The officer says a court's order in my land acquisition case lets him reopen years going back to the sixties, because s.150(1) says the notice may be issued at any time. Can he?
No, not for a year that was already beyond assessment before 1 April 1989. Section 150(1) was widened with effect from that date to cover a finding or direction in an order of a court in a proceeding under any other law. The Supreme Court held that the widening is not expressed to be retrospective and so operates only from 1 April 1989: it reaches assessments that had not become final by then, and it does not reach assessments that had. Sub-section (2), the Court said, insulates proceedings that have attained finality on the expiry of the prescribed period of limitation, and it refers to the whole of sub-section (1), so it applies to a reassessment proposed on a court's order under another law just as much as to one proposed on an appellate order under the Act. The appeal was allowed with costs, the Delhi High Court's judgment of 24 May 1996 was set aside, and the notices under ss.148 and 142 for assessment years 1968-69 to 1971-72 and 1981-82 were quashed.
Decided by the Supreme Court (Supreme Court of India — S.P. Bharucha CJI, N. Santosh Hegde and D.M. Dharmadhikari JJ. The judgment was delivered by Dharmadhikari J.) on 2002-04-11, reported as Civil Appeal No. 7742 of 1997, against the judgment of the High Court of Delhi dated 24 May 1996; cited as AIR 2002 SC 1715 and (2002) 254 ITR 772. It bears on section 150, section 150(1), section 150(2), section 150(3), section 149, section 148, section 142, section 283 (Act of 2025) of the Income Tax Act 1961, in Reassessment & Reopening, Assessment & Scrutiny and How Tax Law Is Read matters.
Section 150(1) is the sentence a reopening officer reaches for when the dates have gone against him, because it says the notice may be issued at any time. This decision is the reason that sentence is not the end of the argument, and it gives the reader a date to work from rather than an impression. The date is the date the assessment for that year became final under the limitation then in force, and if it fell before 1 April 1989 then the part of s.150(1) that reaches a court's order under another law simply does not apply to it. The facts show how much can turn on it: a single enhancement of compensation in 1991 produced notices for sixteen assessment years, five of which the Supreme Court struck out. The second half of the decision is the part practitioners under-use. The Delhi High Court had reasoned that because sub-section (2) was not amended in 1989 it could not restrain the widened sub-section (1), and the Supreme Court rejected that: sub-section (2) refers to the whole of sub-section (1). So an officer cannot get past s.150(2) by pointing out that his source is a civil court rather than an appellate authority under the Act. Both halves are still worth running, because the substituted section keeps the structure the decision was built on.
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The appellant's land was acquired under the Land Acquisition Act and an award was made on 2 December 1967. Compensation of about Rs 1,18,810 was granted in 1981. On a reference, a further award of 31 July 1991 gave Rs 1,10,20,624, made up of enhanced compensation of Rs 41,96,496 and interest of Rs 76,84,829. The interest was paid between October 1992 and May 1993 and tax of Rs 8,60,701 was deducted at source from it. On 31 March 1994 the appellant was served with notices under s.148, and with notices under s.142, covering sixteen assessment years — 1968-69 to 1971-72 and 1981-82 to 1992-93, the Department's position being that the interest had accrued from year to year and was assessable in each year. The appellant challenged the notices in the Delhi High Court, which on 24 May 1996 upheld them: the High Court accepted that s.150(1) as amended from 1 April 1989 permitted reassessment on the basis of a court's award in the land acquisition proceedings notwithstanding the bar in s.149, because no corresponding amendment had been made to s.150(2). The appellant appealed.
The appeal was allowed with costs and the High Court's judgment was set aside. The Court held that the amendment to sub-section (1), which extended it to a finding or direction in an order of a court in a proceeding under any other law, “is not expressed to be retrospective and, therefore, has to be held as only prospective”, so it “has to be applied prospectively on or after 1.4.1989 when the said amendment was introduced”. Its conclusion was that sub-section (1) as amended “does not enable the Authorities to reopen assessments, which have become final due to bar of limitation prior to 1.4.1989 and this position is applicable equally to reassessments proposed on the basis of Orders passed under the Act or under any other law”. On sub-section (2) the Court held that it “intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation”, that it “aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation”, and that “in putting such embargo” it “refers to whole of sub-section (1)” — which disposed of the High Court's reasoning that the absence of a matching amendment to sub-section (2) left the widened sub-section (1) unchecked. The order is in these words: “As a result of the discussion aforesaid, the appeal is allowed. The Judgment of the High Court of Delhi dated 24.5.1996 is hereby set aside. As prayed in the petition, the impugned notices issued by the respondent of the Income Tax Department under Sections 148 and 142 of the Act against the appellant for the assessment years 1968-69 to 1971-72 and 1981-82 are hereby quashed. The appeal stands allowed with costs.”
Two settled principles carried the case. The first is about limitation: “Fiscal statute more particularly on a provision such as the present one regulating period of limitation must receive strict construction. Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events.” The second is about liability: “Taxing provision imposing a liability is governed by normal presumption that it is not retrospective and settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication.” Applying them, the Court reasoned that a provision which lifts a limitation bar operates on assessments that are still open when it comes into force, and that to let it operate on assessments already closed would be to give it retrospective effect that Parliament had neither expressed nor implied. That is why the operative date is 1 April 1989 and why the test is whether the year had already attained finality before it. The Court then closed the escape route the High Court had left open. Sub-section (2) is not limited to the part of sub-section (1) that existed before 1989; it refers to the whole of it, so the insulation it gives extends to reassessments proposed on the strength of a court's order under another law.
Fiscal statute more particularly on a provision such as the present one regulating period of limitation must receive strict construction. Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events.
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Handle my notice → Ask a CA on WhatsAppNo, not for a year that was already beyond assessment before 1 April 1989. Section 150(1) was widened with effect from that date to cover a finding or direction in an order of a court in a proceeding under any other law. The Supreme Court held that the widening is not expressed to be retrospective and so operates only from 1 April 1989: it reaches assessments that had not become final by then, and it does not reach assessments that had. Sub-section (2), the Court said, insulates proceedings that have attained finality on the expiry of the prescribed period of limitation, and it refers to the whole of sub-section (1), so it applies to a reassessment proposed on a court's order under another law just as much as to one proposed on an appellate order under the Act. The appeal was allowed with costs, the Delhi High Court's judgment of 24 May 1996 was set aside, and the notices under ss.148 and 142 for assessment years 1968-69 to 1971-72 and 1981-82 were quashed. This was decided by the Supreme Court (Supreme Court of India — S.P. Bharucha CJI, N. Santosh Hegde and D.M. Dharmadhikari JJ. The judgment was delivered by Dharmadhikari J.) and bears on section 150, section 150(1), section 150(2), section 150(3), section 149, section 148, section 142, section 283 (Act of 2025) of the Income Tax Act 1961. It is reported as Civil Appeal No. 7742 of 1997, against the judgment of the High Court of Delhi dated 24 May 1996; cited as AIR 2002 SC 1715 and (2002) 254 ITR 772. Section 150(1) is the sentence a reopening officer reaches for when the dates have gone against him, because it says the notice may be issued at any time. This decision is the reason that sentence is not the end of the argument, and it gives the reader a date to work from rather than an impression. The date is the date the assessment for that year became final under the limitation then in force, and if it fell before 1 April 1989 then the part of s.150(1) that reaches a court's order under another law simply does not apply to it. The facts show how much can turn on it: a single enhancement of compensation in 1991 produced notices for sixteen assessment years, five of which the Supreme Court struck out. The second half of the decision is the part practitioners under-use. The Delhi High Court had reasoned that because sub-section (2) was not amended in 1989 it could not restrain the widened sub-section (1), and the Supreme Court rejected that: sub-section (2) refers to the whole of sub-section (1). So an officer cannot get past s.150(2) by pointing out that his source is a civil court rather than an appellate authority under the Act. Both halves are still worth running, because the substituted section keeps the structure the decision was built on. If it applies to you, the first step is this: Fix the date on which the assessment for the year now being reopened became final under the limitation then in force. That date, not today's date, decides the point.
The appellant's land was acquired under the Land Acquisition Act and an award was made on 2 December 1967. Compensation of about Rs 1,18,810 was granted in 1981. On a reference, a further award of 31 July 1991 gave Rs 1,10,20,624, made up of enhanced compensation of Rs 41,96,496 and interest of Rs 76,84,829. The interest was paid between October 1992 and May 1993 and tax of Rs 8,60,701 was deducted at source from it. On 31 March 1994 the appellant was served with notices under s.148, and with notices under s.142, covering sixteen assessment years — 1968-69 to 1971-72 and 1981-82 to 1992-93, the Department's position being that the interest had accrued from year to year and was assessable in each year. The appellant challenged the notices in the Delhi High Court, which on 24 May 1996 upheld them: the High Court accepted that s.150(1) as amended from 1 April 1989 permitted reassessment on the basis of a court's award in the land acquisition proceedings notwithstanding the bar in s.149, because no corresponding amendment had been made to s.150(2). The appellant appealed. The matter was decided on 2002-04-11 by the Supreme Court (Supreme Court of India — S.P. Bharucha CJI, N. Santosh Hegde and D.M. Dharmadhikari JJ. The judgment was delivered by Dharmadhikari J.). On those facts the Supreme Court held as follows. The appeal was allowed with costs and the High Court's judgment was set aside. The Court held that the amendment to sub-section (1), which extended it to a finding or direction in an order of a court in a proceeding under any other law, “is not expressed to be retrospective and, therefore, has to be held as only prospective”, so it “has to be applied prospectively on or after 1.4.1989 when the said amendment was introduced”. Its conclusion was that sub-section (1) as amended “does not enable the Authorities to reopen assessments, which have become final due to bar of limitation prior to 1.4.1989 and this position is applicable equally to reassessments proposed on the basis of Orders passed under the Act or under any other law”. On sub-section (2) the Court held that it “intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation”, that it “aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation”, and that “in putting such embargo” it “refers to whole of sub-section (1)” — which disposed of the High Court's reasoning that the absence of a matching amendment to sub-section (2) left the widened sub-section (1) unchecked. The order is in these words: “As a result of the discussion aforesaid, the appeal is allowed. The Judgment of the High Court of Delhi dated 24.5.1996 is hereby set aside. As prayed in the petition, the impugned notices issued by the respondent of the Income Tax Department under Sections 148 and 142 of the Act against the appellant for the assessment years 1968-69 to 1971-72 and 1981-82 are hereby quashed. The appeal stands allowed with costs.”
Two settled principles carried the case. The first is about limitation: “Fiscal statute more particularly on a provision such as the present one regulating period of limitation must receive strict construction. Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events.” The second is about liability: “Taxing provision imposing a liability is governed by normal presumption that it is not retrospective and settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication.” Applying them, the Court reasoned that a provision which lifts a limitation bar operates on assessments that are still open when it comes into force, and that to let it operate on assessments already closed would be to give it retrospective effect that Parliament had neither expressed nor implied. That is why the operative date is 1 April 1989 and why the test is whether the year had already attained finality before it. The Court then closed the escape route the High Court had left open. Sub-section (2) is not limited to the part of sub-section (1) that existed before 1989; it refers to the whole of it, so the insulation it gives extends to reassessments proposed on the strength of a court's order under another law. In the words reproduced by the source cited on this page: "Fiscal statute more particularly on a provision such as the present one regulating period of limitation must receive strict construction. Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events."
It was decided by the Supreme Court on 2002-04-11 and is reported as Civil Appeal No. 7742 of 1997, against the judgment of the High Court of Delhi dated 24 May 1996; cited as AIR 2002 SC 1715 and (2002) 254 ITR 772. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 150, section 150(1), section 150(2), section 150(3), section 149, section 148, section 142, section 283 (Act of 2025), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed with costs and the High Court's judgment was set aside. The Court held that the amendment to sub-section (1), which extended it to a finding or direction in an order of a court in a proceeding under any other law, “is not expressed to be retrospective and, therefore, has to be held as only prospective”, so it “has to be applied prospectively on or after 1.4.1989 when the said amendment was introduced”. Its conclusion was that sub-section (1) as amended “does not enable the Authorities to reopen assessments, which have become final due to bar of limitation prior to 1.4.1989 and this position is applicable equally to reassessments proposed on the basis of Orders passed under the Act or under any other law”. On sub-section (2) the Court held that it “intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation”, that it “aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation”, and that “in putting such embargo” it “refers to whole of sub-section (1)” — which disposed of the High Court's reasoning that the absence of a matching amendment to sub-section (2) left the widened sub-section (1) unchecked. The order is in these words: “As a result of the discussion aforesaid, the appeal is allowed. The Judgment of the High Court of Delhi dated 24.5.1996 is hereby set aside. As prayed in the petition, the impugned notices issued by the respondent of the Income Tax Department under Sections 148 and 142 of the Act against the appellant for the assessment years 1968-69 to 1971-72 and 1981-82 are hereby quashed. The appeal stands allowed with costs.” It arises in Reassessment & Reopening, Assessment & Scrutiny and How Tax Law Is Read matters, on section 150, section 150(1), section 150(2), section 150(3), section 149, section 148, section 142, section 283 (Act of 2025) of the Income Tax Act 1961, and was decided by Supreme Court of India — S.P. Bharucha CJI, N. Santosh Hegde and D.M. Dharmadhikari JJ. The judgment was delivered by Dharmadhikari J.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If that date fell before 1 April 1989 and the officer is relying on an order of a court in a proceeding under some other law, this decision answers the notice outright: the widening of s.150(1) does not reach back over it. Where the year became final after 1 April 1989, the answer comes from s.150(2) rather than from the prospectivity point, so move to the date on which the order that was the subject matter of the appeal, reference or revision was made and ask whether the year could still have been assessed then. Ask the officer, in writing, to identify the order he says contains the finding or direction and to give its date. Both branches of the answer are worked from a date in that order, and the notice will often not say what it is. Where the reopening follows an enhancement of compensation, get the dates the interest was paid as well as the years to which it is said to relate; the notices in this case covered sixteen years on a single payment. For a notice issued on or after 1 February 2026, add the new s.150(3) question: the notice has to go out within three months from the end of the quarter in which the certified copy of the order reached the jurisdictional Principal Commissioner or Commissioner. Do not concede that s.150 dispenses with anything except the time limit in s.149. Sanction, the s.148A procedure and service all remain to be satisfied.
Still good law. Nothing doubting it was found, and the statutory foundation it rests on has survived the rewriting of s.150. Section 150 was substituted by section 11 of the Finance Act, 2026 (Act No. 4 of 2026), deemed made with effect from 1 February 2026. Sub-section (2) is re-enacted, and its clause (a) keeps the measuring moment this decision worked from: whether the year could have been assessed “at the time when … the order which was the subject matter of the appeal, reference or revision, as the case may be, was made”. A year that was already dead on that date still stays dead, and the reasoning that sub-section (2) refers to the whole of sub-section (1) applies with more force now that sub-section (1) is split into a clause for an authority and a clause for a court. Two things in the substituted section are outside anything this judgment addressed. Sub-section (2) gains a clause (b) with a second measuring moment, for proceedings that were the subject matter before a court and have not culminated in an order: there the date is the date those proceedings were initiated. And sub-section (3) is new in kind — it gives the department three months from the end of the quarter in which the certified copy of the order reaches the jurisdictional Principal Commissioner or Commissioner to issue the notice. Before 1 February 2026 s.150 had no outer date of its own at all. One point of method deserves care. The Court held the 1989 amendment prospective because it “is not expressed to be retrospective”. The 2026 substitution is expressed to be retrospective, being deemed to have taken effect from 1 February 2026, so the presumption applied here is displaced for those words. That displacement is narrow: it reaches back weeks, not decades, and it cannot revive a year that limitation had closed. On the boundary: s.150 belongs to the Income-tax Act, 1961, repealed on 1 April 2026 by s.536(1) of the Income-tax Act, 2025 and continued by s.536(2) for tax years beginning before that date. For later years the provision is s.283 of the 2025 Act. It is not a mirror: sub-section (1) there is not split into an authority limb and a court limb, and sub-section (2) carries a third measuring moment of its own, keyed to a reference to the Approving Panel. What it keeps is the moment this decision worked from — the date the order that was the subject matter before the authority, Tribunal or court was made. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment was read on three separately published reproductions, which agree on the coram, on the sentences quoted here and on the order. Two print the presiding judge as “CJI” without naming him; the third, a reproduction published outside India, prints him as S.P. Bharucha CJI. All three record the judgment as delivered by Dharmadhikari J. The appeal number is given as Civil Appeal No. 7742 of 1997. The reports at AIR 2002 SC 1715 and (2002) 254 ITR 772, and the Delhi decision set aside at (1996) 221 ITR 202, are citation strings printed alongside the judgment; no editorial summary was used. The figures in the facts are the judgment's own: the award of 2 December 1967, compensation of about Rs 1,18,810 granted in 1981, the reference award of 31 July 1991 for Rs 1,10,20,624 comprising Rs 41,96,496 of enhanced compensation and Rs 76,84,829 of interest, payment of the interest between October 1992 and May 1993, tax of Rs 8,60,701 deducted at source, and notices served on 31 March 1994 for sixteen years from 1968-69 to 1992-93. The quotation carried as the key passage is the Court's statement on strict construction of a limitation provision, rather than its better-known conclusion on 1 April 1989. That is deliberate. The conclusion is set out in the holding above and is also where the library's statutory treatment of s.150(2) starts from; the reasoning sentence is what a reader has to deploy when the officer's answer is that s.150(1) says “at any time”. One matter was checked and is recorded as absent rather than left to inference: the judgment does not cite Rama Bai, and it does not decide the year-by-year accrual question. It records that position as the Department's, in the sentence that interest accrued from year to year was assessable in each year, and then decides the appeal on limitation alone. The substituted text of s.150 was read on the departmental page for that section stamped Year 2026, which prints three sub-sections and footnotes the substitution to Act No. 4 of 2026 with effect from 1 February 2026. The pre-substitution words, which are the words this appeal was decided on, are set out in the judgment itself and are reproduced in the holding above. Readers who want the section itself, both texts side by side, the new three-month rule and the separate twelve-month clock for completing the assessment, should go to this library's statutory page on s.150(2) rather than to this entry, which is about the decision and not about the provision. The Court quashed the notices only for assessment years 1968-69 to 1971-72 and 1981-82, and it did so “as prayed in the petition”. The remaining eleven of the sixteen years covered by the notices were not dealt with, so the decision does not say what becomes of a year that had not attained finality before 1 April 1989 — for those years the answer has to come from s.150(2) and s.149, not from this judgment. The Court did not decide whether the award of a reference court in land acquisition proceedings contains a “finding or direction” about the assessee's income at all, because it did not need to. And it says nothing about the spreading of interest on enhanced compensation over the years of accrual, which it recorded as the Department's position rather than ruling on. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed with costs and the High Court's judgment was set aside. The Court held that the amendment to sub-section (1), which extended it to a finding or direction in an order of a court in a proceeding under any other law, “is not expressed to be retrospective and, therefore, has to be held as only prospective”, so it “has to be applied prospectively on or after 1.4.1989 when the said amendment was introduced”. Its conclusion was that sub-section (1) as amended “does not enable the Authorities to reopen assessments, which have become final due to bar of limitation prior to 1.4.1989 and this position is applicable equally to reassessments proposed on the basis of Orders passed under the Act or under any other law”. On sub-section (2) the Court held that it “intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation”, that it “aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation”, and that “in putting such embargo” it “refers to whole of sub-section (1)” — which disposed of the High Court's reasoning that the absence of a matching amendment to sub-section (2) left the widened sub-section (1) unchecked. The order is in these words: “As a result of the discussion aforesaid, the appeal is allowed. The Judgment of the High Court of Delhi dated 24.5.1996 is hereby set aside. As prayed in the petition, the impugned notices issued by the respondent of the Income Tax Department under Sections 148 and 142 of the Act against the appellant for the assessment years 1968-69 to 1971-72 and 1981-82 are hereby quashed. The appeal stands allowed with costs.”
TaxSphere, “K.M. Sharma v ITO — the 1989 widening of s.150(1) does not revive a year already barred”, https://taxnotice.vittsphere.com/caselaw/case/k-m-sharma-v-ito-s-150-1-cannot-revive-a-year-already-barred/ (validity last checked 2026-09-23)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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