Reassessment beyond three years is barred when escaped income is below ₹50 lakh.

The petitioner, who had not filed a return of income for Assessment Year 2016–17, jointly sold immovable property with seven family members for ₹6,27,04,000.

The Assessing Officer issued notices under Sections 148A(a) and 148A(b) of the Income Tax Act, 1961; the petitioner did not respond.

The Assessing Officer then passed an order under Section 148A(d), treating the full sale consideration as escaped income, and issued a notice under Section 148.

During reassessment proceedings, the petitioner stated that her share of the consideration was ₹39,19,000 and supplied supporting documents.

After allowing indexed acquisition cost, the Assessing Officer identified long-term capital gains of ₹37,55,365.

The petitioner challenged the reassessment notice and order, contending that the amount was below Section 149’s ₹50 lakh threshold for reopening after three years.

Whether reassessment could be initiated beyond three years where the income alleged to have escaped assessment, as determined after considering the petitioner’s explanation, was less than ₹50 lakh

Whether the petitioner’s failure to respond to the initial notices under Section 148A(b) permitted the Assessing Officer to proceed contrary to the limitation imposed by Section 149

Section 149(1)(b) of the Income Tax Act, 1961, read with the proviso referred to by the Court, bars issuance of a reassessment notice beyond three years where the income chargeable to tax alleged to have escaped assessment is below ₹50 lakh.

Sections 148 and 148A govern the reassessment-notice process, including the preliminary procedure and order under Section 148A(d).

The Court also stated that an assessee’s failure to respond to initial notices does not relieve the Assessing Officer of the obligation to apply the statutory provisions to the facts available.

The Assessing Officer initially treated the entire sale consideration as escaped income, but during the reassessment proceedings accepted that the petitioner owned only a 6.25% share and, after allowing indexed cost, calculated her capital gains at ₹37,55,365.

Because that amount was below ₹50 lakh and the reassessment was beyond three years, Section 149(1)(b) barred the notice.

The petitioner’s earlier non-response did not justify continuing proceedings once the Assessing Officer had the relevant explanation and documents; moreover, the TDS information was available when the initial notices were issued.

It allowed the petition, set aside the Section 148 notice and the Section 148A(d) order dated 23 March 2023, made the rule absolute, and ordered no costs.