Facts of the Case

The present 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 the representative case, the assessee had filed the return of income for AY 2017-18 which was processed under Section 143(1) of the Income Tax Act, 1961.

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

After considering the reply of the assessee, the Assessing Officer passed an order under Section 148A(d) holding that income had escaped assessment and issued a reassessment notice under Section 148.

The order and notice were issued after obtaining approval from the Principal Commissioner of Income Tax (PCIT).

The assessees challenged the reassessment proceedings before the Delhi High Court contending that the approval required under the law had not been obtained from the “specified authority” as mandated under Section 151(ii) of the Income Tax Act.

 Issues Involved


  1. Whether reassessment notices issued under Sections 148 and 148A(d) are valid when approval is taken from an authority not falling within the category of “specified authority” under Section 151(ii) of the Income Tax Act.
  2. Whether approval from the correct specified authority is mandatory for initiating reassessment proceedings where more than three years have elapsed from the relevant assessment year.
  3. Whether reliance by the Revenue on TOLA (Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020) and CBDT instructions can override statutory requirements under the Income Tax Act.

 Petitioner’s Arguments


  • Reassessment proceedings were initiated without obtaining approval from the correct specified authority as required under Section 151(ii) of the Income Tax Act.
  • Where more than three years have elapsed from the end of the relevant assessment year, approval must be granted by the Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General, and not by the Principal Commissioner.
  • The approval obtained from the Principal Commissioner of Income Tax was therefore legally invalid.
  • Since the mandatory statutory requirement was not complied with, the entire reassessment proceedings including the order under Section 148A(d) and the notice under Section 148 were liable to be quashed.

 Respondent’s Arguments


  • The reassessment proceedings were initiated in accordance with law and were supported by approval from the Principal Commissioner of Income Tax.
  • The Revenue relied on provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and CBDT Instruction No.1 of 2022 dated 11.05.2022 to justify the validity of the reassessment notices.
  • It was contended that approval of the specified authority was not mandatory in the manner suggested by the petitioners.

 Court Findings


  • The first proviso to Section 148 clearly mandates that prior approval of the specified authority is mandatory before issuing a reassessment notice.
  • Section 151 of the Income Tax Act specifies which authority must grant approval depending on the time elapsed since the relevant assessment year.
  • Where more than three years have elapsed, approval must be obtained from authorities specified under Section 151(ii) such as the Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General.
  • In the present case, the approval had been obtained from the Principal Commissioner, which is an authority falling under Section 151(i) and not under Section 151(ii).
  • Therefore, the reassessment notices were issued without the approval of the correct specified authority, rendering them unsustainable in law.

Court Order


  • The impugned orders under Section 148A(d) and the notices issued under Section 148 were quashed.
  • The reassessment proceedings were invalid as they lacked approval from the specified authority under Section 151(ii).

Important Clarification by the Court


  • Approval of the specified authority is mandatory under the first proviso to Section 148.
  • The rank of the approving authority depends on the limitation period provided under Section 151.
  • Any reassessment notice issued without approval of the correct specified authority is liable to be set aside.

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


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