Facts of the Case

The petitioner, Atma Ram Singhania, along with other connected assessees, challenged reassessment proceedings initiated for Assessment Year 2015-16 through notices issued under Section 148 of the Income-tax Act, 1961.

The reassessment notices were issued after the expiry of four years from the end of the relevant assessment year. The sanction for issuance of such notices was granted by the Joint Commissioner of Income Tax (JCIT).

The petitioners contended that such approval was contrary to Section 151, as sanction beyond the stipulated period could only be accorded by higher designated authorities, and not by the JCIT. The Revenue relied on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) to justify the reassessment action.

 

Issues Involved

Whether reassessment notices issued under Section 148 after four years were valid when sanctioned by the Joint Commissioner of Income Tax.

Whether TOLA altered or diluted the mandatory approval requirements under Section 151.

Whether sanction granted by an incompetent authority renders reassessment proceedings void.

Which version of Section 151 (pre- or post-Finance Act, 2021) governs such reassessment actions.

 

Petitioner’s Arguments

The petitioners argued that:

Section 151 mandates that reassessment beyond the prescribed period must be approved only by specified senior authorities.

Approval by the JCIT was jurisdictionally defective.

TOLA merely extended timelines and did not amend the hierarchy of sanctioning authorities.

Absence of valid sanction strikes at the root of jurisdiction, rendering the reassessment notices void ab initio.

The position is well-settled by consistent High Court jurisprudence, including Twylight Infrastructure, JM Financial, and Siemens Financial Services.

 

Respondent’s Arguments

The Revenue contended that:

TOLA extended the limitation period and thereby validated the reassessment action.

Since notices were issued within the extended period, sanction by the JCIT was sufficient.

The reassessment action was in accordance with the statutory scheme prevailing at the relevant time.

 

Court Order / Findings

The Delhi High Court decisively rejected the Revenue’s submissions and held that:

TOLA does not amend or override Section 151; it merely extends time limits.

Sanction under Section 151 must strictly conform to the authority prescribed by statute.

Where reassessment is initiated beyond the relevant period, approval by the JCIT is impermissible.

Sanction by an incompetent authority constitutes a jurisdictional defect, not a curable irregularity.

Consistent judicial opinion across High Courts confirms that statutory safeguards cannot be diluted by executive action.

The Court followed and reaffirmed:

Twylight Infrastructure Pvt. Ltd. v. ITO (Delhi HC)

JM Financial & Investment Consultancy Services Pvt. Ltd. (Bombay HC)

Siemens Financial Services Pvt. Ltd. (Bombay HC)

Ganesh Dass Khanna v. ITO (Delhi HC)

 

Important Clarification

The Court clarified that:

Extension of limitation under TOLA does not affect the rank or competence of the sanctioning authority.

Approval requirements under Section 151 are mandatory and jurisdictional.

Reassessment proceedings initiated without valid sanction are non est in law.

 

Final Outcome

Writ Petitions Allowed
 Reassessment Notices Issued Under Section 148 Quashed
 Proceedings Held Void for Want of Proper Sanction
 Revenue Granted Liberty Only to Act in Accordance with Law, If Permissible

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770191811_ATMARAMSINGHANIAVsASSISTANTCOMMISSIONEROFINCOMETAXCIRCLE222DELHIANDORS.pdf 

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