Facts of the Case

The petitioner, Twylight Infrastructure Pvt. Ltd., challenged reassessment proceedings initiated by the Income Tax Department for Assessment Years 2016-17 and 2017-18.

The reassessment notices were issued under Section 148 of the Income Tax Act, 1961 after the amendments introduced by the Finance Act, 2021, which substantially changed the reassessment framework and introduced procedural safeguards such as Section 148A and revised approval requirements under Section 151.

The petitioner contended that the notices were issued without obtaining proper sanction from the specified authority as required under the amended provisions of the Act.

Several connected writ petitions were also filed raising similar challenges against reassessment notices issued by the Income Tax Department.

 

Issues Involved

  1. Whether reassessment notices issued under Section 148 of the Income Tax Act are valid when sanction from the specified authority under Section 151 is not properly obtained.
  2. Whether the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) modifies or relaxes the requirement regarding the competent sanctioning authority.
  3. Whether reassessment proceedings can be sustained if statutory approval requirements under the amended regime are not complied with.

 

Petitioner’s Arguments

  • The petitioner argued that the reassessment notices were invalid because the approval required under Section 151 of the Income Tax Act had not been obtained from the legally prescribed specified authority.
  • It was submitted that the amendments introduced by the Finance Act, 2021 clearly prescribe which authority must grant sanction before issuance of reassessment notices.
  • The petitioner contended that TOLA merely extended limitation periods but did not alter the statutory requirement regarding the authority competent to grant approval.
  • Therefore, notices issued without valid approval were contrary to the statutory framework and liable to be quashed.

 

Respondent’s Arguments

  • The Income Tax Department contended that reassessment proceedings were initiated within the extended time limits permitted under TOLA.
  • It was argued that the approvals obtained were sufficient for initiating reassessment proceedings and that the notices were issued in accordance with the law.
  • The Revenue also argued that procedural objections raised by the petitioner should not invalidate the reassessment proceedings.

 

Court Findings

  • Section 151 mandates approval from the specified authority before issuance of a notice under Section 148.
  • Compliance with statutory safeguards is mandatory and not merely procedural.
  • The extension of time limits under TOLA does not alter or substitute the statutory requirement regarding the authority competent to grant sanction.

 

Court Order / Decision

The Court held that reassessment proceedings initiated without proper sanction under Section 151 of the Income Tax Act are invalid and unsustainable in law.

 

Important Clarification by the Court

  • The requirement of sanction from the specified authority is mandatory under the reassessment regime.
  • TOLA only extends limitation periods and does not modify statutory approval requirements.
  • Any reassessment notice issued without proper sanction under Section 151 is liable to be set aside.

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