Facts of the Case

The petitioners had filed their income tax returns for Assessment Years 2016-17 and 2017-18, which were processed by the department under Section 143(1) of the Income Tax Act, 1961.

Following the decision of the Supreme Court in Union of India vs Ashish Agarwal, the Income Tax Department issued show cause notices under Section 148A(b) alleging that income chargeable to tax had escaped assessment.

After considering the replies filed by the petitioners, the Assessing Officer passed orders under Section 148A(d) and subsequently issued reassessment notices under Section 148 of the Act.

The petitioners challenged the reassessment proceedings before the Delhi High Court, contending that the notices were issued without obtaining prior approval from the “specified authority” as required under Section 151(ii) of the Income Tax Act.

Issues Involved

  1. Whether reassessment notices issued under Sections 148A(d) and 148 of the Income Tax Act are valid without obtaining prior approval of the specified authority under Section 151(ii).
  2. Whether approval obtained from an authority mentioned in Section 151(i) is sufficient when more than three years have elapsed from the end of the relevant assessment year.

 Petitioner’s Arguments


  • The reassessment proceedings were initiated without approval of the appropriate specified authority as required under Section 151(ii) of the Act.
  • Since more than three years had elapsed from the end of the relevant assessment year, approval had to be obtained from the authorities specified under Section 151(ii).
  • However, the approval was obtained from Principal Commissioner / Commissioner level authority, which falls under Section 151(i) and not under Section 151(ii).
  • Therefore, the reassessment proceedings were without jurisdiction and liable to be quashed.
  • The petitioners relied upon the Delhi High Court decision in Ganesh Dass Khanna vs ITO, where similar reassessment notices were invalidated.

Respondent’s Arguments


  • The Revenue contended that the reassessment proceedings were initiated in accordance with law following the Supreme Court judgment in Union of India vs Ashish Agarwal.
  • It was argued that the Assessing Officer had obtained approval from the competent authority and therefore the reassessment notices were valid.
  • The Revenue also relied upon departmental instructions issued for implementation of reassessment proceedings after the Finance Act, 2021 amendments.

Court Findings


  • The first proviso to Section 148 mandates that no notice can be issued unless the Assessing Officer obtains prior approval of the specified authority.
  • After the Finance Act, 2021, Section 151 clearly identifies different specified authorities depending on the time elapsed from the end of the relevant assessment year.
  • Where more than three years have elapsed, the approval must be obtained from the authorities specified in Section 151(ii).
  • In the present case, although more than three years had passed, the department obtained approval from authorities covered under Section 151(i).
  • Such approval does not satisfy the statutory requirement for reassessment proceedings beyond three years.

Court Order


The Delhi High Court held that the reassessment proceedings were not legally sustainable.

Accordingly, the Court quashed the impugned notices issued under Section 148A(d) and Section 148 of the Income Tax Act.

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

 Important Clarification

  • Approval of the specified authority under Section 151 is mandatory before issuing reassessment notices.
  • The authority granting approval must correspond with the time limitation prescribed under the statute.
  • If approval is obtained from the wrong authority, the entire reassessment proceeding becomes invalid and without jurisdiction.


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

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