Facts of the Case

The petitioners challenged reassessment proceedings initiated by the Income Tax Department under the provisions of the Income Tax Act, 1961. The reassessment notices were issued for relevant assessment years beyond three years from the end of the assessment year.

The petitioners contended that the reassessment notices were issued without obtaining approval from the “specified authority” as mandated under the amended provisions of the Income Tax Act. The Revenue authorities had obtained approval from an authority not competent under the applicable statutory framework.

Therefore, the petitioners approached the Delhi High Court challenging the validity of the reassessment notices as well as consequential orders passed under Section 148A(d) of the Act. 

Issues Involved

  1. Whether reassessment notices issued under Section 148 were valid without obtaining approval from the “specified authority” as required under Section 151 of the Income Tax Act.
  2. Whether reassessment proceedings initiated after three years from the relevant assessment year required approval from the competent authority specified under Section 151(ii).
  3. Whether reassessment notices issued without proper statutory sanction were liable to be quashed.

Petitioner’s Arguments

  • The reassessment notices were issued beyond three years from the end of the relevant assessment year.
  • Under Section 151(ii) of the Income Tax Act, prior approval of the “specified authority” was mandatory before issuing reassessment notices.
  • The approval was taken from an authority mentioned under Section 151(i), which was not the competent authority in cases where more than three years had elapsed.
  • Therefore, the initiation of reassessment proceedings was without jurisdiction and liable to be quashed.

Respondent’s Arguments

  • The reassessment notices were issued in accordance with the statutory framework under the Income Tax Act.
  • Necessary approvals had been obtained before issuance of the notices.
  • The reassessment proceedings were valid and within the scope of the powers granted to the assessing authorities. 

Court Findings

  • Section 151 clearly specifies the competent authority whose approval is necessary before issuing reassessment notices.
  • Where reassessment proceedings are initiated after the expiry of three years from the end of the relevant assessment year, approval must be obtained from the authority specified under Section 151(ii).
  • In the present case, the approval was obtained from an authority specified under Section 151(i), which was not the competent authority for cases beyond three years.

Court Order

  • The reassessment notices and consequential orders were invalid due to the absence of approval from the competent specified authority.
  • Consequently, the impugned notices issued under Section 148 and orders passed under Section 148A(d) were quashed.

Important Clarification by the Court

  • Approval from the specified authority under Section 151 is a mandatory jurisdictional requirement.
  • Where the approval is obtained from an incorrect authority, the entire reassessment proceedings become invalid.
  • Compliance with statutory approval requirements cannot be treated as a procedural irregularity.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/RAS05012024CW165242022_114311.pdf

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