Cal. Rev. & Tax. Code § 43304

The California Department of Tax and Fee Administration may decrease or increase the amount of the determination before it becomes final, but the amount may be increased only if a claim for the increase is asserted by the California Department of Tax and Fee Administration at or before the hearing. Unless the penalty imposed by subdivision (c) of Section 43201 or subdivision (c) of Section 43201.01 applies to the amount of the determination as originally made or as increased, the claim for increase must be asserted within eight years after the date the return for the period for which the increase is asserted was due.