An analysis of BKR Capital (P.) Ltd. v. Income-tax Officer [2026] 187 taxmann.com 10 (Delhi)
Few questions in reassessment litigation are as decisive as the one concerning the Section 148A timeline. A reassessment that survives every test on merits can still collapse if the notice under Section 148 is found to have been issued even a single day beyond the prescribed time limit under Section 149. Equally, an assessee who has himself consumed the calendar by seeking repeated adjournments cannot later turn around and plead that the clock ran out while he was being heard.
The Delhi High Court’s judgment in BKR Capital (P.) Ltd. squarely addresses this tension. The decision is a useful reminder that the limitation framework in Section 149 is not a single bright line but a composite scheme of provisos that must be read together. For practitioners, it crystallises an important principle: the time an Assessing Officer (AO) spends accommodating the assessee’s own requests for time does not count against the AO when computing the 148A time limit.
The 148A Timeline in Brief
Before reaching the facts, it helps to set out how the reassessment machinery is sequenced under the law as it stood prior to the Finance Act, 2024 substitution.
A valid reassessment for an assessment year typically moves through these stages:
- Section 148A(b) – The AO issues a show-cause notice supplying the information suggesting income has escaped assessment and grants the assessee an opportunity to respond.
- Reply by the assessee – The assessee files objections within the time allowed (or any extended time).
- Section 148A(d) – The AO passes a reasoned order deciding whether it is a fit case to reopen.
- Section 148 – Only if the 148A(d) order is in favour of reopening does the AO issue the substantive reassessment notice.
The outer limit for issuing the Section 148 notice is governed by Section 149. For assessment years beginning on or before 1 April 2021, the first proviso to Section 149(1) preserves the old six-year ceiling — a notice cannot be issued if it would have been time-barred under the pre-amendment law.
But Section 149(1) does not stop there. The fifth proviso (as numbered in the version applicable at the relevant time) carves out an exclusion: in computing limitation, the time or extended time allowed to the assessee under a Section 148A(b) notice — and any period during which 148A proceedings are stayed by a court — is to be excluded. A companion proviso ensures that if, after such exclusion, fewer than seven days remain for the AO to pass the 148A(d) order, that window is stretched to seven days.
This is the architecture on which the dispute turned.
The Facts: A Calendar Built by the Assessee
The facts in BKR Capital are almost deceptively simple.
For Assessment Year 2017-18, the assessee had filed its return declaring income of about Rs. 13.63 lakh. The ordinary six-year window for issuing a Section 148 notice expired on 31 March 2024.
The AO acted within that window. The Section 148A(b) show-cause notice was issued on 21 March 2024, requiring a reply by 28 March 2024 — comfortably before the limitation date. What happened next is the heart of the case:
| Date | Event |
|---|---|
| 21.03.2024 | Notice under Section 148A(b) issued (within six-year limit) |
| 28.03.2024 | Assessee seeks adjournment; matter deferred to 08.04.2024 |
| 08.04.2024 | Assessee seeks further time; matter deferred to 13.04.2024 |
| 13.04.2024 | Assessee finally files its reply |
| 15.04.2024 | AO passes order under Section 148A(d) and issues Section 148 notice |
The assessee then filed a writ petition contending that since the six-year limitation expired on 31 March 2024, the Section 148 notice dated 15 April 2024 was without jurisdiction and barred by limitation.
In other words, the assessee asked the Court to ignore the fact that the post-31-March delay existed only because he had repeatedly asked for it.
The Question Before the Court
The narrow issue was whether the Section 148 notice dated 15 April 2024 for AY 2017-18 was barred by limitation, given that the six-year period had nominally ended on 31 March 2024.
The answer depended on how the provisos to Section 149(1) interact — and whether the period consumed in granting the assessee his adjournments could be excluded.
The Court’s Reasoning
The High Court dismissed the writ petitions and upheld the notice. Its reasoning unfolds along four threads.
First, limitation is a question of jurisdiction, not sympathy. The Court was candid that equity has no role where a bar of limitation is concerned. The AO could not save a time-barred notice merely by pleading good faith. So the question had to be answered on the statute alone, not on fairness to the Revenue.
Second, the proceedings were validly initiated within time. The trigger for reassessment was the 148A(b) notice of 21 March 2024 — issued before the six-year window closed. On that date, the AO indisputably had jurisdiction to proceed under the unamended provisions. The first proviso to Section 149(1) protects assessees only where a notice could not have been issued at all within the old limit; here, the proceedings had lawfully commenced within the limit.
Third, the fifth proviso supplies the exclusion. Once 148A proceedings are validly pending and the assessee is granted time to respond, the time so allowed is statutorily excluded from the limitation computation. The period from 28 March 2024 to 15 April 2024 — during which the matter remained pending solely because the assessee sought adjournments — was therefore liable to be excluded. Strip out that excluded period, and the 15 April 2024 notice falls squarely within limitation.
Fourth, Section 149(1) must be read as a whole. The Court accepted the Revenue’s harmonious-construction argument: the first proviso cannot be read in isolation from the fifth. To let the first proviso override the express exclusion mechanism would render the fifth proviso otiose — an outcome impermissible in statutory interpretation. All the provisos form one composite limitation framework and must be given effect together.
The Court also made a pointed observation on conduct. The assessee had wilfully availed the indulgence, filed his reply on 13 April 2024 without a murmur of protest, and raised the limitation plea only after the adverse notice issued. A litigant who builds the delay cannot profit from it.
A Worked Illustration
Consider how the principle plays out in practice.
Example 1 — Adjournment sought by the assessee (the BKR Capital situation). Suppose the six-year limit expires on 31 March. The AO issues the 148A(b) notice on 20 March, allowing a reply by 27 March. The assessee seeks two adjournments and files his reply on 12 April. The AO passes the 148A(d) order and issues the 148 notice on 14 April. The 16-day stretch (27 March to 12 April) attributable to the assessee’s requests is excluded. The 14 April notice is within limitation, because in real terms the AO consumed only the days that were legitimately his.
Example 2 — No fault of the assessee. Now suppose the AO simply sat on the file. The 148A(b) notice issues on 20 March, the assessee replies on time by 27 March, and the AO — for no reason attributable to the assessee — issues the Section 148 notice on 14 April. Here, there is no excludable period. The notice is time-barred, because the delay belongs entirely to the Department.
The distinction the Court drew between these two scenarios is exactly why it declined to follow two decisions the assessee relied upon.
How the Court Distinguished the Assessee’s Authorities
The assessee leaned heavily on two judgments. The Court found both inapplicable.
In Manju Somani v. ITO, the notice had been issued beyond limitation without any delay caused by the assessee, and the statutory exclusion was neither applicable nor even pleaded. That is the Example 2 situation — pure departmental delay. It offered the BKR Capital assessee no help, because here the delay was self-inflicted and the exclusion was squarely invoked.
In Shree Cement Ltd. v. ACIT (Rajasthan High Court), the 148A(b) notice was issued on the very last day — 31 March 2024 — and the 148 notice followed on 1 May 2024. The Rajasthan Court was dealing with proceedings launched at the verge of the deadline, leaving almost no room to elicit a response and pass the 148A(d) order. Crucially, the fifth proviso was neither claimed nor examined there. In BKR Capital, by contrast, the proceedings began well before the deadline, and the exclusion was directly in play. The two cases therefore stood on different footings.
Why This Matters: The Policy Behind the 148A Time Limit
There is a deeper rationale the Court articulated, and it is worth dwelling on.
Section 148A exists to give the assessee a fair opportunity to defend before reopening. If an assessee’s contention were accepted — that any time spent hearing him eats into limitation — every AO facing a closing deadline would be incentivised to refuse adjournments and rush the 148A(d) order to beat the clock. That would hollow out the very protection Section 148A was designed to confer. The exclusion in the fifth proviso is thus not a loophole for the Revenue; it is the structural feature that lets natural justice and limitation coexist.
Practical Takeaways for Assessees and Practitioners
Several actionable lessons emerge:
- Track the trigger date, not just the outer date. If the 148A(b) notice is issued within the six-year window, the proceedings are validly initiated even if the eventual 148 notice spills past 31 March. Limitation challenges premised solely on the 148 notice date will often fail.
- Adjournments are not free. Every adjournment an assessee seeks is, in law, an excludable period. A limitation defence cannot be manufactured out of delay the assessee himself requested.
- Raise objections at the right stage. The Court was visibly unimpressed that the limitation plea surfaced only after the adverse notice. A contemporaneous objection during the 148A stage carries far more weight than an afterthought in writ proceedings.
- Read Section 149(1) as a composite scheme. Isolating the first proviso while ignoring the fifth is a losing argument. The provisos interlock and must be construed harmoniously.
- Where the delay is purely departmental, the defence is real. Manju Somani survives. Where the assessee did nothing to cause the delay and no statutory exclusion applies, a notice issued beyond the limit remains vulnerable.
Conclusion
BKR Capital (P.) Ltd. v. ITO does not expand the Section 148A time limit; it clarifies how the clock is read. The six-year ceiling remains intact, and limitation continues to be a hard jurisdictional bar untouched by sympathy. But the statute itself stops the clock for the period an assessee consumes in being heard. An assessee who asks for time, takes it, and then complains the time ran out will find little traction. The judgment is a quiet but firm endorsement of the idea that fair process and finality of limitation are partners, not rivals — and that the calendar an assessee builds for himself is a calendar he must live with.
This article is intended for general information and professional discussion and does not constitute legal or tax advice. The applicability of the provisos to Section 149 depends on the precise facts and the version of the law in force for the relevant assessment year; readers should obtain advice specific to their circumstances before acting.