Facts of the Case

The petitioners filed writ petitions before the Delhi High Court challenging reassessment proceedings initiated by the Income Tax Department through notices issued under Section 148 of the Income-tax Act, 1961.

The reassessment proceedings were initiated after the introduction of the new reassessment regime brought by the Finance Act, 2021, which substituted Sections 147 to 151 of the Act.

The Assessing Officer passed orders under Section 148A(d) concluding that certain income had escaped assessment and subsequently issued notices under Section 148 for reopening the assessment.

The petitioners contended that the reassessment notices were issued without obtaining the mandatory approval from the specified authority under Section 151 of the Income-tax Act, which is a prerequisite for initiating reassessment proceedings.

 Issues Involved

  1. Whether reassessment notices issued under Section 148 of the Income-tax Act, 1961 are valid when the mandatory approval under Section 151 is not obtained from the competent authority.
  2. Whether reassessment proceedings initiated under the amended reassessment framework complied with statutory procedural requirements.
  3. Whether extension of limitation under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) could dispense with the statutory requirement of sanction by the competent authority.

 Petitioner’s Arguments

  • The reassessment notices were issued without obtaining approval from the competent authority prescribed under Section 151 of the Income-tax Act.
  • Compliance with the statutory scheme of Sections 148A and 151 is mandatory before initiating reassessment proceedings.
  • The extension of limitation under TOLA does not alter the statutory requirement relating to the authority competent to grant sanction.
  • Consequently, the reassessment proceedings were without jurisdiction and liable to be quashed.

 Respondent’s Arguments

  • The reassessment proceedings were initiated after following the procedure prescribed under the amended provisions of the Income-tax Act.
  • The Department relied upon the extension of limitation under TOLA, arguing that the reassessment notices were issued within the extended time period.
  • It was contended that the initiation of reassessment proceedings was legally justified on the basis of information suggesting that income had escaped assessment.

 Court Findings

  • Before issuing a notice under Section 148, the Assessing Officer must obtain prior approval from the specified authority under Section 151.
  • Such approval is a mandatory jurisdictional requirement under the reassessment framework introduced by the Finance Act, 2021.
  • The Revenue failed to demonstrate that the required approval from the competent authority had been obtained before issuing the reassessment notices.

 Court Order

The Delhi High Court quashed the reassessment notices issued under Section 148 and the corresponding orders passed under Section 148A(d) on the ground that the mandatory approval under Section 151 of the Income-tax Act had not been obtained from the competent authority.

Thus, the reassessment proceedings initiated against the petitioners were declared invalid in law.

 Important Clarification by the Court

  • Compliance with the statutory procedure prescribed under Sections 148A and 151 is mandatory before initiating reassessment proceedings.
  • The extension of limitation under TOLA cannot override the requirement of obtaining sanction from the specified authority.
  • Failure to obtain the mandatory approval renders the entire reassessment proceedings without jurisdiction.


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

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