The assessee filed an appeal against the order dated 28 May 2025 passed by the Commissioner of Income Tax (Appeals)-27, New Delhi, which arose from a reassessment order dated 25 August 2023 passed under section 147 read with section 143(3) of the Income-tax Act, 1961 for Assessment Year 2017-18.

During the appellate proceedings before the Tribunal, the assessee raised additional legal grounds challenging the very assumption of jurisdiction under section 148. It was contended that the notice under section 148 was issued on 31 March 2023, which was beyond three assessment years from the end of the relevant assessment year. It was argued that as per section 149 of the Act, reassessment beyond three years and up to ten years is permissible only where the alleged income escaping assessment amounts to or exceeds ₹50,00,000. In the present case, the notice itself alleged escapement of income only to the extent of ₹35,00,000, which was below the statutory threshold.

The Department contended that the cumulative escapement for multiple years should be considered for determining applicability of section 149.

The Tribunal admitted the additional grounds, holding that they raised a pure question of law going to the root of jurisdiction and could be adjudicated on the basis of admitted facts. On perusal of the notice issued under section 148 and the approval proforma placed on record, the Tribunal noted that the Assessing Officer had specifically mentioned the alleged escaped income as ₹35,00,000 and had invoked section 149(1)(b) for reopening beyond three years. The Tribunal further observed that at the stage of seeking approval, the Assessing Officer had not relied upon any theory of cumulative escapement across years, as argued by the Department.

The Tribunal held that the statutory requirement under section 149 is explicit and unambiguous, and reassessment beyond three years cannot be initiated unless the escaped income for the relevant assessment year exceeds ₹50,00,000. Since the alleged escapement in the present case was admittedly below the prescribed threshold, the assumption of jurisdiction itself was vitiated.

Accordingly, the Tribunal sustained the additional legal ground raised by the assessee and quashed the reassessment proceedings as being void ab initio.
The appeal of the assessee was allowed.

Source Link- https://itat.gov.in/public/files/upload/1767953500-Bd6gX6-1-TO.pdf

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