; where such material prima facie shows escapement of income represented in the form of an asset of Rs. 50 lakhs or more, the notice is valid.

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