Rs 50 Lakh Reopen Limit Year-Specific – No Clubbing AYs | HC
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- Last Updated on 30 May, 2025
Case Details: L-1 Identity Solutions Operating Company (P.) Ltd. vs. Assistant Commissioner of Income-tax, Central Circle - 25 - [2025] 174 taxmann.com 969 (Delhi)
Judiciary and Counsel Details
- Vibhu Bakhru & Tejas Karia, JJ.
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Shankey Agrawal & Siddarth Agrawal, Advs. for the Petitioner.
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Gaurav Gupta, SSC, Shivendra Singh & Yojit Pareek, JSCs for the Respondent.
Facts of the Case
A search and seizure operation was conducted at the assessee company’s premises. Subsequently, the Assessing Officer (AO) issued a notice for reassessment for the relevant assessment year. The AO was of the view that the assessee had undercharged its AE for the R&D Services it provided. The income that has escaped assessment for the assessment year exceeded Rs. 50 lakhs.
The assessee filed a writ petition before the Delhi High Court contending that the income alleged to have escaped assessment was less than Rs. 50 lakhs. Therefore, the principal condition specified under section 149(1)(b) was not satisfied.
High Court Held
The Delhi High Court held that the threshold amount of ?50 lakhs of the income that has escaped assessment or is expected to escape evaluation is to be reckoned in respect of the specified assessment year. A plain reading of section 149(1A) indicates that the condition of a minimum amount of ?50 lakhs of income escaping assessment may be satisfied by the cumulative amount that has escaped assessment in respect of more than one assessment year, exceeding the said amount. However, the same is subject to the condition that the income chargeable to tax is represented as an “asset” or “expenditure concerning an event or occasion”.
In the present case, it was apparent that no singular occasion or event resulted in the income of more than one previous year exceeding the sum of ?50 lakhs. The assessee has undercharged its AE for the R&D Services rendered, and therefore, the income must be adjusted.
Additionally, it is alleged that the assessee has overpaid for certain managerial and group-related services. None of these adjustments can be stated to have been a part of a singular event or occasion spanning more than one previous year. It is impermissible for the AO to add income alleged to have escaped assessment for different previous years to determine the threshold figure of Rs. 50 lakhs as specified under section 149(1)(b).
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