2026 Supreme(Online)(ITAT) 13996

INCOME TAX APPELLATE TRIBUNAL (AGRA BENCH)
M. Balganesh, Accountant Member
Musarrat Nasarin – Appellant
Versus
Assessment Unit – Respondent
ITA No. 82/AGR/2026

Reassessment beyond three years is barred by limitation if the income alleged to have escaped assessment is less than Rs. 50 lakhs, the threshold prescribed under Section 149(1)(b) of the Income-tax Act, 1961.

Headnote:(A) Income-tax Act, 1961 - Sections 147, 148, 148A, 149(1)(b), 144B, 69A, 115BBE - Reassessment - Limitation - Initiation of reassessment proceedings for AY 2015-16 (beyond three years) based on alleged escapement of income - Threshold under Section 149(1)(b) requires escapement to exceed Rs. 50 lakhs for reopening beyond three years - Where the only escapement found is cash deposit of Rs. 33 lakhs, which is below the threshold, the reopening is barred by limitation - The presence of a non-existent CIB transaction of Rs. 40 lakhs in the revenue's information cannot be used to exceed the threshold. (Para 5, 6)

(B) Jurisdiction - Fundamental Principle - A defect of jurisdiction strikes at the very authority to pass any decree or order and cannot be cured by consent - If an authority assumes jurisdiction based on an erroneous finding of a jurisdictional fact, the entire proceeding is void ab initio. (Para 2)

(C) Reassessment - Section 148A(d) - Mechanical order - The authority cannot reject an assessee's specific plea regarding the quantum of escapement without proper application of mind, particularly when the lower quantum would render the proceedings barred by limitation. (Para 6)

Facts of the case:
The assessee, an individual, did not file a return for AY 2015-16. The Assessing Officer (AO) received information from the Insight Portal that the assessee had made cash deposits of Rs. 33 lakhs and had a CIB transaction of Rs. 40 lakhs. Based on a total alleged escapement exceeding Rs. 50 lakhs, the AO initiated proceedings under Section 148A and issued a notice under Section 148 on 29.03.2022, which was beyond three years from the end of the relevant assessment year. In response, the assessee filed a return and contended that the total cash deposit was only Rs. 33 lakhs and that the CIB transaction of Rs. 40 lakhs was non-existent. The AO completed the reassessment, adding the Rs. 33 lakhs as unexplained, a decision upheld by the first appellate authority. The assessee raised additional grounds before the ITAT challenging the validity of the reopening.

Findings of Court:
The Tribunal found that the only income allegedly escaped was the cash deposit of Rs. 33 lakhs, as the CIB transaction of Rs. 40 lakhs was not relied upon by the AO. Since this amount (Rs. 33 lakhs) was less than the statutory threshold of Rs. 50 lakhs prescribed under Section 149(1)(b) of the Act, the notice under Section 148 issued beyond three years was barred by limitation. The Tribunal relied on the HC decision in Bijender Singh vs. ITO, which held that if the material shows escapement below Rs. 50 lakhs, the authority loses jurisdiction to proceed under the extended limitation period. The mechanical rejection of the assessee's plea by the AO was also criticized. Consequently, the assumption of jurisdiction for reopening was flawed, and the entire reassessment proceedings were quashed as void ab initio.

Issues: Whether the reassessment proceedings initiated under Section 147/148 for AY 2015-16 (beyond three years) were valid, given that the total income alleged to have escaped assessment (Rs. 33 lakhs) was below the statutory threshold of Rs. 50 lakhs for invoking the extended period of limitation under Section 149(1)(b)?

Ratio Decidendi: For reopening an assessment beyond three years but within ten years under Section 149(1)(b), the income chargeable to tax that has escaped assessment must be Rs. 50 lakhs or more. If the actual escapement is below this threshold, the proceedings are barred by limitation and void from inception. A jurisdictional defect, such as an erroneous finding on this threshold, renders the entire proceeding null and void.

Result: The appeal of the assessee is partly allowed; the reassessment proceedings are quashed.