Section 149 — Time Limit for Notice

Section 149 of the Income-tax Act, 1961, prescribes the time limits within which the Assessing Officer can issue a notice for income escaping assessment under Section 148. Generally, a notice can be issued within four years from the end of the relevant assessment year. However, if the income that has escaped assessment amounts to or is likely to amount to one lakh rupees or more, the time limit extends to six years. In cases where the income in relation to any asset located outside India has escaped assessment, the notice can be issued up to sixteen years. This section is significant as it sets the statutory deadlines for reopening assessments, ensuring that taxpayers have certainty and finality regarding their tax liabilities after a reasonable period.

Common Litigation Flashpoints

1. Dispute over the interpretation of 'income escaping assessment'
2. Challenges regarding the validity of notices issued beyond the prescribed time limit
3. Contention on whether the conditions for extending the time limit are met
4. Disputes over the applicability of Section 149 in cases involving foreign assets

Judgments on Section 149 — Time Limit for Notice

• Union of India & Ors. vs Rajeev Bansal — SC,
  Reassessment notices issued under the old regime are deemed valid under the new regime due to the application of TOLA and judicial directions.
• Manisha Agarwal vs Income Tax Officer, Ward 59(1), Delhi & Ors. — HC,
  A reassessment notice issued beyond the surviving time limit under the Income Tax Act read with TOLA is time-barred.
• Hexaware Technologies Limited vs Assistant Commissioner of Income Tax — HC,
  Reassessment notices issued after 1st April 2021 must comply with the amended provisions of the Income Tax Act, 1961, and cannot rely on the erstwhile provisions.
• Pawan Sachdeva vs Income-Tax Officer, Ward 19(3), Delhi & Anr. — HC,
  Issuance of notice within the limitation period is sufficient for jurisdiction, even if the service occurs later or with errors.
• Twylight Infrastructure Pvt Ltd vs Income Tax Officer Ward 25 3 Delhi and Ors. — HC,
  Approval from the specified authority is mandatory for issuing reassessment notices under Section 148.
• Union of India & Ors. vs Rajeev Bansal — SC,
  Reassessment notices issued after 1 April 2021 should be treated as issued under the new regime, with TOLA extending the time limits for compliance.
• Vodafone International Holdings B.V. vs Union of India & Anr. — SC,
  Section 9 of the Income Tax Act does not cover indirect transfers of capital assets situated in India.
• The Authority for Advance Rulings (Income Tax) and Others vs Tiger Global International II Holdings — SC,
  The DTAA between India and Mauritius allows capital gains to be taxed only in Mauritius, provided the entity holds a valid TRC.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Aditya Birla Nuvo Limited vs The Deputy Director of Income-tax — HC,
  The beneficial ownership of shares, despite being registered in the name of a permitted transferee, determines the taxability of capital gains in India.
• Mon Mohan Kohli vs Assistant Commissioner of Income Tax & Anr — HC,
  The government cannot extend the applicability of statutory provisions through notifications without explicit legislative authority.
• Manju Somani vs Income Tax Officer Ward-70(1) & Ors. — HC,
  A reassessment notice issued post-01 April 2021 must comply with the time limits prescribed by the pre-amendment provisions of Section 149 if the assessment year is prior to 01 April 2021.
• Mon Mohan Kohli vs Assistant Commissioner of Income Tax & Anr — HC,
  The Government cannot extend the applicability of legislative provisions beyond the dates specified by the Legislature through notifications.
• Union of India & Ors. vs Ashish Agarwal — SC,
  Reassessment notices issued under the unamended Section 148 post-01.04.2021 are deemed valid under Section 148A of the Finance Act, 2021.
• Commissioner of Income Tax, Bangalore vs B. C. Srinivasa Setty — SC,
  Goodwill generated in a newly commenced business cannot be described as an 'asset' within the terms of Section 45 and therefore its transfer is not subject to income-tax under the head 'capital gains'