HC Rules Mere Suspicion Isn’t Enough, Section 149(1)(b) Not Attracted Below Rs. 50 Lakh: Reassessment Quashed:

HC Rules Mere Suspicion Isn’t Enough, Section 149(1)(b) Not Attracted Below Rs. 50 Lakh: Reassessment Quashed In a recent matter before the Delhi High Court, the assessee had claimed an exemption from Long-Term Capital Gains (LTCG) for the sale of shares in two companies during the 2013–14 assessment year, under Section 10 (38) of the Income Tax Act. The Assessing Officer reopened the case under Section 148 after conducting a general investigation and the reports alleging misuse of stock exchange mechanisms for laundering unaccounted money. The assessee was accused of generating false LTCG by routing cash through accommodation entries. The assessee argued that the reassessment was invalid because there was no concrete evidence connecting her to the alleged sham transactions and the alleged escaped income was less than Rs. 50 lakhs.

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Issue Raised: Whether the reassessment could be initiated beyond the limitation period when the escaped income was below ₹50 lakhs and based solely on presumptions without specific material.

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High Court’s Decision: The Court agreed with the assessee's contentions and clarified that there was no concrete proof or evidence linking the assessee to the purported cash transactions and that the reassessment was based solely on general suspicion. The extended limitation under Section 149(1)(b) did not apply because the income that was allegedly exempt from assessment was less than Rs. 50 lakhs. To Read Judgment, Download PDF Given Below.