Reopening of assessment is valid if income escaped is likely to exceed the statutory threshold.

Following a search operation at the premises of Khavda Travels Limited on November 11, 2022, which allegedly revealed an illicit cash financing business, the Revenue issued a notice under Section 148 of the Income Tax Act, 1961, dated March 30, 2025.

The Revenue alleged that books of Khavda Property Finance indicated transactions involving the petitioner aggregating to over ₹1.14 Crores.

The petitioner participated in the reassessment proceedings, filing objections and returns.

Subsequently, an assessment order was passed on March 10, 2026, assessing the total income at ₹60,49,260.

The petitioner challenged the Section 148 notice and the resulting assessment order by way of a writ petition, arguing that the jurisdictional threshold of ₹50 lakhs under Section 149(1)(b) was not met because the "peak balance" of the transactions was only ₹11,39,560.

1. Whether the notice issued under Section 148 and the subsequent assessment order were void for lack of jurisdiction due to the alleged failure to meet the ₹50 lakh threshold prescribed under Section 149(1)(b) of the Act.

2. Whether a writ petition under Article 226 of the Constitution of India is maintainable against an assessment order when a statutory alternative remedy of appeal is available.

Section 149(1)(b) of the Income Tax Act, 1961, which permits the reopening of assessment after three years if the escaped income "is likely to amount to" fifty lakh rupees or more.

Commissioner of Income-tax and Ors. v. Chhabil Dass Agarwal (2014) 1 SCC 603, which holds that High Courts should not entertain writ petitions under Article 226 if an effective alternative statutory remedy exists, except in specific circumstances such as a total violation of natural justice or lack of jurisdiction.

The court reasoned that the expression "is likely to amount to" in Section 149(1)(b) implies that the actual amount of escaped income is determined only upon the conclusion of the assessment.

Therefore, if the final assessed income exceeds the threshold, the notice cannot be invalidated retrospectively based on the petitioner's internal calculation of "peak balance".

The court observed that the petitioner sought to quash the assessment order by challenging the initiation of proceedings after having already participated in them.

Applying the Chhabil Dass Agarwal doctrine, the court found no "exceptional circumstances"—such as a breach of natural justice or proceedings under repealed laws—that justified bypassing the statutory appellate machinery.

The court emphasized that the Income Tax Act provides a complete machinery for redressal through the Commissioner of Income Tax (Appeals).

The High Court dismissed the writ petitions, holding that they were not maintainable due to the availability of an efficacious alternative remedy.

The petitioner was granted liberty to avail the statutory remedy of filing an appeal before the CIT (Appeals).