Kerala High Court Quashes Reassessment Under Section 148A for Escaped Income Below ₹50 Lakhs Issued After 3 Years

In a significant ruling, the Kerala High Court has held that reassessment proceedings initiated under Section 148A of the Income Tax Act are unsustainable if the alleged escaped income is less than ₹50 lakhs and the notice is issued beyond three years from the end of the relevant assessment year. Justice Ziyad Rahman A.A., while quashing the reassessment notice and order, emphasized that when the notice itself is time-barred and without jurisdiction, the assessee should not be compelled to endure the statutory process. This judgment reinforces the statutory limitation framework under Section 149 and provides critical relief to taxpayers facing belated reassessment notices.

📌 Case Summary

Case Title: Salim Aboobacker v. The Income Tax Officer
Case Number: WP(C) No. 12164 of 2023
Bench: Justice Ziyad Rahman A.A. (Kerala High Court)
Citation: 2025 LiveLaw (Ker) 385

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⚖️ Legal Issue

• Whether proceedings initiated under Section 148A of the Income Tax Act are sustainable when the escaped income is less than ₹50 lakhs and the notice is issued after the 3-year limitation period.
• Under Section 149(1), a notice can only be issued within:
  • 3 years from the end of the relevant assessment year (normal cases), or
  • 10 years if the escaped income is ₹50 lakhs or more.

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🧾 Factual Background

1. The petitioner operated a public market and comfort station under a panchayat contract.
2. In Feb 2023, he received a Section 133(6) notice for non-filing of ITR for AY 2016–17. He replied that his net income was below the taxable threshold, having paid ₹26,47,575 to the panchayat.
3. Later, a Section 148A(b) notice was issued (Feb 27, 2023), culminating in an assessment order on Mar 17, 2023.
4. The petitioner objected to the notice and order on the basis that they were time-barred under Section 149.

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🏛️ Court’s Analysis & Reasoning

• The High Court agreed the limitation period under Section 149(1) had expired by 31 March 2020, as the escaped income was under ₹50 lakhs, making the extended 10‑year period inapplicable.
• Coupon:
  

  “When the order of the assessing authority is found to be without jurisdiction and hit by the period of limitation, it is not necessary to relegate the party concerned to undergo the rigour of the statutory proceedings.”
  — Justice Ziyad Rahman A.A.

• The Court distinguished this case from Anshul Jain v. Pr. CIT (449 ITR 251 SC), noting that limitation issues go to jurisdiction and warrant immediate relief, not deferral back to the assessing officer.

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🏁 Outcome

• The writ petition was allowed.
• The Court quashed the Section 148A notice and consequent assessment order (Ext. P6) dated March 17, 2023.

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✅ Key Takeaways for Tax Practitioners & Assessees

• Tax proceedings under Section 148A/148 are strictly time-bound.
• The 10‑year extended window applies only if escaped income ≥ ₹50 lakhs.
• When escaped income is under ₹50 lakhs, no proceedings can be initiated beyond 3 years from the end of the relevant AY (here, AY 2016–17 → deadline was 31 Mar 2020).
• If such time-barred notices are issued, jurisdiction lapses, meriting judicial intervention without necessity to escalate back to the assessing officer.

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📚 Case Metadata Summary