Reassessment Notice Quashed for Being Issued Beyond the Statutory Time Limit.

By | October 28, 2025
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Reassessment Notice Quashed for Being Issued Beyond the Statutory Time Limit.

Issue

Is a reassessment notice issued under Section 148 legally valid if it is served on the assessee after the expiry of the limitation period prescribed under Section 149 of the Income-tax Act, 1961?

Facts

  • The assessee’s original assessment for the Assessment Year 2017-18 was completed under Section 143(3).
  • The financial year relevant to this assessment year ended on March 31, 2018.
  • The Assessing Officer subsequently issued a notice under Section 148, along with an order under Section 148A(d), on May 7, 2024, alleging that income had escaped assessment.
  • As per the first proviso to Section 149(1)(b), the maximum time limit for issuing such a notice for the Assessment Year 2017-18 expired on March 31, 2024.

Decision

  • The High Court held that the notice issued on May 7, 2024, was clearly beyond the prescribed period of limitation.
  • Consequently, the notice was deemed invalid and without jurisdiction, and it was quashed.

Key Takeaways

  • Limitation Periods are Absolute: The time limits for initiating tax proceedings, as laid down in the statute, are mandatory and cannot be extended by the tax authorities.
  • Notice Must Be Issued Within Time: The validity of a reassessment proceeding hinges on the timely issuance of the notice under Section 148. A notice issued even one day after the deadline is legally void.
  • Know Your Deadlines: For AY 2017-18, the window for issuing a notice under the extended time limit provided by the first proviso to Section 149(1)(b) closed on March 31, 2024. Any notice for this year issued after this date is time-barred.
HIGH COURT OF KARNATAKA
Tarish Investment and Trading Company (P.) Ltd
v.
Union of India
M. Nagaprasanna, J.
WRIT PETITION NO. 17389 OF 2024 (T-IT)
AUGUST  21, 2025
Sandeep Huilgol, Adv. for the Petitioner. Gowthamdev C Ullal and E.I. Sanmathi, Advs. for the Respondent.
ORDER
1. Heard Sri.Sandeep Huilgol, learned counsel appearing for the petitioner, Sri.Gowthamdev C Ullal, learned counsel appearing for respondent No.1, Sri.E.I.Sanmathi, learned counsel appearing for respondent Nos.2 to 6 and have perused the material on record.
2. The petitioner in the subject petition calls in question an order passed by the 2nd respondent under Section 148A(d) of the Income Tax Act and consequent notices so issued to the petitioner under section 148 of the Income Tax Act, 1961. The notice reads as follows:
“Notice under section 148 of the Income-tax Act, 1961
Sir/Madam/M/s.
1. I have the following information in your case or in the case of the person in respect of which you are assessable under the Income tax Act, 1961 (here in alter referred to as “the Act”) for Assessment Year 2017-18
• information in accordance with the risk management strategy formulated in this regard
suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (d) of section 148A of the Act has been passed in such case vide DIN ITBA/AST/F/148A/2024-25/1064704419(1) dated 07/05/2024 and annexed herewith for reference,
2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2017-18 and I, hereby, require you to furnish, within a period of three months from the end of month in which this notice is issued, a return in the prescribed form for the Assessment Year 201718.
Note:- Please note that any return of income, required to be furnished by you under this section and furnished beyond the period allowed shall not be deemed to be a return under section 139 of the Act. (Proviso 3 to Section 148)
NITHAN RAJ T.N.
CIRCLE 7(1)(1), BANGALORE”
3. The notice itself indicates that it is issued for the Assessment Year 2017-18 and is admittedly issued on 7.5.2024. Learned counsel appearing for the petitioner submits that the notice is barred by limitation, as the limitation prescribed under Section 148 is for a period of six years from the date of end of the Financial Year of the Assessment Year. Admittedly, Financial Year of Assessment Year, 2017-18 comes to an end on 31.03.2018 and the limitation would cap at 31.03.2024.
4. Learned counsel for the petitioner would submit that the issue in the lis stands covered by the three Judge Bench of the Apex Court in the case of UOI v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), in which the Apex Court at Paras 49, 53 and 60 has held as follows:
“49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on March 31, 2023, while the six year period expired on March 31, 2019. Without the proviso to section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to rupees fifty lakhs or more. The proviso limits the retrospective operation of section 149(1)(b) to protect the interests of the assesses.
53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than rupees fifty lakhs.
ii. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 can extend the time limit till June 31, 2021
60. The above principles can be applied as follows to the factual situation in the present appeals: (i) The Finance Act, 2021 ([2021] 432 ITR (St.) 52) substituted Sections 147 to 151 of the Income Tax Act with effect from April 1, 2021; (ii) sections 147 to 151 of the old law ceased to operate from April 1, 2021; (iii) after April 1, 2021, any reference to the Income Tax Act means the Income Tax Act as amended by the Finance Act 2021; (iv) the time limits prescribed for issuing reassessment notices under section 149 operate retrospectively for three years for all situations and six years in case the escaped assessment amounts to or is likely to amount to more than rupees fifty lakhs.”
(Emphasis supplied)
5. The High Court of Delhi in two of the judgments has followed the said judgment of the Apex Court in Rajeev Bansal supra. In Sheetal International (P.) lLtd. v. Chief CIT [2024] 168 taxmann.com 308 (Delhi), it is held as under:
“1. Issue notice.
2. Learned counsel appearing for the respondents accepts notice.
3. The petitioner has filed the present petition, inter alia, impugning an order dated 01.05.2024 (hereafter the impugned order) issued under Section 148A(d) of the Income Tax Act, 1961 (hereafter the Act) for the assessment year (AY) 2017-18 as well as the notice dated 01.05.2024 issued under Section 148 of the Act.
4. The petitioner contends that the said notice was issued beyond the period of limitation as prescribed in first proviso to Section 149(1) of the Act.
5. The learned counsel appearing for the petitioner submits that the issue stands covered by the decision of this Court in Manju Somani v. Income Tax Officer [2024] 165 taxmann.com 675/300 Taxman 516/466 ITR 758 (Delhi): Neutral Citation: 2024:DHC:5411-DB.
6. It is also relevant to note that the Supreme Court in a recent decision of Union of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693/[2024] 167 taxmann.com 70 (SC) (SC) has observed as under:

“46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 20212022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.

**** **
49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 20122013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.”

7. In view of the above, the present petition is allowed. The impugned order dated 01.05.2024 as well as the notice issued under Section 148 in respect of the AY 2017-18 are set aside.
8. Pending applications also stand disposed of.”
6. In the light of the issues standing covered on all its fours, the petition deserves to succeed and the action impugned and the orders impugned to be obliterated as admittedly the notice issued is beyond the period of limitation.
7. For the aforesaid reasons, the following:
ORDER
[i] Petition is allowed.
[ii] The impugned order dated 07.05.2024 bearing ITBA/AST/F/148A/2024-25/1064704419(1) passed by the 2nd respondent under Section 148A(d) of the Income Tax Act, 1961 for Assessment Year 2017-18 (Annexure A-1), stands quashed.
[iii] The impugned notice dated 07.05.2024 bearing ITBA/AST/S/148_1/2024-25/1064704431(1) issued by the 2nd respondent under Section 148 of the Income Tax Act, 1961 for Assessment Year 2017-18 (Annexure A-2), stands quashed.
[iv] The petitioner shall be entitled to all consequential benefits that would flow from the quashment of the order.