Calcutta High Court on Reassessment Limitation for AY 2015-16 After Section 149 Amendment

Background of the Dispute

The matter in Shivam Dealcom Private Limited Vs JCIT came before the Calcutta High Court as a challenge to reassessment proceedings initiated for Assessment Year (AY) 2015-16 under the framework of the Income Tax Act 1961.

The assessee questioned the legality of the following actions by the revenue authorities:

  • A show-cause notice dated 25 November 2025 issued under Section 148A(b)
  • An order dated 29 January 2026 passed under Section 148A(d)
  • A notice dated 29 January 2026 issued under Section 148

The core issue revolved around whether these proceedings were barred by limitation in light of the amended Section 149, which came into force with effect from 01.09.2024.

Relief Sought by the Assessee

The assessee requested the Court to:

  1. Declare the show-cause notice under Section 148A(b) dated 25.11.2025 as illegal and without jurisdiction.
  2. Set aside the consequential order under Section 148A(d) dated 29.01.2026.
  3. Quash the notice under Section 148 dated 29.01.2026 for AY 2015-16 as being time-barred.

Assessee’s Primary Contentions

Challenge to the Section 148A(b) Notice

The assessee argued that the show-cause notice dated 25.11.2025 under Section 148A(b) was fundamentally flawed because:

  • The legal regime governing reassessment had undergone a material change with effect from 01.09.2024, particularly via amendment to Section 149.
  • Any reassessment proceedings initiated after that date had to strictly adhere to the amended provisions, not to the pre-amended framework.
  • Consequently, the issuance of notice and subsequent actions ignoring the new limitation scheme under Section 149 were unlawful.

Limitation under Amended Section 149

The assessee emphasized the post-amendment legal position:

  • Under the amended Section 149, a notice under Section 148 cannot be issued if three years have elapsed from the end of the relevant assessment year, unless the case falls within the extended limitation prescribed in Section 149(1)(b).
  • For AY 2015-16, the three-year period from the end of the assessment year ended on 31.03.2019.

The assessee contended:

  • No notice could be validly issued under Section 148 after this date unless the case satisfied the conditions of Section 149(1)(b) (i.e., escapement of income of Rs. 50,00,000/- or more).
  • There was no allegation and no material on record to suggest that income escaping assessment either amounted to or was likely to amount to Rs. 50,00,000/- or more.
  • As such, the extended period of ten years under Section 149(1)(b) was not attracted.

Impact of Supreme Court Judgments

The assessee placed strong reliance on two Supreme Court decisions:

  1. The Income Tax Officer & Anr. vs Sri Sai Kumar Mateti, reported in 2026 (5) TMI 855
  2. Union of India & Ors. vs. Rajeev Bansal, reported in 2024 (10) TMI 264 Supreme Court (LB)

The assessee highlighted specific observations from the judgment in The Income Tax Officer & Anr. vs Sri Sai Kumar Mateti, where the Supreme Court, after referring to Union of India vs Rajeev Bansal, stated: