Validity of reopening assessment time bar under six year limitation; late notice held barred and relief granted to assessee

Reopening of assessment was challenged as time barred under the six year limitation for issuing notice u/s 149; the court applied precedents including Rajeev Bansal and Manju Somani to hold that the six year period for AY 2014 15 expired on 31.03.2021. Because the impugned notice was issued after that date, the reopening was barred by limitation and in favour of the assessee. The reasoning treats the proviso extending limitation as not rendering the later notice valid retrospectively in the facts of the case.

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Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 for assessment year 2014-15 is barred by limitation and liable to be set aside.

Analysis: The applicable limitation rule under the pre-amendment regime is the six year period from the end of the relevant assessment year. For AY 2014-15 the six year period expired on 31.03.2021. The proviso to Section 149(1)(b) of the post-amendment regime restricts retrospective application of extended time limits and requires that a notice under Section 148 of the new regime can be issued only if the time limit under the old regime continued to exist at the time of issuance. The impugned notice was issued after the expiry of the six year period; consequently the time limit under the old regime no longer existed when the notice under Section 148 was issued.

Conclusion: The notice issued under Section 148 for AY 2014-15 is barred by limitation and is set aside; petition allowed.

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