Facts of the Case

The petitioners filed several writ petitions before the Delhi High Court challenging reassessment proceedings initiated by the Income Tax Department. The reassessment proceedings were initiated through orders passed under Section 148A(d) and notices issued under Section 148 of the Income Tax Act, 1961 for various assessment years.

The petitioners contended that the reassessment notices were issued after the expiry of three years from the end of the relevant assessment year. Under the amended provisions of the Income Tax Act introduced by the Finance Act, 2021, the Assessing Officer must obtain prior approval from the specified authority before issuing such reassessment notices.

However, in the present case, approval for issuing the reassessment notices was taken from an authority not competent under the relevant statutory provision. Therefore, the petitioners challenged the legality of the reassessment notices and orders passed under Section 148A(d).

 

Issues Involved

  1. Whether reassessment notices issued under Section 148 of the Income Tax Act, 1961 were valid when approval was not obtained from the specified authority prescribed under Section 151(ii).
  2. Whether reassessment proceedings initiated after three years from the relevant assessment year require approval from the higher authority specified under the Act.
  3. Whether failure to obtain proper statutory approval renders reassessment proceedings invalid.

 Petitioner’s Arguments


  • The reassessment notices were issued beyond three years from the end of the relevant assessment year.
  • As per the amended reassessment regime introduced by the Finance Act, 2021, prior approval must be obtained from the specified authority mentioned under Section 151(ii).
  • In the present case, the Assessing Officer obtained approval from the authority specified under Section 151(i) instead of Section 151(ii).
  • Since approval from the competent authority was mandatory, the reassessment proceedings were without jurisdiction and liable to be quashed.

 Respondent’s Arguments


  • The reassessment proceedings were initiated based on material suggesting that income chargeable to tax had escaped assessment.
  • The Assessing Officer had obtained approval prior to issuing notices under Section 148.
  • The approval obtained should be treated as sufficient compliance with the statutory requirement for initiating reassessment proceedings.

 Court Findings


  • The proviso to Section 148 mandates that reassessment notices can only be issued after obtaining approval from the specified authority.
  • Section 151 provides two separate categories of authorities depending upon the time elapsed since the relevant assessment year.
  • Where more than three years have elapsed, approval must be obtained from the authority specified under Section 151(ii).
  • In the present case, the approval was obtained from the authority specified under Section 151(i) instead of Section 151(ii).

 Court Order / Decision


  • The reassessment notices issued under Section 148 and the corresponding orders under Section 148A (d) were invalid in law.
  • The mandatory approval required under Section 151(ii) was not obtained.
  • Consequently, the reassessment proceedings were quashed.

 Important Clarification by the Court

  • Approval from the correct specified authority under Section 151 is a mandatory statutory requirement before issuing reassessment notices.
  • If reassessment notices are issued without such approval, the proceedings become legally unsustainable.
  • Authorities must strictly comply with procedural safeguards introduced by the Finance Act, 2021. 


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


Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.