Reassessment Limitation under the New Regime: Hon’ble Allahabad High Court’s First Pronouncement on the issue

In Dinesh Jain v. Union of India, the Hon’ble Division Bench of the Allahabad High Court has examined the jurisdictional validity of reassessment proceedings for AY 2016–17, initiated by notice dated 06.06.2024.

The core issue before the Court was limitation under Section 149 of the Income-tax Act, 1961, as substituted by the Finance Act, 2021, read with subsequent legislative changes and the binding interpretation of the Hon’ble Supreme Court.

Applying the law laid down in Union of India v. Rajeev Bansal (2024) 469 ITR 46, the Hon’ble Court held that no reassessment notice can be issued for assessment years prior to AY 2021–22 unless the limitation under the unamended law was alive on the date of issuance. For AY 2016–17, the six-year limitation under the old regime had admittedly expired on 31.03.2023. Consequently, the reassessment notice issued on 06.06.2024 was held to be wholly barred by limitation and without jurisdiction and was accordingly quashed.

The judgment is significant on multiple counts. First, it reinforces the settled principle that reassessment is a jurisdictional power, not a procedural formality, and must strictly conform to statutory timelines. Second, it affirms that the extended ten-year window under the new regime operates prospectively and cannot revive dead or time-barred assessments. Third, the Hon’ble Court has declined to entertain any arguments contrary to the Hon’ble Supreme Court’s exposition, emphasising judicial discipline, certainty, and consistency in tax jurisprudence.

This ruling provides much-needed clarity for pending and future reassessment disputes, particularly where notices are being issued mechanically for pre-2021 assessment years without examining whether limitation under the old law had survived. It strengthens the position that limitation is not a curable defect, and that jurisdictional errors strike at the very root of reassessment proceedings.

The decision is a timely reminder that tax administration must balance revenue interests with constitutional safeguards, and that certainty and finality remain foundational to a fair tax system.

On behalf of the assessee, Advocate (CA.) Divyanshu Agrawal appeared and assisted the Hon’ble Allahabad High Court on the legal issue arising in the matter.