S.149 IT Act | Additions Made During Reassessment Don't Validate Proceedings Initiated For Income Escapement Below ₹50 Lakh Threshold: Delhi HC

The Delhi High Court has held that the benchmark of minimum Rs. 50 lakh income escapement prescribed under Section 149 of the Income Tax Act, 1961 must be met at the very initiation of reassessment proceedings. A division bench of Justices Yashwant Varma and Dharmesh Sharma observed, “Additions ultimately made in the course of reassessment would not validate the initiation of proceedings if founded on income of INR 46,17,000/- having escaped assessment and thus evidently below the threshold of INR 50 lakhs.” Section 149(1) bars issuance of reassessment notice under section 148 if three years have elapsed from the end of the relevant assessment year. Sub-clause (b) thereof adds that reassessment can be initiated where ten years have not lapsed, if the Assessing Officer has evidence that the income chargeable to tax which escaped assessment amounts to or is likely to amount to ₹50 lakh rupees or more. In the case at hand, the reasons for initiation of reassessment proceedings as furnished to the Petitioner-assessee had pegged the escaped assessment at ₹46,17,000/-. However, while passing an order of assessment, the AO made additions of ₹49,98,000/- as unexplained cash credits under Section 69 of the Act as well as a further addition of ₹3,68,750/- on account of income from other sources. While this would cross the qualifying benchmark of ₹50 lakhs, the Court said, “what needs to be fundamentally borne in mind is the initial formation of opinion and the quantum of income which was alleged to have escaped assessment.” The bench relied on the Union of India and Ors. vs. Rajeev Bansal (2024) where the Supreme Court has categorically held that an action of reassessment commenced post the introduction of Finance Act on 01 April 2021, would have to be compliant with the prescribed pecuniary threshold. Accordingly, the reassessment proceedings were set aside. Appearance: Mr. Salil Aggarwal, Sr. Adv. with Mr. Mahir Aggarwal, Mr. Uma Shankar and Mr. Madhur Aggarwal, Advs for Petitioner; Mr. Debesh Panda, SSC with Ms. Zehra Khan, JSC, Mr. Vikramaditya Singh, Mr. Kanishk Aggarwal, Ms. Anauntta Shankar and Mr. Ruchir Joshi, Advs for Respondent Case title: Rohit Kumar v. Income Tax Officer Ward 54 (1), DelhiCitation: 2025 LiveLaw (Del) 47 Case no.: W.P.(C) 2830/2022 Click Here To Read/Download The Order

S.149 IT Act | Additions Made During Reassessment Don't Validate Proceedings Initiated For Income Escapement Below ₹50 Lakh Threshold: Delhi HC

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