Separate transaction events cannot be clubbed to extend reassessment limitation where each event remains below the statutory threshold

Reassessment notices issued beyond three years under section 149 of the Income-tax Act, 1961 require the recorded escaped income relating to the relevant event to meet the statutory threshold prescribed by clause (b) and sub-section (1A). Separate payments for furniture purchases and interior designing fees were treated as distinct events or occasions. Their amounts could not be aggregated merely to satisfy the threshold for extended limitation. As each event remained below the prescribed threshold, the condition for reopening beyond three years was not met, and the reassessment notice and consequential proceedings were treated as barred by limitation.

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Issues: Whether the reassessment notices issued beyond three years were valid when the recorded escapement in relation to each event was below the statutory threshold of fifty lakh rupees and the transactions comprised separate events or occasions.

Analysis: The reopening was tested against section 149 of the Income-tax Act, 1961, particularly clause (b) and sub-section (1A). The seized digital material showed two distinct sets of payments for different purposes, namely furniture purchases and interior designing fees. The cumulative figure could not be used to club separate events for invoking the extended limitation where each event, viewed separately, did not satisfy the statutory threshold. The condition precedent for reopening beyond three years was therefore not met.

Conclusion: The reassessment notice and the consequent reassessment proceedings were held to be barred by limitation and were quashed in favour of the assessee.

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