Facts of the Case

The petitioners had filed their returns of income for Assessment Years 2016-17 and 2017-18, which were processed under Section 143(1) of the Income Tax Act, 1961.

Subsequently, following the judgment of the Supreme Court in Union of India vs Ashish Agarwal, the Income Tax Department issued notices under Section 148A(b) alleging that certain income had escaped assessment.

After considering the replies submitted by the petitioners, the Assessing Officer passed orders under Section 148A(d) and issued consequential reassessment notices under Section 148.

The petitioners challenged the validity of the reassessment proceedings before the Delhi High Court, contending that the notices were issued without obtaining approval from the correct specified authority as mandated under Section 151 of the Income Tax Act.

 Issues Involved


  1. Whether reassessment notices issued under Section 148 are valid when approval is obtained from an authority not specified under Section 151 of the Income Tax Act.
  2. Whether the requirement of prior approval from the specified authority under the proviso to Section 148 read with Section 151 is mandatory.
  3. Whether reassessment proceedings initiated without approval from the correct authority are liable to be quashed.

 Petitioner’s Arguments


  • The reassessment proceedings were initiated after more than three years from the end of the relevant assessment year.
  • Under Section 151(ii), approval for issuing notice in such cases must be obtained from the Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General.
  • However, the approval had been obtained only from the Principal Commissioner, which is not the prescribed authority for cases beyond three years.
  • Therefore, the impugned orders under Section 148A(d) and notices under Section 148 were issued without valid sanction and were liable to be set aside.

 Respondent’s Arguments


  • The reassessment proceedings were initiated in accordance with the provisions of the Income Tax Act.
  • Reliance was placed on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and CBDT Instruction No. 1/2022 dated 11.05.2022.
  • It was submitted that the requirement of approval should not invalidate the proceedings in the present circumstances.
  • The Revenue also sought liberty to initiate fresh proceedings if the notices were quashed.

 Court Findings


  • The proviso to Section 148 clearly mandates prior approval from the specified authority before issuance of reassessment notice.
  • Section 151 specifies the competent authority depending on the time elapsed since the relevant assessment year.
  • Where more than three years have elapsed, approval must be granted by authorities mentioned under Section 151(ii).
  • In the present batch of cases, the approval had been obtained from authorities mentioned under Section 151(i) instead of the authority prescribed under Section 151(ii).
  • Such approval does not satisfy the statutory requirement under the Act.

Court Order

  • The reassessment notices and orders issued under Sections 148A(d) and 148 were invalid.
  • The notices were quashed due to absence of approval from the correct specified authority under Section 151(ii).

Important Clarification by the Court

  • Approval from the correct specified authority is a mandatory statutory requirement.
  • The authority granting approval must correspond with the time limitation framework under Section 149 and Section 151.
  • Any reassessment initiated without approval from the competent authority will be legally unsustainable.

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


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