Limitation on reassessment reopening failed where alleged escaped income fell below the statutory threshold for the longer period.

Reassessment under section 148A(d) was barred by limitation where the alleged escaped income, on proper appreciation of the ledger entries, fell below the threshold in section 149(1)(b). The HC found that the Assessing Officer ignored a material credit entry and treated other items as escapement to reach an inflated figure, but the proper computation reduced the amount below the statutory limit for the longer reopening period. As a result, the notice issued beyond the permissible period could not be sustained and the order under section 148A(d) was quashed.

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Issues: Whether the reassessment proceedings initiated under section 148A(d) of the Income-tax Act, 1961 were barred by limitation where the alleged escaped income, on proper appreciation of the entries, fell below the threshold under section 149(1)(b) of the Act.

Analysis: The notice and impugned order were founded on alleged accommodation entries aggregating to Rs. 70,00,000/-. On examining the ledger entries relied upon by the petitioner, the credit entry of Rs. 25,00,000/- in respect of Sampada Chemicals Ltd. was treated as a nil entry, while the other entries were either opening balances or otherwise not liable to be counted in the manner adopted by the Assessing Officer. The Court found that the Assessing Officer had ignored a material credit entry and had proceeded on an inflated figure of escapement only to bring the case within the longer limitation period. Once the proper figure of alleged escapement was reduced below Rs. 50,00,000/-, the bar under section 149(1)(b) applied and notice beyond the permissible period could not be sustained.

Conclusion: The reassessment was held to be barred by limitation and the order under section 148A(d) was quashed.

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