Delhi High Court Sets Rs 50 Lakh Threshold For Extended Tax Assessments, Clarifies Conditions For Reopening Cases

In a key decision, the Delhi High Court has clarified that the extended 10-year period for reopening income tax assessments will now only apply if the concealed income is over Rs 50 lakh.

The bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia emphasised that the issuance of notices "in normal cases" beyond three years from the end of the relevant assessment year was not intended, as reported by Hindustan Times.

The court explained that, in simpler terms, if the concealed income is less than Rs 50 lakh, the standard three-year limit applies.

However, in more serious cases involving tax evasion with evidence of hiding Rs 50 lakh or more, the extended 10-year period comes into play.

This decision aims to bring clarity to the reopening of tax assessments, ensuring a fair and targeted approach.

It means that cases with lower concealed incomes will not face prolonged scrutiny, while the extended period will be reserved for more substantial cases exceeding Rs 50 lakh.

The ruling is expected to have significant implications for income tax assessments and adds a nuanced perspective to the legal framework surrounding the reopening of assessments.