A Single Bench of the Kerala High Court observed that there is no applicability of limitation period of 3 years under Section 149 (1)(a) of the Income Tax Act, 1961 when income escaped assessment is more than Rs.50 lakhs. The petitioner/assessee did not file return of his income for the assessment year 2016-17. The petitioner’s case was selected for a scrutiny inasmuch as according to the assessment officer, the petitioner had deposited more than Rs.50,00,000/- cash in his two bank accounts and in the estimation of the assessing officer, the said income of the petitioner had escaped assessment under the provisions of the Income Tax Act.

Therefore, the petitioner’s case was re-opened under Section 147 of the Income Tax Act. The petitioner was issued a notice under Section148A(b) on 17.03.2023, to which the petitioner had submitted reply on 23.03.2023, and after affording an opportunity of hearing, an order under Section 148A(d) came to be passed on 28.03.2023. Thereafter, notice under Section 148 has been issued asking the petitioner to file his returns. The counsel for the petitioner submitted that normal limitation period for re-opening the assessment under Section 149(1)(a) of the Income Tax Act, is three years. However, it may extend to ten years if the escaped income is more than Rs.50,00,000/- and that the petitioner’s income is not more than Rs.50,00,000/- which has escaped assessment. Therefore, the proceedings initiated under Section 148A of the Income Tax Act are barred by limitation, and therefore, without jurisdiction. The Senior Standing Counsel for the Income Tax Department submitted that in the two bank accounts of the petitioner, there has been a cash deposit of around Rs.76,00,000/-.

The petitioner did not file return of his income under Section 139 of the Income Tax Act, and therefore, the assessing authority rightly considered that this income to have escaped assessment under the provisions of the Income Tax Act. The case has been re-opened after 3 years which is as per the statute. The Court of Justice Dinesh Kumar Singh observed that “At the initial stage of enquiry of re-opening the assessment under Section 148A, the assessing authority has to satisfy itself that whether the income of the petitioner has escaped assessment and if the 3 years period has elapsed from the last date of relevant assessment year, whether the income which has escaped assessment is more than Rs.50,00,000/-. In the present case, income escaped assessment is allegedly more than Rs.50,00,000/- and therefore, the limitation period of 3 years provided under Section 149 (1)(a) has no applicability in the facts of the present case.”