Introduction
The Income Tax Appellate Tribunal (ITAT), Chennai ‘B’ Bench, in Shri Bheraram v. Income Tax Officer (ITA No.1417/CHNY/2026, pronounced on 25.06.2026), delivered a significant ruling on the limitation period for issuing a notice under section 148 of the Income Tax Act, 1961. The case squarely addressed the interplay between the amended time limits introduced w.e.f. 01.04.2021 and the first proviso to section 149(1) that preserves the old six-year limitation for past assessment years. By quashing the reassessment order for Assessment Year (AY) 2015-16 on the ground that the notice issued on 07.04.2022 was barred by limitation, the ITAT reinforced the principles laid down by the Hon’ble Supreme Court in Union of India v. Rajiv Bansal (469 ITR 430). This commentary provides a deep-dive analysis of the facts, the Tribunal’s reasoning, and the implications for taxpayers facing similar reassessment proceedings.
Facts of the Case
The assessee, Shri Bheraram, filed an appeal challenging the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 11.02.2026, passed under section 250 of the Act. The sole legal ground raised (Ground No.4) was that the reassessment proceedings for AY 2015-16 were initiated beyond the period of limitation. The Assessing Officer (AO) had issued a show-cause notice under section 148A(b) on 19.03.2022, requiring the assessee to respond by 25.03.2022. The assessee submitted his reply on 26.03.2022. Thereafter, the AO passed an order under section 148A(d) on 07.04.2022 and simultaneously issued a notice under section 148 on the same date, i.e., 07.04.2022.
The assessee contended that, as per the provisions applicable to AY 2015-16, the notice under section 148 ought to have been issued within six years from the end of the assessment year. Since the assessment year ended on 31.03.2016, the six-year period expired on 31.03.2022. The notice issued on 07.04.2022 was therefore beyond the prescribed period and invalid. The Revenue argued that the period allowed to the assessee for responding to the show-cause notice should be excluded under the third proviso to section 149(1), and that the AO had until 07.04.2022 after applying the extended period of seven days as per the fourth proviso.
Reasoning of the Tribunal
The ITAT, after hearing both sides and perusing the material on record, undertook a meticulous analysis of the limitation framework. The Tribunal’s reasoning can be broken down into the following key elements:
1. Applicable Time Limits under Section 149(1)
The Tribunal first examined the relevant provisions of section 149(1) as they stood on the date of issuance of the notice (07.04.2022). Under the amended regime (w.e.f. 01.04.2021), no notice under section 148 could be issued if more than three years had elapsed from the end of the relevant assessment year, unless the case fell under clause (b) permitting notices up to ten years for escaped income of ₹50 lakh or more. However, the first proviso to section 149(1) carves out a critical exception: for assessment years beginning on or before 01.04.2021 (i.e., AY 2021-22 and earlier), the notice cannot be issued if it could not have been issued under the old time limits (prior to 01.04.2021). Under the old regime, the maximum period for reopening for AY 2015-16 was six years from the end of the assessment year (i.e., up to 31.03.2022). Since the notice was issued on 07.04.2022, which is beyond 31.03.2022, the first proviso squarely prohibits its issuance.
2. Application of the Third and Fourth Provisos
The Tribunal rejected the Revenue’s argument that the time taken by the assessee to respond to the show-cause notice under section 148A(b) should be excluded, thereby extending the limitation period. The third proviso states that for computing the period of limitation, the time allowed to the assessee to respond or the period during which proceedings under section 148A are stayed by a court shall be excluded. The fourth proviso further extends the remaining period to seven days if the excluded period is less than seven days. However, the Tribunal clarified that these exclusion provisions can only operate after the applicability of the first proviso is satisfied. In other words, if the notice is already barred under the first proviso because the old six-year limit has expired, the third and fourth provisos cannot revive it. The first proviso acts as a threshold barrier; if the notice could not have been issued under the old regime, no amount of exclusion of time can make it valid. The Tribunal noted that the show-cause notice was issued on 19.03.2022, but the deadline for response was 25.03.2022. Even if the assessee had responded within the stipulated time, the AO had ample time to pass an order under section 148A(d) and issue the notice under section 148 before 31.03.2022. The AO failed to do so and instead acted after the limitation period had expired.
3. Reliance on Judicial Precedents
The Tribunal placed strong reliance on its own coordinate bench decision in Ms. Thirumoorthy Revathy v. ITO (ITA No.3188/CHNY/2025 dated 27.01.2026). In that case, on identical facts, the Chennai Bench held that a notice issued under section 148 for AY 2015-16 after 31.03.2022 is time-barred. The Tribunal also cited the Hon’ble Supreme Court’s judgment in Rajiv Bansal (supra). The Supreme Court had clarified that the first proviso to section 149(1) was intended to ensure that the extended ten-year limitation under the new regime does not apply to assessment years where the old six-year period had already expired. The Court held that for AY 2015-16, the notice could not be issued after 31.03.2022. The ITAT followed this binding precedent without any deviation.
4. Conclusion on Limitation
The Tribunal thus concluded that the impugned notice under section 148 issued on 07.04.2022 was invalid and barred by limitation. Consequently, the entire reassessment proceedings, including the order under section 148A(d) and the subsequent assessment order, were quashed. The Tribunal allowed the appeal on the legal ground and left the merits of the case open, thereby giving the assessee substantial relief.
Conclusion
The ITAT Chennai’s decision in Bheraram is a crisp application of the limitation principles governing reassessment proceedings under the amended section 149(1). The ruling underscores that the first proviso creates a non-negotiable time barrier for old assessment years. Tax practitioners and assessing officers must meticulously compute the six-year period from the end of the relevant assessment year and cannot rely on procedural extensions under the third and fourth provisos if the fundamental condition of the first proviso is not met. This commentary serves as a reminder that the Supreme Court’s mandate in Rajiv Bansal continues to guide the ITAT benches, ensuring that reassessment notices issued beyond the lawful period are struck down without hesitation.
—