Section 149

Section 149 — the law in short

What the courts have decided on section 149, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Union of India v Rajeev Bansal Supreme CourtCuts both ways
  Your notice was issued in the 1 April to 30 June 2021 window. Was it saved by TOLA, or is it dead?
  Saved, but only within limits. TOLA extends the time limit for issuing the reassessment notice and for the sanction under s.151. It does not extend anything else, and every other defence survives — including the surviving-period computation for your own assessment year.
• Union of India v Ashish Agarwal Supreme CourtHelps department
  What happened to the thousands of s.148 notices issued under the old rules after the law changed in 2021?
  Reported as treating those notices as s.148A(b) show-cause notices instead of quashing them, with directions on how they were to proceed.
• Phool Chand Bajrang Lal v ITO Supreme CourtHelps departmentValidity unconfirmed
  I produced my books and a confirmation for the loan at the original assessment. The officer now says he has learnt the lender was a name lender. Can he reopen on that?
  Yes. The Supreme Court dismissed the assessee's appeal and upheld the reopening. Where specific, reliable and relevant information comes into the officer's possession after the assessment, exposing the falsity of what the assessee said, that is not a change of opinion or a fresh inference from the same material - it is acting on fresh information. Producing books and a confirmation letter for a transaction later shown to be bogus is not a true and full disclosure. The officer's failure to investigate the doubt during the original assessment does not take away his jurisdiction. Burlop Dealers was confined to its own facts.
• R.K. Upadhyaya v Shanabhai P. Patel Supreme CourtHelps departmentValidity unconfirmed
  My reassessment notice was posted on the last day of the limitation period but reached me three days later. Is it time barred?
  No. The Supreme Court allowed the Revenue's appeal and vacated the Gujarat High Court's order. Under the 1961 Act a clear distinction is made between issue of a notice and service of it. Section 149 says no notice under section 148 shall be issued after the limitation has lapsed, so once a notice is issued in time jurisdiction vests in the officer. Section 148(1) requires service before the order of assessment is made: the mandate is that reassessment shall not be made until there has been service. Service is therefore a condition precedent to the order, not to jurisdiction. Here the notice went by registered post on 31 March 1970, the last day, and that sufficed.
• Parashuram Pottery Works Co Ltd v ITO Supreme CourtHelps taxpayer
  The Income-tax Officer allowed me too much depreciation because he worked it out from his own records and forgot the initial depreciation. Years later he wants to reopen. Is that my failure to disclose?
  No. The Supreme Court quashed notices under section 148 issued more than four years after the assessment years. The mistake was the Income-tax Officer's own: he had computed depreciation from departmental records and overlooked the ceiling that the aggregate of all depreciation cannot exceed original cost. The assessee's duty is to disclose the primary facts fully and truly; it does not extend to telling the officer what inference to draw or instructing him on the law. Nothing in the returns was shown to be incorrect. Without the omission or failure limb, the officer had no jurisdiction beyond four years.
• ITO v Lakhmani Mewal Das Supreme CourtHelps taxpayer
  How strong does the officer's material have to be before he can reopen?
  Strong enough to have a live link with the belief. Material that is vague, indefinite, distant or far-fetched will not do. The statute says reason to believe, not reason to suspect.
• Asha Dubey v Union of India High CourtHelps taxpayer
  They issued a 148 notice in my late husband's name. Can they just issue a fresh one now?
  Not if the s.149 period has run out. Allahabad held that a notice on a dead person is void ab initio and that an order quashing such a notice is not a 'finding or direction' under s.150(1), so it cannot be used to reopen limitation.
• Sapphire Foods India Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  The officer has reopened my scrutiny assessment because the audit party disagreed with what he allowed. Is that a fresh look or a change of opinion?
  On this decision, a change of opinion. Where the Assessing Officer had all the relevant material during the original scrutiny assessment, a reassessment driven by an audit objection on that same material is an impermissible review, and reopening on the same material is not permitted. The Court also held the notice barred by limitation because the extended period was unavailable in the absence of a failure to disclose material facts.
• Ankit Agarwal v PCCIT High CourtHelps taxpayerValidity unconfirmed
  My 148A notice says I never filed a return, but I did. Is that enough to get it quashed?
  Yes, on these facts. The Patna High Court held that where the Insight Portal flag is contradicted by the Department's own records, the 'information which suggests' escapement is missing and the s.148A(b) notice, the s.148A(d) order, the s.148 notice and the demand all fall.
• Hexaware Technologies Ltd v ACIT High CourtHelps taxpayerPartly overruled — read this first
  Your s.148 notice came from your own local officer, not from the faceless unit. Does that matter?
  In Bombay, yes. After the CBDT scheme notified under s.151A on 29 March 2022, only a Faceless Assessing Officer acting through automated allocation can issue a reassessment notice. There is no concurrent jurisdiction, and a notice from the jurisdictional officer was quashed.
• PCIT v Ojjus Medicare P Ltd High CourtCuts both ways
  How do I count the six and the ten assessment years for a s.153C notice, and does the Rs 50 lakh figure have to be met year by year?
  Count them from different points, and no. For a person who was not searched, the first proviso to section 153C moves the starting point: the date on which the seized books, documents or assets are handed to his own Assessing Officer stands in place of the date of the search. From that point the six assessment years are the six that immediately precede the assessment year relevant to that previous year - the year of the handing over is excluded and treated as the zero year. The further block of 'relevant assessment years' under Explanation 1 to section 153A is not counted the same way: it runs backwards from the END of that assessment year, that is from the 31st of March, and the tenth year is the terminal point. On the money threshold, the Rs 50 lakh in clause (a) of the fourth proviso is satisfied if the escaped income meets the benchmark cumulatively or in the aggregate; it does not have to be reached in each year separately.
• Sevensea Vincom P Ltd v PCIT High CourtHelps taxpayerValidity unconfirmed
  They reopened AY 2016-17 in 2022 for under Rs 50 lakh. Is the notice time-barred?
  Yes. The Jharkhand High Court held the three-year period for AY 2016-17 ended on 31 March 2020, and because the Department itself alleged escapement of only Rs. 39,21,450 the extended ten-year window in s.149(1)(b) was unavailable. The whole proceeding was without jurisdiction.
• IDFC Ltd v Dy CIT High CourtHelps taxpayer
  The officer is reopening beyond three years and counting a disallowance of expenditure towards the fifty lakh figure in section 149(1)(b). Is a disallowance income 'represented in the form of an asset'?
  No, not on the text of section 149(1)(b) as it stood from 1 April 2021. The Madras High Court quashed reassessment notices for assessment years 2014-15 and 2017-18 in which the officer proposed only disallowances - unrealised foreign exchange loss, bad debts written off, loss on sale of non-performing loans, a section 43B disallowance and a MAT adjustment. The Court found no mention of any asset anywhere in the impugned proceedings, and held that the law then required material indicating the existence of an asset from which escapement could be inferred. It added that the material relied on was already on record and had been through scrutiny.
• Suman Jeet Agarwal v ITO High CourtCuts both ways
  The department says my section 148 notice was issued on 31 March because the ITBA screen shows it was generated that day, but the e-mail only reached me in April. Which date counts, and can I take that to a writ court?
  The date it went out. The Delhi High Court, deciding a batch of more than 170 writ petitions, held that 'issue' means the officer must, after drawing up and signing the notice, do an overt act to ensure its due despatch, and that it is only upon due despatch that a notice can be said to have been issued. Mere generation of the notice on the ITBA screen is therefore not issue, in fact or in law. The Court noted from the department's own compliance affidavit that generation and digital signing are the officer's acts while the e-mail carrying the notice is drafted and triggered by the ITBA software.
• Divya Capital One Private Limited v ACIT High CourtHelps taxpayer
  The section 148A(b) notice just lists my own turnover from Form 10DB, GST and TDS data and calls it escaped income, and the officer passed the 148A(d) order without my detailed reply. Can I get it set aside?
  Yes. The Delhi High Court quashed the section 148A(d) order and the section 148 notice and remanded the matter for a fresh reasoned order within eight weeks. Classifying a fact already on record as 'information' may let the officer issue a notice under section 148A(b), but it does not let him issue a reassessment notice under section 148. The notice and order were cryptic, the underlying material was never shared, no reasonable time was given, and the detailed reply on record was not considered, which breaches the mandate of section 148A(c). The Court directed that its order be sent to the CBDT.
• Daujee Abhushan Bhandar P Ltd v UOI High CourtHelps taxpayer
  The s.148 notice was digitally signed on 31 March but the e-mail only went on 6 April. Was it issued in time?
  No. Signing a notice and issuing it are different acts. A digitally signed notice is an electronic record, and by s.13(1) of the Information Technology Act, 2000 its despatch occurs when it enters a computer resource outside the control of the originator. The notice here was issued on 6 April 2021, after the period in s.149 had run, and was quashed.
• Mon Mohan Kohli v ACIT High CourtHelps taxpayerValidity unconfirmed
  I got a section 148 notice after 1 April 2021 under the old reassessment provisions. Could the department still use them because of the COVID relaxation notifications?
  No, on this decision. The Delhi High Court held that the substitution of sections 147 to 151 by the Finance Act 2021 repealed the old provisions and replaced them, and that the Explanations in the notifications of 31 March 2021 and 27 April 2021, purporting to keep the old procedure alive until 30 June 2021, could not do so. Section 3(1) of the relaxation Act allows the Central Government to extend time limits and no more; a delegated legislation cannot vary the date on which Parliament's provisions take effect. Section 6 of the General Clauses Act does not save the old notices, because the new Act manifests an intention to destroy the old procedure.
• Brahm Datt v ACIT High CourtHelps taxpayer
  The Department wants to reopen a 1998-99 assessment in 2015 using the sixteen-year limit for foreign assets brought in from July 2012. Limitation for that year ran out in 2005. Can they?
  No. The Delhi High Court quashed the section 148 notice and all consequent proceedings. Limitation for assessment year 1998-99 expired on 31 March 2005 under section 149 as it then stood, six years from the end of the assessment year. The sixteen-year period in section 149(1)(c), inserted by the Finance Act 2012 with effect from 1 July 2012, could not revive an assessment that had already become final more than eight years earlier. Applying K.M. Sharma and S.S. Gadgil, an amendment extending limitation is not to be read as reviving proceedings already barred, absent express words or necessary implication.
• Kanubhai M Patel HUF v Hiren Bhatt High CourtHelps taxpayer
  My s.148 notice is dated 31 March but the post office booked it on 7 April. Which date does s.149 test?
  The date it went to the post office. To issue means to send out, to place in the hands of the proper officer for service; merely signing the notice on 31 March cannot be equated with issuing it. The date of issue was therefore 7 April 2010, beyond the six years available for assessment year 2003-04, and the notices went.
• Haryana Acrylic Manufacturing Co v CIT High CourtHelps taxpayerValidity unconfirmed
  The reopening notice came after four years and the recorded reasons say nothing about my failing to disclose material facts. Is that fatal, and does it matter that the reasons reached me a year later?
  Both points went in the assessee's favour. The Delhi High Court quashed the section 148 notice, the order rejecting objections and all proceedings under them. Where the proviso to section 147 applies, the reasons must themselves allege failure to disclose fully and truly all material facts; the reasons supplied here contained no such allegation, and a differently worded form produced later with the counter-affidavit could not be substituted for them. The Court also held that reasons must be furnished within the six year outer limit in section 149, since the notice and the communication of reasons go hand in hand. On the merits the assessee had disclosed everything the officer asked for.
• Siemens Financial Services Pvt Ltd v DCIT High CourtHelps taxpayerOverruled
  Beyond three years, who has to approve the reopening — and what if the wrong officer signed?
  Beyond three years the sanction must come from the authority in s.151(ii). Approval by the Principal Commissioner under s.151(i) is no approval at all, and the s.148A(d) order and s.148 notice built on it were quashed.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.