Gujarat HC: Search Year Included in 10-Year Block Under Section 153A — Notice for AY 2015-16 Quashed as Time-Barred
Case Background
Case Name: Ashok Madhavdas Khurana Vs ACIT (Gujarat High Court)
Related Assessment Year: 2015-16
The Gujarat High Court recently adjudicated a significant writ petition under Article 226 of the Constitution of India, wherein the assessee contested the validity of a reopening notice dated 16.03.2026 issued under Section 148 of the Income Tax Act, 1961, pertaining to Assessment Year 2015-16.
The assessee had originally submitted a return of income for AY 2015-16 on 30.10.2015, declaring total income of Rs. 7,17,970. The assessee was a constituent entity of the MSK and Madhav Group, which operates in the infrastructure development sector across Gujarat. On 18.05.2024, search and seizure operations were carried out under Section 132 of the Income Tax Act, 1961 against the MSK and Madhav Group, covering the assessee as well.
Following the search, the Assessing Officer — Assistant Commissioner of Income Tax, Central Circle 2(3), Ahmedabad — issued the impugned notice dated 16.03.2026 under Section 148, asserting that books of accounts, documents, and information seized or requisitioned during the search from the MSK and Madhav Group pertained to or related to the assessee. The notice was issued with prior approval of the Directorate General of Income Tax (Investigation), Ahmedabad.
The central challenge raised by the assessee was not on merits but squarely on the ground of limitation.
Arguments Advanced by the Assessee
Counsel for the assessee contended that the impugned notice was issued without jurisdiction, being barred by the applicable statutory limitation period.
The key submissions were as follows:
- The search under
Section 132was conducted on 18.05.2024, falling within Financial Year 2024-25, making the relevant assessment year AY 2025-26. - Since the search was initiated on or after 1st April 2021 but before 1st September 2024, the provisions of
Sections 147to151as they existed immediately before the commencement of the Finance (No. 2) Act, 2024 would govern, as perSection 152(3)of the Income Tax Act, 1961. - Under
Section 153A, the Assessing Officer is empowered to assess or reassess income for ten assessment years, subject to prescribed conditions; however, this ten-year block must be computed from the end of the assessment year relevant to the previous year in which the search is conducted, per Explanation 1 toSection 153A. - Including the search assessment year (AY 2025-26) as the first year of the ten-year block, the permissible window would extend only up to AY 2016-17 as the tenth year. Consequently, the notice issued for AY 2015-16 falls entirely outside this permissible statutory window.
The computation table placed before the Court was as follows:
| Year Count | Assessment Year |
|---|---|
| 1st Year | AY 2025-26 |
| 2nd Year | AY 2024-25 |
| 3rd Year | AY 2023-24 |
| 4th Year | AY 2022-23 |
| 5th Year | AY 2021-22 |
| 6th Year | AY 2020-21 |
| 7th Year | AY 2019-20 |
| 8th Year | AY 2018-19 |
| 9th Year | AY 2017-18 |
| 10th Year | AY 2016-17 |
The assessee relied upon the following decisions in support:
- Dinesh Jindal vs. Assistant Commissioner of Income-tax (Delhi High Court), [2024] 164 taxmann.com 746 / 469 ITR 32 (Delhi) / Writ Petition (Civil) No. 12091 of 2023 decided on 27.05.2024
- Principal Commissioner of Income-tax (Central-1) vs. Ojjus Medicare (P.) Ltd. (Delhi High Court), [2024] 161 taxmann.com 160 / 465 ITR 101 (Delhi)
- A.R. Safiullah vs. ACIT (Madras High Court, Bench at Madurai), Writ Petition (MD) No. 4327 of 2021, dated 24-3-2021
Revenue's Counter-Arguments
The Revenue opposed the petition and advanced the following contentions: