Search Assessment Year Must Be Included When Computing Ten-Year Limitation Period Under Section 153A

The petitioner, an infrastructure development company part of the MSK Group, filed its return for Assessment Year (AY) 2015-16 on October 30, 2015.

On May 18, 2024, a search action under Section 132 of the Income Tax Act, 1961, was initiated against the MSK and Madhav Group.

The Respondent issued a notice dated March 30, 2026, under Section 148 of the Act to reopen the assessment for AY 2015-16.

The petitioner challenged this notice, asserting it was barred by limitation under the statutory scheme governing search-related assessments.

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

2. Whether the "search year" (assessment year relevant to the previous year in which search is conducted) should be included or excluded when calculating the ten-year limit for reopening assessments under the proviso to Section 149 read with Section 153A/153C.

Section 153A(1)(b) regarding the assessment of six assessment years "immediately preceding" the search year.

Explanation 1 to Section 153A, which defines the "relevant assessment year" for extended jurisdiction (ten years) as one falling beyond six years but "not later than ten assessment years from the end of the assessment year" relevant to the year of search.

The principle of statutory interpretation that distinct phraseologies used by the Legislature ("immediately preceding" vs. "from the end of") must be given different effects.

Precedents cited included Dinesh Jindal v. ACIT, PCIT v. Ojjus Medicare (P.) Ltd., A.R. Safiullah v. ACIT, and Jayantibhai Karamshibhai Maniya v. ITO.

The Court noted a deliberate linguistic distinction between the six-year and ten-year block computations. While the six-year period is identified as "immediately preceding" the search year (thereby excluding it), the ten-year period is reckoned "from the end of" the assessment year relevant to the search.

Consequently, the search assessment year itself serves as the first year in the ten-year count.

In this case, the search occurred in May 2024 (FY 2024-25, AY 2025-26). To compute the ten-year limit, AY 2025-26 is the first year, making AY 2016-17 the tenth and final year eligible for reopening.

The Revenue's contention that the search year should be excluded was rejected as it would render the specific phrase "from the end of the assessment year" redundant and conflict with the plain language of the statute.

Therefore, the notice for AY 2015-16 was issued beyond the permissible ten-year period and is barred by limitation. The Court quashed and set aside the impugned notice dated March 30, 2026.