Allahabad HC upholds reassessment despite reduction of alleged income from ₹54 lakh to ₹27 lakh, holding initial information sufficient.
Reduction in Escaped Income Below ₹50 Lakh Does Not Invalidate Reassessment: Allahabad HC
The Allahabad High Court declined to quash a reassessment notice under Section 148 where the initial information indicated escaped income of ₹54 lakh, even though the final assessment revealed only ₹27 lakh. The court held that the validity of reopening depends on the material available at initiation, not subsequent findings.
The taxpayer argued that since the escaped income was ultimately below ₹50 lakh, the extended limitation under Section 149(1) was inapplicable. The court rejected this, stating that reassessment is valid if based on credible information at the outset, even if the final figure is revised downward.
Implication: Revenue may proceed with reassessments if initial data meets the ₹50 lakh threshold. Taxpayers must challenge the 'reason to believe' stage, not the final quantum, to invalidate proceedings.
