Reassessment Notices Beyond Six-Year Limitation Invalid: Supreme Court Upholds Delhi HC Order [Read Order]

Reassessment notice extended ten‑year period under Section 149 cannot revive assessments already barred under the earlier six‑year regime.

In a recent ruling, the Supreme Court of India dismissed the special leave petition challenging the High Court’s order and upheld the Delhi High Court's ruling that quashed a reassessment notice issued under Section 148 of the Income Tax Act for AY 2014‑15.

The Delhi High Court, by its order dated 13.12.2024, had held that the impugned notice dated 30.08.2024 was barred by limitation. The Court reasoned that the six‑year period under the old regime expired on 31.03.2021

The learned counsel, Mr Pradeep Jain, Mr Sambhav Jain, Mr Pranav Raj Singh, and Mr Shubhankar Jha, appearing for Kalpana Buildmart Pvt Ltd, also impugn the notice issued under Section 148A(b) of the Act, and the order passed under Section 148A(d) of the Act before the issuance of the impugned notice.

They strengthened their arguments by pointing out that the issue stands covered by the decision of this Court in Manju Somani v. Income Tax Officer Ward-70(1) & Ors, and 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.

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.

Under the new law, tax reassessment notices cannot be issued for years before April 1, 2021, if they were already out of time under the old six‑year rule. The new ten‑year limit only works for future years, not past ones. For example, for 2012‑1,3 the six‑year period ended in March 2019, so reopening was not allowed even though ten years would have lasted until March 2023.

The Revenue carried the matter to the Supreme Court by way of a Special Leave Petition. However, the Supreme Court noted that the petition was filed with a gross delay of 327 days, which had not been satisfactorily explained.

The bench of Justice J.B. Pardiwala and Justice Sandeep Mehta observed that for no good reason to interfere with the impugned order passed by the High Court. and dismissed the SLP both on the grounds of delay and lack of merit.

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