Bar on Reopening Time-Barred Assessments: The Supremacy of the First Proviso to Section 149

By | May 6, 2026
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Bar on Reopening Time-Barred Assessments: The Supremacy of the First Proviso to Section 149

Facts

  • The Notice: The Revenue issued a reassessment notice under Section 148 in the year 2024 for Assessment Year 2013-14.

  • The Regime Change: The notice was issued under the “New Reassessment Regime” introduced by the Finance Act, 2021, which theoretically allows reopening up to 10 years if income escaping assessment exceeds ₹50 lakhs.

  • The Limitation Conflict: Under the erstwhile (old) regime, the maximum time limit for reopening an assessment was 6 years.

  • TOLA Extension: Due to the COVID-19 pandemic, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) extended the deadline for many actions. However, even with TOLA, the time limit to issue a notice for AY 2013-14 had expired on 30-06-2021.

  • The Dispute: The Assessee challenged the 2024 notice, arguing that since the assessment was already “time-barred” under the old law as of 01-04-2021, it could not be revived by the extended 10-year window of the new law.

Decision

  • Final Verdict: In favour of the Assessee.

  • Ratio Decidendi:

    • The First Proviso: The Court held that the first proviso to Section 149(1) acts as a mandatory “cutoff” or “safety valve.” It explicitly states that no notice can be issued under the new regime if such notice could not have been issued at that time due to being beyond the time limit specified under the erstwhile provisions.

    • Vested Rights: If a right to reopen an assessment was lost under the old law (6-year limit), it cannot be resurrected by the new law (10-year limit). The “New Law” cannot retrospectively grant the Revenue power to reach back into years that were already legally closed.

    • TOLA Limitation: While TOLA extended deadlines, it did not permanently shift the limitation period for AY 2013-14 beyond June 2021. Since the notice was issued in 2024, it was clearly outside the permissible boundary of both the old and new regimes when read with the restrictive first proviso.

Key Takeaways

  • The “Six-Year” Shield: For all assessments relating to the period prior to the Finance Act, 2021 (i.e., AY 2013-14 to AY 2015-16), practitioners must check if the 6-year window had already closed by 01-04-2021. If it had, any notice issued now under the 10-year rule is likely jurisdictionally void.

  • Proviso Overrides Main Provision: This ruling clarifies that the 10-year window in Section 149(1)(b) is not absolute; it is strictly governed and restricted by the first proviso.

  • Jurisdictional Challenge: In pending reassessments for old years, taxpayers should immediately raise a jurisdictional objection if the notice relies on the 10-year extension for a year that had already “died a statutory death” under the pre-2021 law.

  • IT Act 2025 Preparedness: The structural logic of “limiting retrospective reach” remains a cornerstone of tax certainty. Even under renumbered sections (280-282), the principle that a “dead” assessment cannot be revived by a subsequent amendment remains the prevailing law.

HIGH COURT OF BOMBAY
Pratibha Syntex Ltd.
v.
Deputy Commissioner of Income-tax*
B.P. COLABAWALLA and FIRDOSH P. POONIWALLA, JJ.
WRIT PETITION (L) NO. 8759 OF 2026
MARCH  13, 2026
Dharan V. Gandhi and Ms. Aanchal Vyas, Advs. for the Petitioner. Arjun Gupta, Adv. for the Respondent.
ORDER
1. Rule. Rule made returnable forthwith. Respondents waive service. By consent of the parties, the Writ Petition is taken up for final hearing.
2. By this Petition under Article 226 of the Constitution of India, the Petitioner challenges the validity of the notice dated 19.03.2024 issued under section 148A(b), the order dated 04.04.2024 passed under section 148A(d), and the consequential notice dated 04.04.2024 issued under section 148 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year (“AY”) 2013-14.
3. The short issue that arises for consideration in the present Petition is whether the impugned notices and order are barred by limitation in terms of the first proviso to section 149(1) of the Act.
4. The learned Counsel appearing for the Petitioner submits that the impugned proceedings for AY 2013-14 are time-barred. In this regard, he relies upon the first proviso to section 149(1) of the Act to contend that for Assessment Year 2021-22 and earlier years, no notice under Section 148 can be issued if such notice could not have been issued at that time, on account of it being beyond the time limit specified under the provisions of section 149(1) (b) of the Act as they stood immediately before the commencement of the Finance Act, 2021. He submits that under the unamended provisions, i.e., prior to 01.04.2021 (“old regime”), the maximum time limit for reopening an assessment was six years from the end of the relevant Assessment Year. For AY 2013-14, the six-year period expired on 31.03.2020. Further, such time was extended till 30.06.2021 by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 (“TOLA”). The present notice under section 148 is dated 04.04.2024 and is therefore, barred by limitation. In support of this contention, the learned Counsel placed heavy reliance on the judgment of the Hon’ble Supreme Court in the case of UOI v. Rajeev Bansal (SC).
5. Per contra, the learned Counsel for the Respondents supports the impugned notices. He submits that under the amended section 149(1)(b) of the Act, a notice under section 148 can be issued up to ten years from the end of the relevant Assessment Year if the income escaping assessment amounts to Rs. 50,00,000/- or more. He contends that since the alleged escapement in the present case exceeds the monetary threshold, the notice issued in 2024 for AY 2013-14 is within the ten-year window provided by the new law. He relied upon paragraph 48 of the decision in the case of Rajeev Bansal (supra) to submit that one has to look at the law as on the date of issuance of the notice. Consequently, the learned counsel submitted that there is no merit in the above Writ Petition and the same be dismissed.
6. We have heard the learned Counsel for the parties and perused the record. To appreciate the controversy, it is necessary to reproduce section 149(1) of the Act, along with the first proviso, as substituted by the Finance Act, 2021, and as amended by Finance Act, 2023 :
“149. Time limit for notice.
(1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of—
(i) an asset;
(ii) expenditure in respect of a transaction or in relation to an event or occasion; or
(iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more :
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021. “
(emphasis supplied)
7. Section 149(1)(b) of the Act provides time of 10 years from the end of the relevant Assessment Year for issuance of notice under section 148 of the Act. However, the same is subject to the first proviso. A plain reading of the first proviso to section 149(1) makes it clear that it acts as a restriction on the retrospective application of the extended ten-year limitation period. It mandates that for any Assessment Year beginning on or before 01.04.2021, a notice under section 148 cannot be issued at any time, if such notice could not have been issued at such time under section 149(1)(b) of the Act, as it stood immediately before the commencement of the Finance Act, 2021 (i.e., the provisions as they stood before the Finance Act, 2021). In the present case we are not concerned with sections 153A and 153C of the Act, as reference to such provisions would arise only in search or requisition cases. It is undisputed that the said sections are not relevant here.
8. Moreover, this issue is no longer res integra. The Hon’ble Supreme Court in Rajeev Bansal (supra) has interpreted the first proviso to section 149(1). The relevant observations of the Supreme Court in paragraphs 46, 49 and 53 are reproduced below :
” 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 2021-2022 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 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.”
9. Thus, the Hon’ble Supreme Court has categorically held that a notice could be issued under section 148 of the new regime for Assessment Year 2021-2022 and before, only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime. If, at any particular point of time, after the new regime has kicked in, the Department could not have issued a notice under section 148 of the Act, due to the limitation of section 149(1)(b) of the Act prior to the amendment by Finance Act, 2021 i.e., the old regime, then at such point of time no notice under section 148 can be issued under the new regime as well. This benefit is for AY 2021-22 and earlier assessment years.
10. In so far as the reliance of the learned Counsel for the Respondents on paragraph 48 of the judgement in the case of Rajeev Bansal (supra) is concerned, it may be noted that there is no quarrel with the proposition that the notices have to be judged according to the law existing on the date the notice is issued. That is the settled law. However, the law as on the date of issuance of notice under section 148, includes not only section 149(1)(b) but also the first proviso to section 149(1). Further, the Hon’ble Supreme Court in Rajeev Bansal (supra) itself has in paragraphs 49 and 53 given its findings relating to the first proviso, which we have reproduced above. Therefore, this argument does not support the case of the Revenue, and, on the contrary, assists the Petitioner herein.
11. Now, this brings us to the next question, i.e. what is the time limit to issue a notice under section 149(1)(b) of the old regime. Under the old regime, the maximum time limit for reopening an assessment under Section 149(1)(b) was six years from the end of the relevant Assessment Year. For the Assessment Year 2013-14, the six-year period expired on 31.03.2020. Further, as rightly pointed out by the learned Counsel for the Petitioner, such period was extended, first till 31.03.2021 by TOLA. Until 31.03.2021 the old regime applied. This period was further extended from 01.04.2021 till 30.06.2021 by TOLA. Notices issued under section 148 of the Act between 01.04.2021 and 30.06.2021 were subject matter of litigation in the case of UOI v. Ashish Agarwal  (SC) and in the case of Rajeev Bansal (supra). The later decision has laid down a mechanism by the name “surviving period” to determine the validity of the notice under section 148 of the Act in terms of limitation. Admittedly no notice under section 148 was issued in the present case between 01.04.2021 and 30.06.2021.
12. In a nutshell, after 30.06.2021, no notice under section 148 could have been issued for reopening the assessment for AY 2013-14. We may hasten to add that notices issued under section 148 of the Act, between 01.04.2021 till 30.06.2021, which were the subject matter of litigation in the case of Ashish Agrawal (supra), and where such notices were deemed to be notices issued under section 148A(b) of the Act, and where pursuant to the decision in the case of Ashish Agrawal (supra), fresh notices were issued under section 148 of the Act, the same are governed by the decision in the case of Rajeev Bansal (supra) and not the present order.
13. Applying the ratio of Rajeev Bansal (supra) to the facts of the present case, it is evident that for AY 2013-14, the time limit for issuance of notice under Section 148 was latest by 30th June 2021. In the present case, the notice is issued on 4th April 2024 and has certainly expired as on 19.03.2024 and as on 04.04.2024. Consequently, by virtue of the first proviso to section 149(1), the Revenue is barred from issuing the notice under section 148 of the Act under the new regime, notwithstanding the ten-year period provided in section 149(1)(b) after its amendment by Finance Act of 2021.
14. The Writ Petition is, accordingly, allowed in terms, of prayer clause (a), which reads as under :
“(a) that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner’s case and after going into the legality and propriety thereof, to quash and set aside the Impugned Notice dated 19.03.2024 issued under Section 148A(b) (Exhibit B), the Impugned Order dated 04.04.2024 passed under Section 148A(d) (Exhibit C), the Impugned Notice dated 04.04.2024 issued under Section 148 (Exhibit D); and all subsequent proceedings, including notices under Section 143(2) and 142(1).
15. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
16. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.