Supreme Court permits income aggregation across years for tax reassessment notices

The Supreme Court upheld a reassessment notice issued under section 148 after determining that alleged bogus purchases across two years totalled Rs. 88.03 lakh, overriding the threshold challenge for assessment year 2018-19 where the escaped income was Rs. 31.80 lakh. The apex court explicitly allowed the aggregation of escaped income across multiple assessment years under section 149(1A). Reassessment provisions allow tax authorities to reopen past assessments when income has escaped taxation, provided the escaped amount crosses statutory monetary limits.

Previously, taxpayers frequently challenged notices by isolating figures to a single assessment year to stay below threshold limits, whereas this judicial stance permits combining amounts across relevant periods to validate reopening. Tax practitioners and chartered accountants handling scrutiny cases must review multi-year transaction trails and evaluate aggregate income exposures before advising clients on legal remedies.

Watch for detailed appellate instructions in subsequent assessments, and ensure meticulous documentation for historical purchases to protect clients from combined threshold triggers.