Section 149 Reassessment Time Limit: When a Notice Becomes Invalid (2026 Guide)

Why Limitation Under Section 149 Is the Foundation of Valid Reassessment

Section 149 reassessment time limit determines whether a notice issued after three years survives in law. Received a reassessment notice recently? The first question is whether it is time-barred. Limitation under Section 149 is not a procedural technicality — it is the jurisdictional boundary that decides whether a reassessment notice legally survives or automatically fails.

While Section 147 empowers the Assessing Officer to reopen completed assessments, that power is strictly controlled by the reassessment time limit prescribed under Section 149. If a notice under Section 148 is issued beyond the statutory limitation period, the entire proceeding becomes invalid, irrespective of the alleged escaped income.

Post 1 April 2021, the law tightened this framework. In general, reassessment cannot be initiated after three years from the end of the relevant assessment year. The extended ten-year reassessment limitation applies only where escaped income exceeds ₹50 lakh and is represented in the form of an asset — and even then, strict conditions must be satisfied.

Courts consistently interpret limitation provisions narrowly, reinforcing that reassessment is an exception to finality — and exceptions are never read expansively.

Quick Answer: Time Limit Under Section 149

• Normal limit: 3 years from end of relevant AY
• Extended limit: Up to 10 years only if escaped income exceeds ₹50 lakh and relates to assets
• If issued beyond permissible time → Notice is invalid

How the Time Limit Under Section 149 Is Computed (With Simple Example)

Understanding how to compute the limitation period under Section 149 is crucial. The law calculates the time limit from the end of the relevant assessment year, not from the date of filing of return or completion of assessment.

For example, for Assessment Year 2020–21, the relevant assessment year ends on 31 March 2021. Under the general three-year rule, reassessment notice cannot be issued after 31 March 2024. If the notice is issued even one day later without satisfying the ₹50 lakh asset condition, it becomes time-barred.

The extended ten-year limitation applies only when the Assessing Officer possesses information suggesting that income of ₹50 lakh or more, represented in the form of an asset, has escaped assessment. This threshold is not automatic; it must be demonstrably satisfied.

Judicial decisions repeatedly emphasise that computation errors or casual extension of limitation render the entire reassessment invalid. Time limits are jurisdictional — not procedural.

Extended 10-Year Reassessment Limitation Under Section 149 — When Can Notice Be Issued After 3 Years?

One of the most misunderstood aspects of reassessment law is the 10-year reassessment limitation under Section 149. Many taxpayers assume that the tax department automatically gets ten years to reopen cases. That is incorrect. The extended limitation is not a general power — it is a tightly restricted exception.

After the Finance Act, 2021, reassessment beyond three years is permitted only if the Assessing Officer possesses specific information suggesting that income escaping assessment exceeds ₹50 lakh and is represented in the form of an asset. This could include immovable property, shares, loans, bank deposits, or other tangible financial assets. Mere income discrepancies, audit objections, or routine mismatches do not justify invoking the extended time limit.

Courts have repeatedly held that the ₹50 lakh threshold under Section 149 is mandatory and must be clearly recorded before issuing notice. If the department mechanically invokes the 10-year reassessment limit without satisfying these statutory conditions, the notice becomes legally vulnerable.

In short, reassessment after three years is the exception — not the rule — and strict compliance is essential.

Strict Judicial Interpretation of Section 149 — Why Courts Do Not Allow Liberal Reading

Indian courts have consistently held that limitation under Section 149 for reassessment is a jurisdictional safeguard. Since reassessment disturbs the finality of completed assessments, limitation provisions must be strictly construed. The principle is simple: if the notice is time-barred, the authority to proceed does not exist.

Judicial rulings repeatedly emphasise that the tax department cannot enlarge the reassessment time limit by interpretation, assumption, or administrative convenience. Even procedural compliance under Section 148A cannot cure a notice issued beyond the statutory time limit under Section 149.

Another important long-tail issue is the “calculation of reassessment limitation after Finance Act 2021.” Courts have carefully examined transitional cases and clarified that amended limitation provisions apply subject to statutory safeguards. Revenue authorities must clearly demonstrate how the notice falls within the prescribed limitation period.

In short, limitation is not procedural — it goes to the root of jurisdiction. If Section 149 is violated, the reassessment fails entirely.

Impact of Finance Act 2021 on Reassessment Limitation Under Section 149

The reassessment limitation after Finance Act 2021 significantly altered the time limits prescribed under Section 149. Earlier, notices could generally be issued up to six years from the end of the relevant assessment year. Post amendment, the law reduced the normal time limit for reassessment to three years, while introducing a conditional ten-year limitation in specified cases.

This change created transitional disputes, particularly for assessment years falling between the old and new regimes. A major controversy arose regarding whether reassessment notices issued under the old six-year rule after 1 April 2021 would survive. Courts examined whether the amended Section 149 applied retrospectively or prospectively.

Judicial interpretation clarified that reassessment notices must strictly comply with the amended limitation framework. The law does not permit the tax department to revive time-barred cases by relying on the old regime if the new limitation period has expired. Thus, computation of reassessment time limit under amended Section 149 has become a critical compliance checkpoint for taxpayers and advisors alike.

Common Errors in Reassessment Notices Related to Section 149 Limitation

One of the most frequent litigation triggers is incorrect calculation of limitation period under Section 149. Assessing Officers sometimes miscalculate the end of the relevant assessment year or incorrectly assume eligibility for the extended ten-year reassessment limitation without satisfying the ₹50 lakh asset threshold.

Another common error involves vague recording of reasons without clearly demonstrating how the escaped income exceeds ₹50 lakh and is represented in the form of an asset. Courts have repeatedly held that mere suspicion or general information does not justify invoking the extended limitation period.

There are also cases where reassessment notices are issued on the last permissible date but lack proper approval or documentation. Since limitation under Section 149 is jurisdictional, even minor computational mistakes can invalidate the entire proceeding.

Therefore, whenever a notice under Section 148 is received, the first legal check should always be whether it falls within the prescribed reassessment time limit under Section 149.

Interaction Between Section 149 and Section 148A — Can Procedure Override Limitation?

After the 2021 amendments, Section 148A introduced a pre-notice inquiry procedure before issuing a reassessment notice under Section 148. However, an important legal question frequently searched is: Can compliance with Section 148A cure a time-barred notice under Section 149?

The answer, based on strict judicial interpretation, is no. Limitation under Section 149 for reassessment operates independently of procedural safeguards under Section 148A. Even if the Assessing Officer follows the due process of issuing a show-cause notice and passing an order under Section 148A(d), the reassessment cannot proceed if the notice is issued beyond the prescribed time limit.

Courts have clarified that procedural compliance cannot confer jurisdiction where none exists. The reassessment time limit under Section 149 is a statutory boundary. If that boundary is crossed, subsequent procedural steps become irrelevant. This principle reinforces that limitation provisions are jurisdictional and not merely procedural in nature.

Practical Safeguards for Taxpayers Facing Reassessment Notices Under Section 149

Whenever a taxpayer receives a notice under Section 148, the first defensive step should be verifying the time limit for reassessment under Section 149. This includes identifying the correct assessment year, calculating three years from its end, and checking whether the ten-year extended limitation conditions are genuinely satisfied.

If the notice relies on the ₹50 lakh threshold, taxpayers should examine whether the alleged escaped income is truly represented in the form of an asset. Vague references or generalized data may not satisfy statutory requirements.

It is also advisable to raise limitation objections during the Section 148A proceedings itself. Courts have repeatedly entertained writ petitions where reassessment notices were clearly time-barred.

In reassessment litigation, limitation is often the strongest ground available. A time-barred notice under Section 149 is not curable — it strikes at the root of jurisdiction and renders the entire proceeding invalid.

Conclusion

Limitation under Section 149 is the jurisdictional foundation of reassessment proceedings. The law now prescribes a strict three-year limit, with a conditional ten-year extension only where escaped income exceeds ₹50 lakh and is linked to assets. Courts consistently apply a strict judicial interpretation of reassessment limitation provisions, emphasizing that time limits cannot be diluted by administrative interpretation.

For taxpayers, the first legal check upon receiving a notice under Section 148 should always be verification of the reassessment time limit under Section 149. If the notice is time-barred, the entire proceeding collapses — irrespective of merits.

In reassessment litigation, limitation under Section 149 is often the most decisive defence. A time-barred notice cannot be cured — it must fail.

FAQ on Reassessment Limitation Under Section 149