The notice issued under Section 148 for reopening the assessment year was quashed as time-barred, exceeding the ten-year limitation period established by the Income Tax Act.

JUDGMENT :

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. Heard learned Senior Advocate Mr. Tushar Hemani appearing with learned advocate Ms. Vaibhavi K. Parikh for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule on behalf of the respondent. Having regard to the controversy involved, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing..

3. By this petition under Article 226 of the Constitution of India, the petitioner challenges the notice dated 28.03.2025 issued under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act” for short) seeking to re-open income tax assessment of the petitioner for the Assessment Year 2015-16 (hereinafter referred to as “the assessment year under consideration” for short) by the Income Tax Officer, Ward 2(1)(1), Ahmedabad (hereinafter referred to as “the respondent” for short).

4. The facts in brief are that the petitioner is a company engaged in the business of wholesale and retail trade of goods during the assessment year under consideration. In addition, the petitioner was also acting as a commission agent for the said assessment year under consideration. The petitioner filed its return of income for the assessment year under consideration on 06.10.2015 declaring total income at Rs. 16,07,260/-.

4.1. The respondent issued a notice dated 28.03.2025 under Section 148 of the Act for the assessment year under consideration. One MSK and Madhav Group and its associated groups of Gujarat were subjected to search action u/s. 132 of the Act on 18.05.2024. In the Satisfaction Note prepared for assumption of jurisdiction, it was stated that some incriminating material, both physical and digital had been found which confirmed that MSK and Madhav Group and its associated groups have booked accommodation purchase from multiple suppliers without actual supply of goods or services and received back cash after making payment through banking channel. Based on the said seized documents, it was contended that the petitioner had obtained accommodation entry resulting into escapement of income and hence, the notice dated 28.03.2025 has been issued under of the Act for assessment year 2015-16 after obtaining prior approval of CCIT-1 and Pr. CIT-1, Ahmedabad.

4.2. The petitioner filed return of income on 20.06.2025 in response to notice dated 28.03.2025 issued under Section 148 of the Act declaring total income at Rs. 16,07,260/-. The petitioner, vide letter dated 22.09.2025, raised objections against the action of reopening of assessment of the petitioner for the assessment year under consideration.

The respondent, vide order dated 06.10.2025, disposed of the objections raised by the petitioner against reopening of assessment. The petitioner, vide another letter dated 01.01.2026, raised further objections against reopening of assessment. The respondent, vide order dated 05.02.2026, disposed of the objections raised by the petitioner against reopening of assessment and held reopening to be valid and in accordance with law. The petitioner has challenged the said notice u/s. 148 of the Act on the ground of limitation.

5. Learned Senior Advocate Mr. Tushar P. Hemani for the petitioner submitted that the respondent has acted illegally and without jurisdiction while issuing Notice under Section 148 of the Act as the same is barred by limitation. It was further contended that the impugned notice is time- barred under the statutory scheme governing search assessment. It was submitted that in the present case, search action in question w