Section 150(2)

Section 150(2) — the law in short

What the courts have decided on section 150(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• K.M. Sharma v ITO — the 1989 widening of s.150(1) does not revive a year already barred Supreme CourtHelps taxpayer
  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.
• ITO v Murlidhar Bhagwan Das — a finding is only what the year under appeal actually required Supreme CourtHelps taxpayer
  The Commissioner (Appeals) allowed my appeal for one year and said in passing that the amount really belongs to an earlier year. The officer has now reopened that earlier year and calls the remark a finding. Is it one?
  Probably not. A Constitution Bench of five judges construed the second proviso to s.34(3) of the 1922 Act — the ancestor of s.150 — and held by three to two that it lifts the time limit only for the year that was actually before the appellate, revisional or reference authority. The majority adopted the Allahabad High Court's definition of “finding” in Pt. Hazari Lal and added that a finding can only be what was necessary for the disposal of an appeal in respect of the assessment of a particular year. A “direction” means one the authority is empowered to give under the sections named in the proviso, and s.31 gave the Appellate Assistant Commissioner no power to order an assessment for a year that was not before him. The words “any person” in the proviso were confined to a person intimately connected with the assessment of the year under appeal. The Revenue's appeal was dismissed with costs. Raghubar Dayal and Mudholkar JJ dissented.
• Statutory position — s.150(2): a finding or direction cannot revive a year that was already time-barred when the order under appeal was passed, and from 1 February 2026 the notice itself has a deadline CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The officer has reopened a very old year and says he is only giving effect to a finding in an appellate order, so limitation does not apply. Is that right, and what stops him?
  Section 150(1) lifts the time limit in section 149: where an assessment, reassessment or recomputation is in consequence of or to give effect to a finding or direction in an order passed on appeal, reference or revision, or by a court, the section 148 notice may be issued at any time. Section 150(2) is the limit on that power and it is the provision that decides cases — sub-section (1) does not apply where the year in question could not have been assessed, by reason of any other time limit, at the moment the order that was the subject-matter of the appeal, reference or revision was made, so a year already dead on that date stays dead. The Supreme Court so held in K.M. Sharma, quashing notices for assessment years 1968-69 to 1971-72 and 1981-82, and the Constitution Bench in Murlidhar Bhagwan Das had already confined “finding” and “direction” to what was necessary for the year under appeal, so a remark about another year does not open it. Section 150 was substituted with retrospective effect from 1 February 2026: sub-section (1) is re-lettered and widened to a court in a proceeding under this Act, sub-section (2) gains a second measuring date, and a new sub-section (3) gives the department only three months from the end of the quarter in which the certified copy of the order reaches the jurisdictional Principal Commissioner or Commissioner. For a tax year beginning on or after 1 April 2026 the provision is section 283 of the Income-tax Act, 2025.

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.