ITAT Quashes AY 2013–14 Reopening: Old Limitation Law Prevails Over New 10-Year Rule
Tribunal Says New Section 149 Cannot Apply Retrospectively to Past Assessments
Decision Provides Relief to Taxpayers Facing Time-Barred Reassessment Notices
By Our Legal Reporter
New Delhi: December 09, 2025:
In a significant ruling, the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings for Assessment Year (AY) 2013–14, holding that the reopening was barred by limitation under the old regime. The Tribunal clarified that the Finance Act, 2021, which introduced a 10-year limitation period under Section 149, cannot be applied retrospectively to override the earlier six-year limit.
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This judgment provides clarity on the contentious issue of old vs. new limitation rules and offers relief to taxpayers who were facing reassessment notices for older years.
Background of the Case
- Assessment Year: 2013–14.
- Notice Issued: The Assessing Officer issued a notice under Section 148 after April 1, 2021, seeking to reopen the assessment.
- Assessee’s Argument: The notice was invalid because the old law barred reopening beyond six years, and the new 10-year rule could not apply retrospectively.
- Revenue’s Argument: Claimed that the new Section 149 permitted reopening up to 10 years if income escaping assessment exceeded ₹50 lakh.
- ITAT’s Decision: Allowed the assessee’s appeal, quashing the reassessment as time barred.
Court’s Observations
The ITAT made several important observations:
- Old Regime Applies: For AY 2013–14, the limitation period expired on March 31, 2020.
- New Law Not Retrospective: The Finance Act, 2021 provisions apply prospectively from April 1, 2021.
- First Proviso to Section 149: Specifically, bars reopening if the time limit under the old law had already expired before April 1, 2021.
- Relief to Assessee: Since the old six-year limit had lapsed, the reassessment notice was invalid.
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Legal Context
The ruling draws upon key statutory provisions:
- Section 147: Governs reassessment of income escaping assessment.
- Section 148: Provides for issuance of notice to reopen assessments.
- Section 149 (Old Regime): Allowed reopening up to six years from the end of the relevant AY.
- Section 149 (New Regime, post-2021): Extended reopening to 10 years if escaped income exceeded ₹50 lakh.
- First Proviso to Section 149: Ensures that expired cases under the old regime cannot be revived under the new law.
Implications of the Judgment
The ITAT’s ruling has wide-ranging implications:
- For Taxpayers: Provides relief from reassessment notices issued for years already time-barred under the old law.
- For Revenue Authorities: Limits their ability to reopen older assessments using the new 10-year rule.
- For Legal Clarity: Reinforces that new laws cannot override expired rights or obligations retrospectively.
- For Pending Cases: Hundreds of reassessment notices issued after April 2021 for older years may now be invalid.
Expert Views
Tax experts and chartered accountants have welcomed the judgment:
- Tax Lawyers: Say the ruling prevents misuse of the new 10-year rule to reopen expired cases.
- Chartered Accountants: Stress that taxpayers must carefully examine reassessment notices for limitation validity.
- Policy Analysts: Highlight that the judgment balances revenue interests with taxpayer protection.
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Broader Context
The issue of reassessment limitation has been contentious since the Finance Act, 2021 introduced new rules. Several High Courts and Tribunals have delivered similar rulings:
- ITAT Jaipur (Lal Chand Meena v. ITO): Quashed reassessment for AY 2013–14 as time-barred.
- ITAT Delhi (Manjusha Mittal case): Held that reassessment notice issued after April 1, 2021, for AY 2013–14 was invalid.
- Rajeev Bansal Verdict: Supreme Court clarified that the new law applies prospectively, not retrospectively.
Together, these decisions establish that expired cases under the old regime cannot be revived under the new law.
Conclusion
The ITAT’s decision to quash reassessment proceedings for AY 2013–14 underscores the principle that new laws cannot revive expired cases. By holding that the old six-year limitation period prevails over the new 10-year rule, the Tribunal has provided much-needed clarity and relief to taxpayers.
For taxpayers, the message is clear: check reassessment notices carefully for limitation validity. For revenue authorities, the ruling is a reminder that legal certainty and fairness must guide reassessment proceedings.
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