Facts of the Case

The petitioner, Ms. Nandita Sikka, was one of the assessees forming part of a batch of writ petitions challenging reassessment proceedings initiated for Assessment Year 2015–16 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 petitioners contended that the notices were issued pursuant to approvals granted by the Joint Commissioner of Income Tax. The reassessment action was initiated during the period affected by the COVID-19 pandemic, and the Revenue sought to justify the action by relying upon extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

 Issues Involved

Whether reassessment notices issued under Section 148 after the expiry of the prescribed period are valid when the mandatory sanction under Section 151 of the Income Tax Act has been granted by an authority not specified in law, and whether TOLA alters the statutory requirement relating to the competent sanctioning authority.

 Petitioner’s Arguments

The petitioner contended that sanction under Section 151 is a jurisdictional precondition for initiation of reassessment proceedings. Since the notices were issued beyond four years from the end of the relevant assessment year, approval was mandatorily required from the Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner, and not from the Joint Commissioner.

It was further argued that TOLA merely extended time limits and did not amend or dilute the statutory requirement regarding the authority competent to grant sanction. Reliance was placed on decisions of the Delhi High Court, as well as Bombay, Madras, and Orissa High Courts, including Twylight Infrastructure Pvt. Ltd. and Ganesh Das Khanna, holding that sanction by an incompetent authority vitiates the entire reassessment proceedings.

 Respondent’s Arguments

The Revenue contended that in view of the extensions granted under TOLA, the reassessment notices were validly issued and that sanction by the Joint Commissioner was sufficient under the pre-amended Section 151.

It was further argued that the notices were generated prior to 01 April 2021 and that the unamended provisions of Section 151 would apply. The respondents also sought to rely upon CBDT instructions and administrative clarifications to support the validity of the reassessment action.

 Court Order / Findings

The Delhi High Court allowed the writ petitions and quashed the impugned reassessment notices.

The Court held that Section 151 mandates approval by the specified authority depending upon the time elapsed from the end of the relevant assessment year. Where reassessment is sought to be initiated beyond the prescribed period, sanction by higher authorities alone is permissible.

The Court categorically held that TOLA does not amend or override Section 151 and only extends the time available for completing statutory actions. It does not alter the identity of the competent authority required to grant sanction.

The approval granted by the Joint Commissioner was therefore held to be without jurisdiction, rendering the reassessment notices invalid and unenforceable in law.

 Important Clarification

The Court clarified that sanction under Section 151 is not a procedural formality but a substantive jurisdictional safeguard. Reassessment proceedings initiated without approval from the legally prescribed specified authority are void ab initio. Extensions granted under TOLA or reliance on CBDT instructions cannot cure defects arising from lack of jurisdiction or non-compliance with statutory mandates.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770194299_NANDITASIKKAVsINCOMETAXOFFICERWARD233DELHIANDORS.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.