Case Note & Summary
The petitioner, Aditya H. Patel, a salaried individual, filed his return of income for Assessment Year 2019-20 on 02.09.2019, declaring a total income of Rs.10,12,110/-. On 15.03.2025, the Income Tax Officer, Ward 3(3)(1), Ahmedabad, recorded a satisfaction note in the petitioner's case under clause (iv) of Explanation 2 to Section 148 and clause (c) of the proviso to Section 148A of the Income Tax Act, 1961, stating that certain material seized during a search conducted on 28.09.2021 in the case of B Safal Real Estate Group and City Estate Management India pertained to the petitioner. Based on this satisfaction note, a notice under Section 148 was issued to the petitioner. The petitioner challenged the notice by filing a Special Civil Application under Article 226 of the Constitution of India before the Gujarat High Court. The primary legal issue was whether the satisfaction note recorded on 15.03.2025 was within the time limit prescribed under Section 149(1)(b) of the Act, which requires that a notice under Section 148 can be issued only if the income escaping assessment is Rs.50 lakhs or more and the notice is issued within three years from the end of the relevant assessment year, or within ten years if the Assessing Officer has in possession books of account or other documents showing that the income represented in the form of an asset has escaped assessment. The petitioner argued that the satisfaction note was recorded beyond three years from the end of AY 2019-20 (i.e., 31.03.2020), and thus the notice was time-barred. The respondent, represented by learned Senior Standing Counsel Mr. Aaditya D. Bhatt, filed an affidavit-in-reply but did not dispute that the satisfaction note was recorded on 15.03.2025. The Court, relying on its earlier decision in Deepak Chinubhai Shah v. Deputy Commissioner of Income Tax, (2026) 183 taxmann.com 90 (Gujarat), held that the satisfaction note recorded on 15.03.2025 is beyond the three-year period from the end of the relevant assessment year, and therefore the reassessment notice under Section 148 is invalid. The Court allowed the petition, quashed the impugned notice, and made the rule absolute.
Headnote
A) Income Tax - Reassessment - Section 148, 149(1)(b), 148A, Explanation 2(iv) of Income Tax Act, 1961 - Time Limit - Satisfaction Note - The petitioner, a salaried individual, filed return for AY 2019-20 on 02.09.2019. On 15.03.2025, the respondent recorded a satisfaction note for reassessment under Section 148 based on material seized in a search conducted on 28.09.2021. The issue was whether the satisfaction note was recorded within the time limit under Section 149(1)(b). The Court held that the satisfaction note recorded on 15.03.2025 is beyond three years from the end of AY 2019-20 (i.e., 31.03.2020), and thus the reassessment notice is invalid. The petition was allowed following the decision in Deepak Chinubhai Shah v. Deputy Commissioner of Income Tax, (2026) 183 taxmann.com 90 (Gujarat). (Paras 3-7)
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 issued to the petitioner is valid when the satisfaction note was recorded beyond the three-year period from the end of the relevant assessment year.
Final Decision
The petition is allowed. The impugned notice under Section 148 of the Income Tax Act, 1961 is quashed and set aside. Rule is made absolute.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 must be based on satisfaction note recorded within the time limit prescribed under Section 149(1)(b)
- satisfaction note recorded beyond three years from end of relevant assessment year is invalid
- decision in Deepak Chinubhai Shah v. Deputy Commissioner of Income Tax applies.
