Delhi HC Quashed Reopening Notice as Issued Beyond Six-Year Limitation

Mohd Athar Anjum Vs ACIT (Delhi High Court)

Reopening u/s 148 beyond six years from end of AY 2016–17 held time-barred; notice and consequent assessment quashed in view of limitation under proviso to Section 149 as clarified in Union of India v. Rajeev Bansal.

Core Issue: Whether a notice issued under Section 148 of the Income Tax Act, 1961 for AY 2016–17 after expiry of six years from the end of the relevant assessment year is barred by limitation in view of the first proviso to Section 149(1), and whether such time-barred cases can be reopened under the new reassessment regime.

Read SC Judgment in this case: Reopening Invalid as Notice Issued Beyond Six-Year Limitation Period: SC

Facts: The petitioner challenged reassessment proceedings initiated for AY 2016–17. The Assessing Officer issued a notice dated 31.03.2024 under Section 148, preceded by proceedings under Sections 148A(b) and 148A(d). The petitioner contended that under the erstwhile provisions of Section 149, the limitation period of six years expired on 31.03.2023, and therefore, on the date of issuance of notice, the case was already time-barred.

Despite this, the Assessing Officer proceeded under the amended provisions introduced by the Finance Act, 2021, and completed reassessment by passing an order under Section 147 on 15.03.2025. The petitioner approached the High Court challenging the jurisdiction of the reassessment proceedings on the ground of limitation, relying on judicial precedents interpreting the scope of the first proviso to Section 149(1).

AO’s Findings

The Assessing Officer invoked the extended limitation period of ten years under the amended provisions of Section 149(1)(b), proceeding on the premise that income escaping assessment exceeded the prescribed threshold. Accordingly, the notice under Section 148 was issued on 31.03.2024 and reassessment proceedings were carried to completion, culminating in an order under Section 147 dated 15.03.2025, without considering the restriction imposed by the first proviso to Section 149(1).

High Court Findings

The Hon’ble Delhi High Court held that the issue is squarely covered by binding precedents. It observed that the first proviso to Section 149(1) restricts reopening of assessments where such action was already barred under the earlier law. The Court noted that for AY 2016–17, the six-year limitation expired on 31.03.2023, and therefore, the notice issued on 31.03.2024 was clearly time-barred.

Relying on settled legal principles, the Court quashed the notice issued under Section 148, the order passed under Section 148A(d), and the consequential assessment order dated 15.03.2025. The Supreme Court, in appeal, declined to interfere with the High Court’s order and dismissed the Special Leave Petition, thereby affirming the legal position.

Cases Relied Upon

1. Union of India v. Rajeev Bansal-Held that the first proviso to Section 149(1) bars reopening of cases already time-barred under the old regime.

2. Manju Somani v. Income Tax Officer Ward 70(1) -Reaffirmed that extended limitation under the new regime cannot revive time-barred cases.

Key Legal Position

Reassessment for years prior to AY 2021–22 cannot be initiated if already barred under the earlier six-year limitation, and such cases cannot be revived by invoking the extended time limits under the amended provisions—this principle now stands affirmed by the Supreme Court.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. The petitioner has filed the present petition, inter alia, impugning a notice dated 31.03.2024 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] for the Assessment Year [AY] 2016-17.

2. The petitioner also impugns the notice issued under Section 148A(b) of the Act, and the order passed under Section 148A(d) of the Act prior to the issuance of the impugned notice.

3. 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 OfficerWard-70(1) & Ors: Neutral Citation: 2024:DHC:5411-DB. 

4. The learned counsel for the petitioner also referred to the decision of the Supreme Court in Union of India & Others v. Rajeev Bansal : 2024 SCC OnLine SC 2693 and drew the attention of this Court to the following passages from the said judgment:

“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. 

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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.” 

5. In the present case, the period of six years from the end of the relevant AY 2016-17 expired on 31.03.2023. The impugned notice has been issued thereafter, and the same is thus barred by limitation.

6. The learned counsel for the respondent concurs with the aforesaid view.

7. The learned counsel for the petitioner states that the assessment order under Section 147 of the Act was passed by the Assessing Officer on 15.03.2025.

8. In view of the above, the impugned notice as well as the assessment order dated 15.03.2025 are set aside.

9. The petition is allowed in the aforesaid terms. The pending application is also disposed of.