The ten-year block period for reopening assessments under the tax statute must be calculated from the end of the search assessment year, thereby including the search year in the reckoning, as distinct from the six-year block period which excludes it using the phrase 'immediately preceding'.

Headnote:(A) Income Tax Act, 1961 - Sections 147, 148, 149, 153A, 153C - Reopening of assessment - Limitation - Search and seizure proceedings - Calculation of block assessment periods - Distinction between six-year and ten-year computation models - Statutory provisions prescribing different methodologies for block periods must be given distinct effect - Search assessment year forms the first year in the ten-year calculation when reckoning from the end of the assessment year. (Paras 8(f), 8(g))

(B) Statutory Interpretation - Principles of - Legislative intent - Where a statute provides different linguistic formulations for distinct periods, courts must ensure every phrase is afforded meaning - Interpretation that renders statutory wording redundant or negates the distinction between calculation regimes is impermissible - Search year is to be included in the ten-year reckoning, unlike the six-year period which excludes it through the phrase 'immediately preceding'. (Paras 8(g), 9.3)

Facts of the case:
The taxpayer challenged a notice issued to reopen an assessment for a previous year following a search action. The primary dispute concerned whether the assessment year in which the search was conducted should be included when calculating the ten-year block period for the reopening of assessments. The taxpayer argued that including the search year rendered the notice time-barred, while the revenue contended for a methodology that would keep the notice within the limitation period.

Findings of Court:
The court held that the statute provides two distinct computational regimes. The six-year block uses the phrase 'immediately preceding' the search year, effectively excluding it. Conversely, the ten-year block uses the phrase 'from the end of the assessment year', necessitating the inclusion of the search year in the reckoning. Following this, the challenged notice was found to fall outside the statutory limit.

Issues: Whether the notice issued by the revenue for the reopening of the assessment was barred by the statutory limitation period, specifically regarding the proper calculation of the ten-year block period.

Ratio Decidendi: The court maintained that the statutory difference in language between the six-year and ten-year block provisions is intentional and must be given full effect. Because the ten-year rule requires calculation from the 'end of the assessment year', the search year is necessarily included, and an interpretation that merges this with the six-year exclusion model would violate principles of statutory construction.

Result: Petition allowed; the impugned notice for initiating reassessment is quashed and set aside as barred by limitation.

Table of Content
1. initiation of legal challenge against income tax reassessment notice due to limitation. (Para 1 , 2 , 3 , 4)
2. contrasting arguments on the computation of the ten-year limitation block period for search assessments under section 153a/153c. (Para 5 , 6)
3. statutory interpretation affirming the inclusion of the search year in the ten-year block period calculation. (Para 7 , 8 , 9)

ORAL JUDGMENT

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

1. Heard learned Senior Advocate Mr.Jaimin Gandhi for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.

2. 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. Rule returnable forthwith.

3. By this petition under Article 226 of the Constitution of India, the petitioner challenges the notice dated 27.03.2025 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 2014-15 (hereinafter referred to as “the assessment year under consideration” for short) by the Deputy Commissioner of Income Tax, Central Circle 2(2), Ahmedabad (hereinafter referred to as “the respondent” for short).

3.1 The petitioner is one of the major partners of PSY Group which is engaged in the business of real estate. The said PSY group and its associated groups of Gandhinagar including the petitioner were subjected to search action under Section 132 of the Act on 08.02.2024. 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 PSY and its associated groups had entered into unaccounted transactions through various firms.

4. The petitioner has challenged the said notice under Section 148 of the Act on the ground of limitation.

5. Learned Senior Advocate Mr. Jaimin Gandhi 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 was carried out on 08.02.2024 i.e. during the Financial Year 2023-24. Since the search under Section 132 of the Act was initiated on or after 1st April, 2021 but before 1st September, 2024, the provisions of Sections 147 to 151 of the Act as they stood immediately before the commencement of Finance (No. 2) Act, 2024 shall apply as contemplated under Section 152(3) of the Act. Relying upon Section 149 of the Act, it is contended that the notice under Section 148 of the Act can be issued up to six years from the end of the relevant assessment year. Further, relying upon the Section 153A of the Act, he would submit that notice under Section 153A of the Act can be issued for a period of “ten assessment years” immediately preceding the assessment year relevant to the previous year in which search is carried out and for the “relevant assessment years”, subject to fulfillment of certain conditions.

5.1 It is further submitted that the “relevant assessment year” means assessment year preceding the assessment year relevant to the previous year in which search is carried out or requisition is made, which falls beyond six assessment years but not later than ten assessment years from the “end of the assessment year relevant to the previous year in which search is conducted”.

5.2 Reference is also made to the provisions of Section 149 of the Act, more particularly the proviso to Section 149 read with Explanation – 1 to Section 153A of the Act, and it is submitted that so far as the limitation is concerned, for reopening of the assessment, the same is pari materia to Section 153C of the Act.

5.3 It is submitt

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2026 Supreme(Online)(Guj) 4723

IN THE HIGH COURT OF GUJARAT AT AHMEDABADA.S. Supehia, Pranav Trivedi, JJPurvibhavin Shah – AppellantVersusIncome Tax Officer – RespondentR/SPECIAL CIVIL APPLICATION NO. 3845 of 2026

The ten-year block period for reopening assessments under the tax statute must be calculated from the end of the search assessment year, thereby including the search year in the reckoning, as distinct from the six-year block period which excludes it using the phrase 'immediately preceding'.

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
A.S. Supehia, Pranav Trivedi, JJ
Purvibhavin Shah – Appellant
Versus
Income Tax Officer – Respondent
R/SPECIAL CIVIL APPLICATION NO. 3845 of 2026