Calcutta High Court quashes reassessment for AY 2015-16 based on amended Section 149 limitation

The Calcutta High Court, in Aarti Highrise Private Limited Vs JCIT, has invalidated reassessment proceedings initiated for Assessment Year (AY) 2015-16, applying the amended limitation framework in Section 149 of the Income Tax Act 1961 which came into force from 01.09.2024. The Court followed the binding interpretation laid down by the Hon’ble Supreme Court in Income Tax Officer & Anr. vs Sri Sai Kumar Mateti, which in turn had considered and applied the earlier Constitution Bench decision in Union of India & Ors. vs Rajeev Bansal.

As this is a full text judicial decision, the key aspects and reasoning are summarised below rather than reproduced in full.

Background of the dispute

Challenge to reassessment notices

The writ petition was filed by Aarti Highrise Private Limited questioning the legality of the following actions of the income-tax authorities for AY 2015-16:

  • Show-cause notice dated 25.11.2025 issued under Section 148A(b)
  • Order dated **29.01.2026underSection 148A(d)`
  • Notice dated **29.01.2026underSection 148`

The assessee contended that, in light of the amendment to Section 149 with effect from 01.09.2024, these notices were issued beyond the legally permissible limitation period and thus suffered from lack of jurisdiction.

Statutory context: Amendment to Section 149

The controversy centered on the impact of the post–01.09.2024 regime of reassessment limitation, particularly:

  • Section 149(1)(a) — prescribing a 3-year limitation from the end of the relevant assessment year for issuing a Section 148 notice, subject to exceptions
  • Section 149(1)(b) — permitting extended limitation up to 10 years where income escaping assessment amounts to or is likely to amount to Rs. 50,00,000 or more

The assessee argued that after the amendment, all notices issued on or after 01.09.2024 must necessarily conform to the amended provisions, regardless of when the underlying information (such as survey material) was gathered.

Assessee’s primary submissions

1. Notices barred by limitation under amended Section 149

The assessee submitted that:

  • For AY 2015-16, the relevant previous year ended on 31.03.2015
  • Under the amended Section 149(1)(a), a notice under Section 148 cannot be issued if three years from the end of the relevant assessment year have already passed, unless the case falls under Section 149(1)(b)
  • Accordingly, the 3-year period for AY 2015-16 expired on 31.03.2019

Since the impugned notice under Section 148 was dated 29.01.2026, the assessee contended that it was ex facie beyond the 3-year limitation under Section 149(1)(a).

2. Extended 10-year period not applicable

The assessee further argued that:

  • The 10-year extended limitation under Section 149(1)(b) is attracted only when the income that has escaped assessment amounts to or is likely to amount to Rs. 50,00,000 or more
  • In the present case, there was neither any clear allegation in the show-cause notice nor any material placed on record to show that the alleged escapement met or exceeded the Rs. 50,00,000 threshold

Consequently, even under the amended law, the Revenue could not take shelter under Section 149(1)(b) to justify a notice issued in January 2026 for AY 2015-16.

3.