Computation of ten-year reassessment period includes search year, excluding prior years as time-barred.

In brief

The question

1. Whether the notice issued under Section 148 for Assessment Year 2015-16 is barred by limitation under the provisions of the Income Tax Act

The court held

The Court held that the impugned notice for AY 2015-16 is barred by limitation as it falls beyond the ten-year period prescribed by the statute

It also directed

The notice dated 30.03.2026 was quashed and set aside, and the writ petition was allowed

01Facts

The petitioner, an infrastructure development company under the MSK/Madhav Group, filed its income tax return for Assessment Year (AY) 2015-16 on 30.10.2015

¶ 4, 4.1

On 18.05.2024, a search was conducted at the petitioner’s premises under Section 132 of the Income Tax Act, 1961

¶ 4.1

Subsequently, on 30.03.2026, the respondent issued a notice under Section 148 seeking to reopen the assessment for AY 2015-16, asserting that seized documents related to the petitioner disclosed escaped income

¶ 4.1

The petitioner challenged this notice primarily on the grounds that it was barred by limitation under the statutory scheme

¶ 4.1, 5

02Issues

i.1. Whether the notice issued under Section 148 for Assessment Year 2015-16 is barred by limitation under the provisions of the Income Tax Act

¶ 9(i)

ii.2. Whether the "search assessment year" (AY 2025-26) should be included or excluded when calculating the ten-year block period for the "relevant assessment year" under Explanation 1 to Section 153A

¶ 10

03Law Applied

The Court applied Section 153A(1)(b) and Explanation 1 of the Income Tax Act, 1961, noting that for the 10-year extended limitation, the period is reckoned "from the end of the assessment year relevant to the previous year in which search is conducted"

¶ 12, 12.1

The Court further relied on the precedent of Jayantibhai Karamshibhai Maniya v. Income-tax Officer [2026] 182 taxmann.com 493 (Guj.), which established that the search year itself is the first year in the ten-year count

¶ 13.4

Provisions in the judgment · 10

Income Tax Act, 1961 10 provisions

Section 132Section 132ASection 147Section 148Section 149Section 150Section 151Section 152Section 153ASection 153C

04Reasoning

The Court analyzed the linguistic distinction between the six-year and ten-year limitation periods in Section 153A. For the six-year block, the law uses "immediately preceding," which excludes the search year

¶ 13, 13.1

However, Explanation 1 for the ten-year block uses "from the end of the assessment year," which the Court interpreted as requiring the inclusion of the search year in the count

¶ 13.1, 13.3

Since the search occurred in FY 2024-25 (AY 2025-26), the Court held that AY 2025-26 is the first year of the ten-year block. Counting backward ten years from AY 2025-26, the limitation period terminates at AY 2016-17

¶ 9, 5.3, 13.4