Facts of the Case

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

In one of the representative matters, the petitioner filed the return of income for AY 2017-18 declaring income of Rs. 66,88,500. The return was processed and an intimation under Section 143(1) of the Income Tax Act, 1961 was issued.

Subsequently, following the judgment of Union of India v. Ashish Agarwal, the Revenue issued a notice dated 26.05.2022 under Section 148A(b) alleging that certain income had escaped assessment. The petitioner submitted a reply to the notice.

Thereafter, the Assessing Officer passed an order under Section 148A(d) holding that income amounting to Rs. 4,37,56,000 had escaped assessment and issued a consequential notice under Section 148 of the Act for reassessment proceedings.

The petitioners challenged these notices and orders before the High Court contending that the reassessment proceedings had been initiated without approval from the “specified authority” as required under Section 151 of the Income Tax Act.

Issues Involved

  1. Whether reassessment notices issued under Sections 148 and 148A of the Income Tax Act, 1961 are valid when the approval is obtained from an authority not designated as the specified authority under Section 151(ii).
  2. Whether the approval of the specified authority is mandatory before issuance of notice under Section 148.
  3. Whether reassessment proceedings initiated without such approval are liable to be quashed.

Petitioner’s Arguments

  • The reassessment proceedings were initiated without obtaining approval from the correct specified authority under Section 151(ii) of the Income Tax Act.
  • As more than three years had elapsed from the end of the relevant assessment year, the approval should have been taken from Principal Chief Commissioner/Principal Director General/Chief Commissioner/Director General, as required by the statute.
  • However, the approval had been taken from authorities falling under Section 151(i) which was not permissible in the circumstances.
  • The first proviso to Section 148 makes prior approval of the specified authority mandatory before issuance of notice.
  • Therefore, the reassessment notices and orders were without jurisdiction and liable to be set aside.

 Respondent’s Arguments


  • The reassessment proceedings were validly initiated in accordance with law.
  • 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 argued that approval from the specified authority was not mandatory in the manner contended by the petitioners.
  • The Revenue further submitted that if the Court found any defect in approval, liberty should be granted to initiate reassessment proceedings afresh.

Court Findings

The Delhi High Court examined the statutory framework of Sections 148, 149 and 151 of the Income Tax Act, both before and after the amendments introduced by the Finance Act, 2021.

  • The first proviso to Section 148 clearly mandates that no notice shall be issued unless the Assessing Officer obtains prior approval of the specified authority.
  • Section 151 specifies the authority competent to grant such approval depending on the time elapsed since the relevant assessment year.
  • Where more than three years have elapsed, the approval must be granted by authorities specified under Section 151(ii).
  • In the present batch of cases, it was undisputed that the approval had been obtained from authorities mentioned in Section 151(i) instead of Section 151(ii).
  • Therefore, the reassessment proceedings had been initiated without the approval of the competent specified authority.

The Court also referred to its earlier decision in Ganesh Dass Khanna v. Income Tax Officer & Anr., 2023: DHC: 8187-DB, which discussed the relationship between limitation provisions and the authority competent to grant approval.

Court Order

  • The impugned notices and orders issued under Sections 148 and 148A(d) were invalid as they lacked approval from the specified authority under Section 151(ii).
  • Consequently, all the impugned reassessment notices and orders were quashed.
  • However, the Court granted liberty to the Revenue to initiate reassessment proceedings afresh in accordance with law, if permissible.

Important Clarification

  • Prior approval of the specified authority under Section 151 read with the first proviso to Section 148 is mandatory before issuing a reassessment notice.
  • The rank of the authority granting approval depends on the limitation period prescribed under Section 149.
  • Any reassessment proceedings initiated without approval from the correct statutory authority are liable to be set aside.

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


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