Proceedings U/S 148A Of Income Tax Act Unsustainable If Escaped Income Is Below ₹50 Lakhs & Notice Is Issued After 3 Years: Kerala High Court
The Kerala Excessive Courtroom held that proceedings beneath Part 148A of Earnings Tax Act not sustainable if escaped earnings is under Rs. 50 lakhs and see issued after 3-years.
Justice Ziyad Rahman A.A. said that “when the order of the assessing authority is discovered to be with out jurisdiction and hit by the interval of limitation, it isn’t essential to relegate the get together involved to endure the rigor of the statutory proceedings”.
Part 148A of the Earnings Tax Act, 1961 empowers taxpayers to present an evidence to the earnings tax division relating to any earnings that escaped evaluation.
In this case, the assessee/petitioner was served with discover (Ext.P1) beneath subsection 6 of part 133 of the Earnings Tax Act, 1961, requiring sure paperwork/data, because it was identified that the assessee didn’t submit returns pertaining to the evaluation yr 2016-2017.
The assessee submitted that he didn’t submit the return because the earnings acquired by him from the panchayat public market and luxury station taken in public sale by the assessee, was under the ceiling restrict that mandates the obligatory submitting of earnings tax returns.
It was additionally identified that the quantity referred to in discover, pertains to the complete transactions that the assessee had, and out of the stated quantity, the assessee had already remitted Rs.26,47,575/- to the panchayat with whom the petitioner had entered into the contract. Thus, the earnings generated from the identical was under the ceiling contemplated beneath the Act.
Later, discover (Ext.P4) was issued to the assessee beneath Part 148 A(b) of the Earnings Tax Act, 1961, and the stated continuing in the end culminated in evaluation order (Ext.P6) regardless that the assessee submitted an in depth objection in opposition to the discover.
One of the objections raised by the assessee was that the proceedings beneath Part 148 A are barred beneath the limitation contemplated beneath Part 149(1).
The bench agreed with the assessee that as per Part 149, the statutory time restrict contemplated for initiating proceedings beneath Part 148 is three years from the top of the related evaluation yr. Nevertheless, in a case the place the escaped evaluation is more likely to be Rs.50 lakhs or extra, the interval may be as much as 10 years. Subsequently, as the quantity alleged to have escaped from evaluation is much less than Rs. 50 lakhs, not at all can the proceedings now initiated, be stated to be legally sustainable.
The related evaluation yr is 2016-17, and subsequently, going by the statutory stipulations, the proceedings should have been commenced on or earlier than 31.03.2020. It’s also evident from evaluation order that the quantity allegedly escaped from the evaluation was lower than 50 lakhs, and subsequently the upper interval as laid out in subclause (b) of Part 149 (1) isn’t relevant, added the bench.
The bench disagreed with the division that that is the matter to be agitated earlier than the assessing officer.
The bench held that any continuing beneath part 148A or the consequential continuing beneath 148 past the statutory interval contemplated beneath the provisions of the Earnings Tax Act.
In view of the above, the bench allowed the petition.
Case Title: Salim Aboobacker v. The Earnings Tax Officer
Case Quantity: WP(C) NO. 12164 OF 2023
Counsel for Petitioner/ Assessee: Babu S. Nair and Smitha Babu
Counsel for Respondent/ Division: Christopher Abraham
