Facts of the Case

The petitioners challenged reassessment proceedings initiated by the Income Tax Department through notices issued under Section 148 of the Income-tax Act, 1961.

The reassessment notices were issued after the introduction of the new reassessment regime under the Finance Act, 2021, which substituted Sections 147 to 151 of the Income-tax Act.

The Revenue attempted to justify the notices by relying on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), arguing that the limitation period for issuing reassessment notices had been extended.

However, the petitioners contended that despite the extension of limitation, the reassessment notices were issued without obtaining proper statutory sanction under Section 151, rendering the notices legally unsustainable.

Issues Involved


  1. Whether reassessment notices issued under Section 148 of the Income-tax Act are valid when sanction from the competent authority under Section 151 was not obtained.
  2. Whether the extension of limitation under TOLA can override the statutory requirement regarding the competent sanctioning authority.
  3. Whether reassessment proceedings initiated under the amended reassessment regime complied with the mandatory procedural safeguards under the Income-tax Act, 1961.

Petitioner’s Arguments


  • The petitioners argued that the reassessment notices were issued without obtaining approval from the competent authority as mandated under Section 151 of the Income-tax Act.
  • They submitted that TOLA only extends the limitation period and does not alter the statutory requirement relating to the authority competent to grant sanction.
  • Therefore, the reassessment proceedings were without jurisdiction and liable to be quashed.
  • It was further contended that procedural safeguards introduced under the amended reassessment regime must be strictly complied with.

 Respondent’s Arguments


  • The Revenue contended that the reassessment notices were valid and issued within the extended time limit allowed under TOLA.
  • It was argued that the extension of limitation permitted the department to initiate reassessment proceedings beyond the original statutory time frame.
  • The department sought to justify the reassessment actions as legally sustainable during the transitional phase between the old and new reassessment provisions of the Income-tax Act.

Court Findings


The Delhi High Court allowed the writ petitions and held that reassessment notices issued without obtaining sanction from the proper authority under Section 151 of the Income-tax Act are invalid in law.

  • TOLA only extends the limitation period for initiating reassessment proceedings.
  • It does not modify or override statutory provisions governing approval or sanction under Section 151.
  • Compliance with procedural safeguards in reassessment proceedings is mandatory, even during transitional legislative changes.

Court Order

The reassessment notices issued under Section 148 without obtaining sanction from the competent authority under Section 151 were declared invalid and set aside.

Important Clarification by the Court

  • Extension of limitation under TOLA cannot dilute the statutory requirement of mandatory sanction under Section 151 of the Income-tax Act.
  • Procedural compliance under the new reassessment regime introduced by the Finance Act, 2021 must be strictly followed.

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

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