Facts of the Case

The petitioner, Mohd Athar Anjum, filed his return of income for Assessment Year 2018-19 on 21.11.2018 declaring total income of ₹19,11,290. A survey under Section 133A was conducted on 01.09.2022 in the cases of Mahajan Group of Industries and Ferticity IVF Clinics Pvt. Ltd. Based on information allegedly found during the said survey, the Assessing Officer issued a notice dated 27.01.2024 under Section 148A(b) alleging unexplained cash transactions of ₹37,63,528 during FY 2017-18 relevant to AY 2018-19.

The petitioner submitted a reply on 14.03.2024 explaining the transactions. However, the Assessing Officer passed an order dated 31.03.2024 under Section 148A(d) holding that it was a fit case for issuance of notice under Section 148. The Assessing Officer invoked Section 149(1A) by aggregating alleged unexplained cash transactions across Assessment Years 2015-16 to 2020-21 to contend that cumulative escapement exceeded ₹50 lakh. Consequently, a notice under Section 148 was issued and assessment was completed under Section 147 by order dated 21.03.2025. The petitioner challenged the entire proceedings.

Issues Involved

Whether reassessment for AY 2018-19 could be initiated beyond three years when alleged income escaping assessment for the relevant year was below ₹50 lakh, whether aggregation of alleged escapement across multiple assessment years was permissible under Section 149(1A), and whether the alleged income was represented by a single asset or related to one singular event or occasion as required by law.

Petitioner’s Arguments

The petitioner contended that the alleged unexplained cash transactions for AY 2018-19 amounted to only ₹37,63,528, which was below the statutory threshold of ₹50 lakh prescribed under Section 149(1)(b). It was argued that the Assessing Officer had wrongly aggregated alleged cash transactions of different years without demonstrating that such income was represented by a single asset or arose from one singular event or occasion. Reliance was placed on the Delhi High Court decision in L-1 Identity Solutions Operating Company Pvt. Ltd. to submit that such aggregation was impermissible.

Respondent’s Arguments

The Revenue argued that Section 149(1A) permitted aggregation of income escaping assessment across multiple years where such income related to the same issue or event. It was contended that the unexplained cash transactions constituted income represented in the form of assets and were part of a common modus operandi involving unaccounted cash dealings.

Court Order / Findings

The Delhi High Court examined the statutory scheme of Sections 149(1)(b) and 149(1A) and held that aggregation across years is permissible only where the income escaping assessment is represented by a single asset or expenditure relating to a singular event or occasion spanning multiple years. On facts, the Court found that the alleged cash transactions across different assessment years were independent in nature and did not relate to a single event or occasion. The Court also observed that there was no asset representing the alleged escaped income.

The Court held that the Assessing Officer had misapplied Section 149(1A) by mechanically aggregating cash transactions of different years to cross the ₹50 lakh threshold. Since the alleged escapement for AY 2018-19 was admittedly below ₹50 lakh, reassessment beyond three years was barred by limitation. The Court noted that the issue was squarely covered by its earlier judgment in L-1 Identity Solutions Operating Company Pvt. Ltd.

Important Clarification

The High Court clarified that Section 149(1A) does not permit blanket aggregation of income escaping assessment across multiple years. Aggregation is permissible only where the escaped income is represented by a single asset or expenditure relating to a singular event or occasion. Independent cash transactions spread across years cannot be aggregated to invoke extended limitation.

Final Outcome

The writ petition was allowed. The order dated 31.03.2024 passed under Section 148A(d), the notice dated 31.03.2024 issued under Section 148, and the assessment order dated 21.03.2025 passed under Section 147 for Assessment Year 2018-19 were set aside as being barred by limitation. All consequential proceedings were quashed.

Link to download order https://www.mytaxexpert.co.in/uploads/1769756378_MOHDATHARANJUMVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf 

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