Post-Amendment Limitation Period under S. 149 of Income Tax Act Applies Retrospectively: Calcutta HC Relies on Supreme Court Verdict [Read Order]

Relying on the Supreme Court verdict, the Calcutta High Court quashed reassessment notices for the Assessment Year 2015-16, ruling that the limitation period prescribed under the amended Section 149 of the Income Tax Act, 1961, is effective from September 1, 2024, and applies to all subsequent proceedings.

Aarti Highrise Private Limited, the petitioner, had approached the Court challenging show-cause notices dated November 25, 2025, and subsequent orders under Section 148A(d) and Section 148 of the Act. The petitioners contended that the notices were barred by limitation as they were issued beyond the three years mandated by the amended Section 149(1)(a). They argued that the extended period of ten years under Section 149(1)(b) was not applicable as there was no material suggesting that the escaped income amounted to Rs. 50 lakhs or more.

It was submitted that after the amendment of Section 149 with effect from 01.09.2024, the notice under Section 148 shall not be issued for the relevant Assessment Year if three years have elapsed from the end of the relevant Assessment Year, unless the case falls under Clause (b) of Section 149(1) of the said Act. For the Assessment year 2015-16, the three-year period expired on 31.03.2019. The petitioner contends that the extended period of 10 years under Clause (b) is not attracted as there is no allegation or material to show that income escaping assessment amounts to or is likely to amount to Rs. 50,00,000/- or more.

The Department opposed the petitions, submitting that a survey was conducted on March 27, 2024, before the amendment, and thus, the pre-amended provisions allowing a longer limitation period should apply.

A single bench of Justice Smita Das De observed that the issue was settled by the Supreme Court in Income Tax Officer & Anr. vs Sri Sai Kumar Mateti, which categorically held that all reassessment proceedings post-September 1, 2024, must conform to the amended provisions of Section 149.

The Court observed:

“Notices issued beyond the time limit prescribed under Section 149(1)(a) are without jurisdiction unless the conditions under Section 149(a) Clause (b) are satisfied... In the present case, the impugned notice under section 148 for Assessment Year 2015-16 has been issued beyond three years... and there is no material on record to demonstrate that income escaping assessment amounts to or is likely to amount to Rs. 50,00,000/- or more.”

Finding that the notices were time-barred and the conditions for the extended period were not met, the Court quashed the show-cause notice and the consequential orders.

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