Reassessment limitation under section 148 failed where reopening conditions and limitation computation were not satisfied.

Reassessment notice under section 148 was held time-barred because reopening beyond three years did not satisfy section 149(1)(b), as the alleged escaped income from a donation did not involve an asset, expenditure, or entry of fifty lakh rupees or more. The period given in the section 148A(b) show-cause notice had to be excluded while computing limitation, and on the stated dates the final notice was issued beyond the permissible limit. The sixth proviso to section 149(1) was held inapplicable because no reply was filed to the section 148A(b) notice. The reassessment challenge succeeded on limitation, while merits were left open.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 was barred by limitation and, consequently, whether the reassessment proceedings could be sustained.

Analysis: The reassessment was initiated on the basis of information relating to a donation of Rs. 3.50 lakhs. For reopening beyond three years, the conditions of section 149(1)(b) were not satisfied because the alleged escaped income did not involve an asset, expenditure, or entry amounting to or likely to amount to fifty lakh rupees or more. Independently, the time allowed in the show-cause notice under section 148A(b) had to be excluded while computing limitation. On the facts, the notice under section 148A(b) was issued on 29.03.2023 and the notice under section 148 was issued on 10.04.2023, which was beyond the permissible limit. The sixth proviso to section 149(1) did not apply because no reply was furnished to the section 148A(b) notice.

Conclusion: The notice under section 148 was time-barred and invalid, and the legal ground challenging the reassessment proceedings was allowed. The challenge on merits was not adjudicated and was kept open.

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