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by sayum
04 August 2026 1:39 PM
“Limitation is not elastic — First Proviso to Section 149 is a clear bar, and parallel proceedings under Section 154 cannot justify reassessment,” In a sharp rebuke to what it called a “legally unsustainable attempt to bypass limitation,” the Telangana High Court quashed a reassessment notice issued by the Income Tax Department against Cyberabad Citizens Health Services for Assessment Year 2017–18. The Court categorically ruled that the notice under Section 148 of the Income Tax Act was “barred by limitation” and held that pending rectification proceedings under Section 154 could not be used to revive jurisdiction that was already lost.
“If the six-year window for reopening under the old regime had closed by March 31, 2024, no fresh life can be breathed into it under the new law,” observed the Division Bench of Chief Justice Aparesh Kumar Singh and Justice G.M. Mohiuddin, rejecting the Revenue’s attempt to invoke the fifth and sixth provisos to Section 149 to claim a limitation extension.
“When law bars reassessment, clever statutory interpretation cannot reopen dead assessments”
Representing the petitioner, Senior Advocate T. Suryanarayana argued that the impugned reassessment notice dated April 22, 2024, was issued after the permissible six-year limit had expired under the old regime — and hence was squarely barred by the first proviso to amended Section 149. The Court agreed, stating:
“The Revenue is obliged to adhere to the timeline prescribed under Section 149 for issuance of notice. Section 148A lays down the procedure, but does not override the statutory outer limits for jurisdiction.”
The Court rejected the Department’s reliance on the fifth and sixth provisos to the amended Section 149, holding that:
“These provisos do not clarify or override the first proviso. They apply to the new limitation regime — not to cases where the limitation under the old law had already expired before April 1, 2021.”
“Assessing Officer was already dealing with the same issues under Section 154 — initiating reassessment is a textbook case of change of opinion”
What tilted the scales further in the petitioner’s favour was that the very grounds used to initiate reassessment were already under scrutiny in ongoing rectification proceedings under Section 154. These included:
“The same issues, same facts — if they were already being examined under Section 154, how can they be reopened under Section 148? This is nothing but an impermissible change of opinion,” the Court declared, referring to the Supreme Court’s judgment in S.M. Overseas (P) Ltd..
“Parallel proceedings for reassessment while rectification is pending are legally untenable,” the bench observed.
“You cannot reopen an assessment after the curtain has fallen — the stage was closed on 31 March 2024”
The Court reinforced the interpretation taken by the Delhi, Rajasthan, Bombay, and Karnataka High Courts in Sheetal International, Shree Cement, Godrej Industries, and Tarish Investments respectively — all of which categorically held that the first proviso to amended Section 149 operates as a bar, preventing revival of time-barred assessments under the old law.
“The fifth and sixth provisos may extend the ten-year window in live cases — but they cannot give new life to dead ones,” the bench wrote.
“Assessment Year 2017–18 was already closed — no jurisdiction survives”
In concluding its judgment, the High Court ruled:
“The initiation of reassessment by notice dated 22.04.2024 is barred by limitation as per the first proviso to Section 149. Furthermore, reopening proceedings during the pendency of rectification under Section 154 amounts to an impermissible change of opinion.”
The writ petition was accordingly allowed. The reassessment notice and the underlying order under Section 148A(d) were quashed. The Court imposed no costs.
Date of Decision: November 17, 2025
