Reassessment Notice For AY 2015-16 Issued In 2026 Time-Barred: Delhi High Court

The Delhi High Court has quashed an Income Tax reassessment notice issued for Assessment Year (AY) 2015-16, holding that the notice issued in 2026 was clearly beyond the permissible limitation period under Section 149 of the Income Tax Act, 1961.

The Division Bench of Justices Dinesh Mehta and Aditi Choudhary allowed a writ petition challenging the notice dated March 31, 2026, issued under Section 148 of the Act seeking to reassess Petitioner's income for AY 2015-16.

Petitioner contended that the reassessment notice had been issued beyond the limitation prescribed under Section 149 of the Act. The reassessment proceedings arose from a search and seizure action conducted under Section 132 on March 2, 2022, at the premises of the Gaursons Group and its associates.

It was argued that since the impugned notice was issued on March 31, 2026, the relevant assessment year for calculating the outer ten-year limitation period would be AY 2026-27.

The Court accepted Petitioner's contention and observed that the notice dated March 31, 2026 falls in the financial year 2025-26, corresponding to AY 2026-27.

It noted that the ten-year period would therefore extend only up to AY 2017-18. Consequently, the notice seeking reassessment for AY 2015-16 was beyond the permissible limitation period, notwithstanding that the escaped income exceeded ₹50 lakh.

The Court further set out the assessment years falling within the ten-year period, with AY 2026-27 being the first year and AY 2017-18 being the tenth year.

"The impugned notice for AY 2015-16 is, thus, time-barred on a plain reading of Section 149 of the Act of 1961," it thus held and quashed the reassessment notice.

For Petitioner: Senior Advocate Sachit Jolly with Advocate Bina Gupta, Anushka Rawal, Ishkia, Abhyudaya Shankar Bajpai, 

For Respondent: Advocate Gaurav Gupta, SSC with Shivendra Singh, JSC, Yojit Pareek, JSC & Shamindra Kumar Dev