Reassessment time limit and sanction validity under income tax law failed where reopening was beyond the statutory threshold.

Reassessment initiated after three years from the end of assessment year 2017-18, where the alleged escaped income was only Rs. 5,00,000, was outside the statutory threshold under section 149(1)(b) of the Income-tax Act, 1961. On that basis, approval under section 151, having been granted for an inapplicable reopening regime, was treated as invalid and unsustainable. As a result, the proceedings under section 147 and the order under section 148A(d) could not survive, and the reassessment was quashed on jurisdictional grounds, with other issues left unexamined.

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Issues: Whether reassessment initiated after three years from the end of the relevant assessment year, on alleged escaped income of Rs. 5,00,000, could validly proceed under section 149(1)(b) of the Income-tax Act, 1961 on the basis of approval under section 151.

Analysis: The reassessment was initiated for assessment year 2017-18 after the expiry of three years from the end of the assessment year, while the alleged escaped income was only Rs. 5,00,000. On those facts, the statutory threshold under section 149(1)(b) was not satisfied. The approval granted under section 151, having been based on an inapplicable reopening regime, was treated as invalid and unsustainable. The consequent proceedings under section 147 and the order under section 148A(d) could not survive. Other grounds were rendered academic and left unadjudicated.

Conclusion: The reassessment proceedings were held to be bad in law and were quashed, with the assessee succeeding on the jurisdictional issue.

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