9911796707
TMI Blog2025 (4) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... has been finally heard. 2. The petitioner [Assessee] has filed the present petition, inter alia, impugning notices dated 21.03.2024 and 28.03.2024 [impugned notices] issued under Section 148 of the Income Tax Act, 1961 [the Act] in respect of Assessment Year [AY] 2018-19. It is the Assessee's case that no such notices could have been issued, as according to the Assessing Officer [AO] the income of the Assessee which has escaped assessment for the relevant assessment year [AY 2018-19] is less than Rs. 50 lakhs. In terms of Section 149 (1) (a) of the Act, as applicable at the material time, no such notices could be issued beyond the period of three years from the end of the relevant assessment year, save and except in cases where the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee, indicate that the AO was of the view that the Assessee had undercharged its AE for the R&D Services provided by it to the extent of 0.27 crores during the Financial Year [FY] 2017-18 which is relevant to AY 2018-19. 8. The AO referred to the policy of the Assessee's AE, which according to the AO, required the group companies rendering services to charge a markup of 50%. The AO was, prima facie, of the view that the markup charged by the Assessee for FY 2017-18 was less to the extent of 0.27 crores, and thus, the said income to the said extent had escaped assessment. In addition, the AO was also of the view that the Assessee had paid a higher amount as management fees for other intragroup services to the extent of Rs. 0.21 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amount of escapement for A.Y. 2017-18 to A.Y. 2019-20 is above Rs.50 lakh. Hence, in view of provisions of section 149 (1A) of the Income Tax Act 1961, all the conditions of section 149 (1) (b) are satisfied in this case for AY 2018-19." 10. There is no cavil that the income alleged to have escaped assessment for the AY 2018-19 is under Rs. 50 lakhs. However, it is contended that the same would not preclude the AO from issuing a notice under Section 148 of the Act as cumulatively the income that is alleged to have escaped assessment is to the extent of 0.73 crores which is in excess of Rs. 50 lakhs. Mr Gupta, the learned counsel appearing for the Revenue has referred to Section 149 (1A) of the Act in support of his contention. 11. Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch assessment year for assessment, reassessment or recomputation, as the case may be." 12. It is apparent from the opening sentence of Section 149 (1) of the Act that a notice under Section 148 of the Act for an assessment year cannot be issued beyond the period of three years unless the conditions under Section 149 (1) (b) of the Act are satisfied. Thus, one of the said conditions is that the income alleged to have escaped assessment exceeds Rs. 50 lakhs or is likely to exceed Rs. 50 lakhs. Undisputably, the threshold amount of Rs. 50 lakhs of the income that has escaped assessment or is likely to escape assessment, is to be reckoned in respect of the specified assessment year. We say so because the conditions as set out in clause (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccasion. 13. In the present case, it is apparent that there is no singular occasion or event which has resulted in the income of more than one previous year exceeding the sum of Rs. 50 lakhs. As noted above, the allegations against the Assessee are that it has undercharged its AE for the R&D Services rendered by it, and therefore, the income is required to be adjusted to the extent of Rs. 27 lakhs. Additionally, it is alleged that the Assessee has overpaid for certain managerial and group related services to the extent of Rs. 21 lakhs. None of these two adjustments can be stated to have been a part of a singular event or occasion spanning more than one previous year. 14. In our view, the AO has erred in proceeding on the basis that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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