A reassessment notice cannot travel beyond the outer limitation period under Section 149 even where the alleged escaped income exceeds Rs. 50 lakh
The Delhi High Court quashed a search-linked reassessment notice issued under Section 148 of the Income Tax Act on March 31, 2026 for Assessment Year 2015-16, holding that it was beyond the ten-year limitation period prescribed under Section 149 of the Income Tax Act, 1961.
The court found that when counted backwards from AY 2026-27, the ten-year period extended only up to AY 2017-18 and could not reach AY 2015-16.
Rita Kumari (the petitioner) challenged the Section 148 notice issued on March 31, 2026 seeking reassessment of her income for AY 2015-16. The reassessment proceedings arose from a search and seizure action conducted under Section 132 of the Income Tax Act at the premises of Gaursons Group and its associates.
The petitioner’s counsel argued that the reassessment notice had been issued beyond the period permitted under Section 149. They submitted that the notice was issued during financial year 2025-26 corresponding to AY 2026-27, so that the assessment year had to be treated as the starting point for computing the outer ten-year period.
On this calculation, AY 2026-27 was the first year and AY 2017-18 was the tenth year. AY 2015-16 consequently fell outside the permissible reassessment period.
The revenue counsel was unable to controvert the factual position placed before the Court.
The Division Bench comprising Justice Dinesh Mehta and Justice Aditi Choudhary observed that the notice dated March 31, 2026 fell in financial year 2025-26 corresponding to AY 2026-27.
The court calculated the ten assessment years backwards as AY 2026-27, AY 2025-26, AY 2024-25, AY 2023-24, AY 2022-23, AY 2021-22, AY 2020-21, AY 2019-20, AY 2018-19 and finally AY 2017-18 as the tenth year.
The court observed
“The impugned notice for AY 2015-16 is, thus, time-barred on a plain reading of Section 149 of the Act of 1961.”
The court also specifically recorded that the position remained so even though the alleged escaped income was more than Rs. 50 lakh.
Finding the notice outside the statutory ten-year window, the court allowed the writ petition and quashed the Section 148 notice dated March 31, 2026. The pending applications were also disposed of.
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How to cite
2026 TAXSCAN (HC) 1664
Before the Court
Delhi High Court
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