Facts of the Case

The batch of writ petitions before the Delhi High Court concerned Assessment Years 2016-17 and 2017-18 relating to reassessment proceedings initiated by the Income Tax Department.

In one of the representative matters, the petitioner had filed its return of income for AY 2017-18 declaring income of ₹66,88,500, which was processed under Section 143(1). Later, after the judgment of the Supreme Court in Union of India v. Ashish Agarwal, the revenue issued a notice dated 26.05.2022 under Section 148A(b) alleging that income had escaped assessment.

The petitioner filed a reply to the said notice. Subsequently, the Assessing Officer passed an order under Section 148A(d) holding that income of ₹4,37,56,000 had escaped assessment and issued a reassessment notice under Section 148.

The petitioners challenged these notices and orders before the Delhi High Court primarily on the ground that reassessment proceedings were initiated without obtaining approval from the proper “specified authority” as required under Section 151(ii) of the Income Tax Act.

Issues Involved


  1. Whether reassessment notices issued under Section 148 after passing order under Section 148A(d) are valid without approval of the “specified authority” prescribed under Section 151(ii) of the Income Tax Act.
  2. Whether approval obtained from an authority other than the specified authority under Section 151(ii) renders the reassessment proceedings invalid.
  3. Whether reliance on TOLA and CBDT Instruction No.1 of 2022 can cure the defect relating to approval by the correct authority.

Petitioner’s Arguments


The petitioners contended that the reassessment notices and orders were invalid in law because they were not backed by approval of the specified authority required under Section 151(ii) of the Income Tax Act.

It was argued that where more than three years have elapsed from the end of the relevant assessment year, the approval must be granted by the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, as stipulated under Section 151(ii).

However, in the present cases, the approval had been obtained from authorities falling under Section 151(i), which were not competent to grant such approval when the statutory time limit had crossed three years.

The petitioners also relied on the Delhi High Court decision in Ganesh Dass Khanna v. ITO, which emphasized the importance of statutory compliance in reassessment proceedings.

 Respondent’s Arguments


The Revenue argued that the reassessment proceedings were valid and relied upon 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 contended that the requirement regarding approval of the specified authority should not invalidate the proceedings, and that the statutory provisions should be interpreted in light of the transitional framework introduced following the Supreme Court judgment in Union of India v. Ashish Agarwal.

The Revenue further attempted to argue that the approval requirement should not be treated as mandatory in the manner suggested by the petitioners.

Court Findings


The Delhi High Court examined the amended provisions of Sections 148, 149, and 151 introduced by the Finance Act, 2021.

The Court held that the first proviso to Section 148 clearly mandates that no notice can be issued unless the Assessing Officer obtains prior approval of the specified authority.

The Court further clarified that Section 151 determines which authority qualifies as the specified authority depending on the elapsed time from the relevant assessment year.

Where more than three years have elapsed, the approval must necessarily be obtained from the authorities listed under Section 151(ii).

In the present batch of cases, it was undisputed that although more than three years had elapsed from the relevant assessment years, approval was taken from authorities mentioned under Section 151(i) instead of Section 151(ii).

The Court therefore held that the reassessment notices and orders were not in conformity with the statutory mandate.

Court Order


The Delhi High Court quashed the impugned reassessment notices issued under Section 148 and the orders passed under Section 148A(d) on the ground that they lacked approval from the specified authority under Section 151(ii) of the Income Tax Act.

However, the Court granted liberty to the Revenue to initiate reassessment proceedings afresh in accordance with law, if deemed necessary.

Important Clarification by the Court

  • Prior approval of the specified authority under Section 151 is mandatory before issuing notice under Section 148.
  • The rank of the authority granting approval depends on the time elapsed from the relevant assessment year.
  • Approval by an incorrect authority renders the reassessment proceedings legally unsustainable.
  • Quashing of the notices does not prevent the Revenue from initiating fresh proceedings in accordance with law.

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

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