Income tax reassessment notice for AY 2016-17 after six years: s.147/148 new regime time-bar, quashed

The dominant issue was whether a reassessment notice issued under the "new regime" provisions of ss. 147/148 could be sustained when issued after expiry of six years from the end of the relevant AY, and whether the ten-year limit in s. 149(1)(b) could be applied retrospectively. The HC held that a notice under s. 148 in the new regime cannot be issued once the six-year period has expired at the time of issuance, and this construction ensures the ten-year period operates only prospectively. Since six years for AY 2016-17 expired on 31.03.2023 and the notice was issued thereafter, it was barred by limitation; the writ petition was allowed and the notice was quashed.

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The petition challenged a notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961 for AY 2016-17, and the prior order under Section 148A(d). The petitioner contended the issue was covered by precedent and relied on the Supreme Court's interpretation of limitation under the "new regime" in light of the proviso and Section 149. The Court noted the Supreme Court's clarification that "a notice under Section 148 of the new regime cannot be issued ... if it is barred ... because of the 'time limits specified' under ... 149(1)(b) of the old regime," and that "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." Applying this, the Court held that for AY 2016-17 the six-year period expired on 31.03.2023; since the notice was issued thereafter, it was "barred by limitation." With no effective rebuttal from the respondent, the impugned notice was set aside and the petition allowed.

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