₹50 lakh income-tax case: ITAT quashes reassessment after tax department issued notice beyond the legal deadline

A Surat ITAT ruling has quashed reassessment proceedings involving a ₹50 lakh IDS disclosure after finding the tax department’s section 148 notice was time-barred. The case also involved a bank error that delayed part of the taxpayer’s tax payment.

A taxpayer who had declared ₹50 lakh under the Income Declaration Scheme (IDS), 2016, but could not complete the process after a bank-related payment issue, has received relief from the Income Tax Appellate Tribunal (ITAT). In Harshali Lavishkumar Jain v. ITO, Ward-1(2)(1), Surat (ITA No. 1463/SRT/2025), the Surat bench quashed the reassessment after finding that the tax department's fresh notice under section 148 was issued beyond the permissible time limit.

The case relates to the assessment year 2017-18. Jain had filed her return declaring income of ₹6.88 lakh. The tax department later received information that she had declared ₹50 lakh under IDS 2016 for assessment year 2012-13 but had not completed the declaration process by submitting Form-4, the certificate of final acceptance. The department subsequently reopened her assessment and eventually added the entire ₹50 lakh as unexplained income.

Why the ₹50 lakh was added

Under IDS 2016, Jain had declared ₹50 lakh and claimed that she had paid the required tax of ₹22.50 lakh. However, she said a payment of ₹5.625 lakh could not be credited to the government's account before the deadline because of a technical error at the bank's end.

According to her submissions before the tribunal, the bank issued a certificate acknowledging the error. She argued that the assessing officer had also accepted that the full ₹22.50 lakh tax had ultimately been paid, but Form-4 could not be submitted because of the payment issue.

The assessing officer nevertheless treated the ₹50 lakh as unexplained income and added it under "income from other sources". The assessment was completed under section 147 read with sections 144 and 144B in May 2023. The taxpayer challenged the addition, but the Commissioner of Income Tax (Appeals) dismissed her appeal.