Reassessment Notice Beyond 10 Years Quashed as Time-Barred Under Law | Biz Flow Kit
HC: Reassessment Notice Beyond 10 Years Quashed as Time-Barred Under Law
The petitioner, an individual engaged in the real estate business as part of the PSY Group, had originally filed his return of income for Assessment Year 2014-15, declaring modest income. Thereafter, search action under Section 132 of the Income Tax Act was conducted on 08.02.2024 in the group cases. Based on materials allegedly found during the search, the Department issued a notice dated 26.03.2025 under Section 148 seeking to reopen the assessment for A.Y. 2014–15.
The petitioner challenged the notice primarily on the ground of limitation. It was argued that once the search was conducted in Financial Year 2023-24, the outer limit of ten assessment years permissible under the statutory scheme would extend only up to A.Y. 2015-16. Since the impugned notice related to A.Y. 2014-15, it was contended to be beyond the permissible time limit and therefore without jurisdiction.
Main Issue: Whether a reassessment notice issued under Section 148 for A.Y. 2014–15, pursuant to a search conducted in February 2024, is barred by limitation under the 10-year framework prescribed under Sections 153A/149 of the Income Tax Act.
HC’s Decision: The High Court held that the impugned notice was clearly barred by limitation and liable to be quashed. It explained that the statute prescribes two distinct methods for computing limitation one for six years and another for the extended ten-year period. While the six-year block excludes the search year, the ten-year period is to be computed “from the end of the assessment year” relevant to the year of search, thereby including the search assessment year itself.
The Court observed that the search conducted in February 2024 falls in A.Y. 2024-25, which becomes the starting point for computing the ten-year block. On this basis, the outer limit would extend only up to A.Y. 2015-16. Since A.Y. 2014-15 falls outside this range, the notice issued for that year was beyond jurisdiction. The Court emphasized that the Legislature has consciously used different language for six-year and ten-year blocks. Any attempt to apply the same computation method to both would defeat the statutory scheme. Thus, the notices issued under Section 148 were quashed and the petitions were allowed.
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