Case Note & Summary
The dispute involved a writ petition under Article 226 of the Constitution of India filed by an assessee challenging a reassessment notice issued by the Income Tax Department. The petitioner had filed a return for Assessment Year 2015-16, declaring an income of Rs. 5,06,940. On May 9, 2024, a search under Section 132 of the Income Tax Act, 1961, was conducted, during which documents including a notarized agreement and cash notings were seized, leading the department to allege that the petitioner held a 25% share in a property and received unaccounted cash consideration of Rs. 1,75,85,000, which had escaped assessment. Based on this, a notice under Section 148 was issued on March 31, 2025, after obtaining approval under Section 151(ii). The petitioner filed objections, but the department proceeded with notices under Section 143(2) and disposed of objections on October 14, 2025, prompting the writ petition. The core legal issue was the validity of the reassessment notice, considering the time limits under Sections 149, 153A, and 153C of the Act, especially in light of amendments introduced by the Finance Act, 2021, and Finance (No. 2) Act, 2024. The petitioner argued that the search on May 9, 2024, fell within the period from April 1, 2021, to September 1, 2024, making pre-amendment provisions applicable under Section 152(3), and that the notice was time-barred under the first proviso to Section 149(1) as it could not have been issued under Section 153A for an assessment year before April 1, 2021. The respondent opposed, citing incriminating material from the search. The court analyzed the provisions, noting that Section 152(3) applied, bringing in Sections 147 to 151 as they stood before the Finance (No. 2) Act, 2024. It examined Section 149(1)(b) and the first proviso, which bars notices for assessment years before April 1, 2021, if time-barred under Section 149(1)(b) or Section 153A/153C. The court linked this to Section 153A, which limits reassessment to six assessment years preceding the search year, and found that the notice for 2015-16, based on a search in 2024, exceeded the ten-year limit from the end of the assessment year, making it invalid. Relying on a prior judgment in Special Civil Application No. 16615 of 2025, the court allowed the petition, quashing the notice as time-barred.
Headnote
A) Income Tax Law - Reassessment Proceedings - Time Limits for Search-Based Reassessment - Income Tax Act, 1961, Sections 148, 149, 153A, 153C - Reassessment notice under Section 148 issued for Assessment Year 2015-16 based on search on May 9, 2024, which falls between April 1, 2021, and September 1, 2024, attracting pre-amendment provisions under Section 152(3) - Court applied first proviso to Section 149(1), barring notice if time-barred under Section 149(1)(b) or Section 153A/153C for years before April 1, 2021 - Held that notice was invalid as it traveled beyond ten-year limit from end of assessment year under Section 153A, quashing it (Paras 7-9).
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Issue of Consideration: Whether the notice under Section 148 of the Income Tax Act, 1961, for reassessment for Assessment Year 2015-16, issued based on a search conducted on May 9, 2024, is valid given the time limits under Sections 149, 153A, and 153C of the Act as per pre-amendment provisions
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Final Decision
Writ petition allowed; impugned notice under Section 148 dated 31.03.2025 quashed and set aside as time-barred under Sections 149, 153A, and 153C of Income Tax Act, 1961
2026 LawText (GUJ) (01) 527
R/Special Civil Application No. 4 of 2026
A.S. Supehia J. , Pranav Trivedi J.
Mr. Hardik V Vora, Karan G Sanghani
Batukbhai Premjibhai Kalathiya
Income Tax Officer, Ward 3(2)(1) Surat
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Nature of Litigation: Writ petition under Article 226 of the Constitution of India challenging reassessment notice under Income Tax Act, 1961
Remedy Sought
Petitioner prayed to quash and set aside notice under Section 148 dated 31.03.2025 for Assessment Year 2015-16 and to direct respondent not to proceed further or pass final order under Section 143(3) read with Section 147
Filing Reason
Petitioner filed writ petition after respondent issued notice under Section 148 based on search on 09.05.2024 and disposed of objections on 14.10.2025 without proper consideration
Previous Decisions
Issue covered by decision of High Court in Special Civil Application No. 16615 of 2025 dated 05.01.2026
Issues
Validity of notice under Section 148 of Income Tax Act, 1961, for reassessment for Assessment Year 2015-16 based on search conducted on 09.05.2024, considering time limits under Sections 149, 153A, and 153C
Submissions/Arguments
Petitioner argued reassessment proceedings governed by pre-amendment provisions under Section 152(3) as search on 09.05.2024 falls between 01.04.2021 and 01.09.2024, and notice time-barred under first proviso to Section 149(1) as it could not have been issued under Section 153A for assessment year before 01.04.2021
Respondent opposed, citing incriminating material found during search establishing petitioner's share in property and unaccounted cash consideration
Ratio Decidendi
For searches conducted between April 1, 2021, and September 1, 2024, reassessment proceedings under Section 148 are governed by pre-amendment provisions under Section 152(3), and notices cannot be issued for assessment years before April 1, 2021, if time-barred under Section 149(1)(b) or Section 153A/153C, with Section 153A limiting reassessment to six assessment years preceding the search year, making notices beyond ten-year limit invalid
Judgment Excerpts
“Where a search has been initiated under section 132 or requisition is made under section 132A or a survey is conducted under section 133A [other than under sub-section (2A)] on or after the 1st day of April, 2021 but before the 1st day of September, 2024, the provisions of section 147 to 151 shall apply as they stood immediately before the commencement of the Finance (No. 2) Act, 2024.”
“Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021:”
Procedural History
Petitioner filed return for Assessment Year 2015-16 on 28.03.2016; search under Section 132 conducted on 09.05.2024; notice under Section 148 issued on 31.03.2025; petitioner filed objections on 08.04.2025, 03.05.2025, 24.05.2025; respondent issued notice under Section 143(2) on 25.06.2025; petitioner filed replies on 09.07.2025 and 11.07.2025; respondent disposed of objections on 14.10.2025; petitioner filed writ petition; High Court heard arguments and allowed petition based on prior judgment
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