HC Invalidates Reopening Exceeding Statutory Ten-Year Limit in Search Case

HC Invalidates Reopening Exceeding Statutory Ten-Year Limit in Search Case

The petitioner challenged a notice issued under Section 148 for Assessment Year 2014–15 on the ground that it was barred by limitation. The case arose from a search conducted on 08.02.2024 in connection with a real estate group to which the petitioner belonged. Based on material allegedly linked to the petitioner, the department issued a reopening notice in March 2025.

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ITAT Delhi Quashes Reassessment as Section 148 Notice Issued Beyond Limitation Period

The petitioner contended that under the statutory scheme governing search assessments, the outer limit of ten years had already expired. By including the search assessment year (AY 2024–25) as the starting point, the ten-year period extended only up to AY 2015–16. Therefore, reopening AY 2014–15 was beyond permissible limits. The revenue, however, argued that the search year should be excluded while computing the ten-year block, thereby bringing the impugned year within limitation.

Main Issue: Whether, for the purpose of computing the extended ten-year limitation under search-related reassessment provisions, the search assessment year is to be included or excluded.

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ITAT Delhi Quashes Reassessment as Section 148 Notice Issued Beyond Limitation Period

HC Ruling: The High Court ruled in favour of the assessee and held that the notice was time-barred. It clarified that the statute prescribes two distinct methods for computing limitation one for six years and another for ten years. While the six-year block excludes the search year, the ten-year period must be computed from the end of the assessment year relevant to the previous year in which the search took place, thereby necessarily including the search year.

Applying this interpretation, the Court found that AY 2024–25 would be the first year in the ten-year block, and the outer limit would extend only up to AY 2015–16. Since the impugned notice related to AY 2014–15, it fell outside the permissible period. Accordingly, the notice was quashed as being without jurisdiction and barred by limitation.

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