A notice for reopening assessment under Section 148 of the Income Tax Act, 1961, issued after three years from the end of the relevant assessment year, is invalid if the income chargeable to tax which has escaped assessment is less than Rs. 50 lakhs.

आदेश / O R D E R

PER ABY T. VARKEY, JM:

This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 22.09.2025 for the Assessment Year (hereinafter referred to as "AY”) 2017-18.

2. At the outset, the Ld.AR of the assessee has raised a legal issue, contending that the statutory notice issued by AO on 26.07.2022 for reopening the assessment for AY 2017-18, u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act”) is barred by limitation, hence the consequent assessment order is bad in law. On two counts, in this case, according to Ld AR, the notice u/s 148 is invalid/bad. In this regard, the Ld AR pointed out that the relevant assessment year, the AO desires to reopen, being AY 2017-18, and the income escaping assessment was less than ₹50 lakhs, therefore, according to the assessee, the AO ought to have issued notice u/s.148 of the Act for AY 2017-18 within three (3) years i.e. on or before 31.03.2021, hence the notice issued on 26.07.2022 is invalid being barred by limitation. Next contention was that since notice u/s.148 of the Act was issued by AO, beyond three (3) years, approval should have been taken from the Principal Chief Commissioner of Income Tax (PCCIT) instead of Principal Commissioner of Income Tax (PCIT) for valid issuance of notice u/s.148 of the Act. According to the Ld.AR, since the legal issue strikes at the root of the jurisdiction of the AO to reopen the assessment, the same should be adjudicated first. The issue raised being a legal issue, assailing the power of AO to have reopened the assessment for AY 2017-18, we are inclined to examine the same.

3. The brief facts of the case for deciding the legal issue are that the assessee filed his return of income (RoI) for AY 2017-18 on 16.04.2018 declaring income of ₹3,76,290/-. The AO received information that during the demonetization period, the assessee has deposited cash of ₹12,21,500/- in Kotak Mahindra Bank. Hence, the AO reopened the assessment by issuing notice u/s.148 of the Act on 08.04.2021 [i.e. during the old regime] and subsequently, as per the directions of the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal (Civil Appeal No. 3005/2022 dated 04.05.2022), the said notice was treated as show cause notice u/s.148A of the Act and pursuant thereto, the AO passed order u/s 148A(d) of the Act and issued impugned notice u/s.148 of on 26.07.2022; and thereafter is noted to have made an addition of ₹11,02,500/- as unexplained cash deposits u/s.69A of the Act the SBN deposited during demonetization. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) which was dismissed. Hence, the assessee is before us. In respect of the legal issue, we note that the time limit to issue notice of reopening u/s 148 of the Act is provided for u/s 149 of the Act. As per section 149, the impugned notice of reopening issued by AO u/s.148 of the Act is dated 26.07.2022, which is an event after three years from the end of the relevant assessment year, is barred by limitation, since the escaped income is less than Rs 50 lakhs. It would be gainful to refer to Section 149 under new regime which reads as under [w.e.f.01.04.2021]:

149 - Time limit for notice.

(1) No notice under section 148 shall be issued for the relevant assessment year,-

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable