s.149 — Time limits for the show-cause and for the reassessment notice
How long the Department has to reopen, measured separately for the show- cause and for the notice, the monetary threshold that unlocks the longer period, and the date from which time runs.
Two texts, and the current one is far shorter than what it replaced. As substituted with effect from 1 September 2024 by Act No. 15 of 2024, the Finance (No. 2) Act 2024, it runs to two sub-sections and nothing else: no provisos, no Explanation, no exclusion or extension machinery. What section 152 preserves is the text as it stood IMMEDIATELY BEFORE that date, not as first substituted in 2021. That shape was reached in stages, the Department's footnote recording amendments by Act No. 6 of 2022, the Finance Act 2022, and by Act No. 8 of 2023, the Finance Act 2023, in between, so a notice tested against an earlier date must be read against the text then in force, which is not set out here. At repeal it carried a ten year outer limb, six provisos, an Explanation defining "asset", a sub-section (1A) for income spread across years, and a sub-section (2) making the issue of notice subject to section 151. Which text governs is decided by section 152(3) and section 152(4), and is dealt with on that page. Sourcing: the current text was read on the Year 2025 edition and the preserved one on footnote 29 to the "2024 (No. 2)" edition.
Income-tax Act, 1961
s.149
Income-tax Act, 2025
s.282
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 149 of the Income-tax Act, 1961 now sets two limits, and they are deliberately three months apart. By sub-section (2) a show-cause under section 148A cannot issue after three years from the end of the relevant assessment year, or after five years where the income escaping assessment, as per the information with the Assessing Officer, amounts or is likely to amount to fifty lakh rupees or more. By sub-section (1) the notice under section 148 itself cannot issue after three years and three months, or five years and three months on the same monetary footing, except that the longer limb requires the officer to have in his possession books of account or other documents or evidence related to any asset or expenditure or transaction or entries showing the escaped income. The three month gap is what the section gives the officer to complete the section 148A stage, in place of the exclusions the preserved text used. Both limits bar the ISSUE of the notice, not its receipt, so the date of issue governs and the date printed on the notice is not conclusive of it. The preserved text ran to ten years on the longer limb and expressed the threshold differently, requiring the escaped income to be "represented in the form of" an asset, expenditure in respect of a transaction or in relation to an event or occasion, or an entry or entries in the books, with an Explanation that "asset" includes immovable property, shares and securities, loans and advances and bank deposits. It carried six provisos: a bar on reopening a year already barred under the pre-2021 regime; a provision disapplying the sub-section where a notice under section 153A, or section 153C read with section 153A, was required for a search or requisition on or before 31 March 2021; two fifteen day exclusions where a search or requisition falls after 15 March of a financial year, the second also reaching information from a statement recorded or documents impounded under section 131 or section 133A in consequence of one; an exclusion for the time allowed to reply under section 148A and for any stay; and a seven day floor for the section 148A(d) order. Sub-section (1A) required a notice for every year across which an asset or expenditure was spread. The counterpart in the Income- tax Act, 2025 is section 282, which lengthens both limbs by a year and adds a floor the 1961 Act has never had: no notice under section 280 or 281 may issue within one year from the end of any tax year.
What the provision does
Bars the issue of the show-cause and of the notice after the periods it fixes, and fixes a different period for each. It does not decide whether income escaped assessment, and under the current text it supplies no machinery at all for excluding or extending time. It also says nothing about how long the officer then has to complete the assessment, which is section 153.
Threshold questions
- Which text governs, which section 152 decides, subject to the class of case that falls within the words of neither saving, dealt with on that page
- When the notice was in fact issued, taken from the dispatch record, the digital signature time and the portal or e-mail entry and not from the date printed on it, because these limits run from issue
- Which limit is in issue, because the show-cause and the notice have different ones and a show-cause issued in time does not save a notice issued out of time
- Is the longer limb relied on, and if so is the fifty lakh rupee threshold crossed on the footing the applicable text requires, possession of books, documents or evidence related to an asset, expenditure, transaction or entries under the current text and income represented in the form of an asset, expenditure or an entry under the preserved one
- Whether the section 148A(3) order and the notice both fall inside the sub-section (1) date, because the current text fixes no separate period for the order and that date is the only control on it
- Under the preserved text, whether the relaxations under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 touch the year, because for the years that Act reaches the first proviso is decided on extended dates and not on the ordinary pre-2021 limits
- Whether the limitation point has been taken on the record at the earliest opportunity, in the reply to the show-cause and again in the grounds, because it goes to jurisdiction and can end the file without reaching the merits
In practice
The recurring disputes.
What the longer limb now requires
The current sub-section (1)(b) asks whether the officer has in his possession books of account or other documents or evidence related to an asset, expenditure, transaction or entries showing escaped income of fifty lakh rupees or more. The assessee's point is that possession is a fact to be demonstrated on the record at the date of the notice, not asserted afterwards. The Revenue's answer is that the words are wider than the preserved "represented in the form of" formulation, which generated a body of case law about whether cash receipts were an asset, and that "transaction or entries" was added precisely to close that argument. On the preserved text the older authorities still bite; on the current text they have to be used with care.
The gap between the two limits
The three month difference between sub-section (1) and sub-section (2) replaces the exclusions the preserved text used. The question it raises is what happens where the show-cause issued inside its own limit but the order and the notice slipped past the longer one. The Revenue's answer is structural: sub-section (2) bars the show-cause and sub-section (1) bars the notice, they are separate bars, and a notice issued inside its own limit is not made bad by what happened between the two dates. The assessee's answer is that the current section 148A fixes no period at all for the order under sub-section (3), the one month limit on the old clause (d) order having gone with the preserved text, so the sub-section (1) date is the only outer control on the whole stage and must mean what it says. The point appears to be open and should be taken where the dates permit it.
Reviving a year barred under the old regime
The first proviso to the preserved text forbids a notice for any year beginning on or before 1 April 2021 where a notice could not then have been issued under the pre-2021 limits. It is the provision behind a great deal of the reassessment litigation of the last few years. The Revenue's answer is rarely that the proviso does not apply; it is that the year was not barred on the earlier limits once the relaxations under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 are brought into the computation, so that notices in the window that Act covers are measured against extended dates. The dispute is therefore a computation with three moving parts: the ordinary pre-2021 limit for the year, the relaxation period, and the time taken by the section 148A stage. Work all three before the point is taken. The computation has been litigated all the way to the Supreme Court and the answer now turns on what that Court held, so the point cannot be run on the words of the proviso alone. The citations are deliberately not given on this page because they have not been checked against a primary source for it; read the decisions before the argument is advanced.
Income spread across years under the preserved text
Sub-section (1A) of the preserved text provided that where the escaped income represented in the form of an asset or expenditure was spread across more than one year within the longer limb, a notice should be issued for every such assessment year. The assessee's point on a search or on-money file is that the years for which no notice issued cannot be brought in through the one that did, the sub-section having told the officer what to do and he not having done it. The Revenue's answer is that the sub-section is enabling rather than restrictive, and that the Explanation to section 147 in any event permits an issue coming to notice in the course of the proceedings to be assessed. Which reading prevails decides how much of a multi-year spread survives.