Facts of the Case

The appeals were filed by the Revenue challenging a common order of the Income Tax Appellate Tribunal (ITAT) dated 21 December 2018. The Tribunal had allowed the assessee’s appeals on the ground that reassessment proceedings initiated under Section 148 were invalid due to improper sanction under Section 151 of the Income Tax Act.

The Assessing Officer had obtained approval from the Commissioner of Income Tax (CIT), whereas, as per statutory requirements, sanction should have been obtained from the Joint Commissioner of Income Tax (JCIT). The original assessments in relevant years were processed under Section 143(1).

Issues Involved

  1. Whether reassessment notices issued under Section 148 are valid when sanction is obtained from an incorrect authority under Section 151.
  2. Whether approval from a higher authority (CIT) can substitute the statutory requirement of approval from the designated authority (JCIT).
  3. Whether such defect can be cured under Section 292B of the Act.

Petitioner’s (Revenue) Arguments

  • The Revenue contended that there was no requirement to obtain sanction from the Joint Commissioner as reassessment notices were issued within four years.
  • It was argued that approval had been obtained from the Additional Commissioner, who is equivalent in rank to the Joint Commissioner.
  • The Revenue further submitted that approval from a higher authority (CIT) should not invalidate the proceedings.
  • It was also argued that there was no lack of satisfaction or procedural defect affecting jurisdiction.

Respondent’s (Assessee) Arguments

  • The assessee contended that the sanction for reopening was obtained from an incorrect authority (CIT instead of JCIT), rendering the reassessment proceedings invalid.
  • It was argued that the defect was jurisdictional and could not be cured under Section 292B.
  • Reliance was placed on judicial precedents including CIT vs Soyuz Industrial Resources Ltd (58 taxmann.com 336).

Court Findings / Judgment

The Delhi High Court upheld the ITAT’s decision and dismissed the Revenue’s appeals, holding:

  • Section 151 clearly mandates the competent authority for granting sanction depending on the nature of assessment.
  • Where original assessment is processed under Section 143(1), sanction must be obtained from the Joint Commissioner.
  • Approval from a higher authority like CIT does not cure the defect when statute specifically prescribes a particular authority.
  • The Court reiterated that when a statute requires a thing to be done in a specific manner, it must be done in that manner alone.
  • The defect in sanction is jurisdictional and cannot be cured under Section 292B.
  • The arguments raised by the Revenue before the High Court were inconsistent with their stand before lower authorities and thus not sustainable.

Accordingly, the Court held that no substantial question of law arose and dismissed the appeals.

Important Clarifications

  • Sanction under Section 151 is mandatory and jurisdictional.
  • Approval must be obtained from the correct authority specified in the statute.
  • Higher authority approval cannot substitute statutory requirement.
  • Section 292B cannot cure jurisdictional defects.
  • Consistency in arguments across appellate stages is crucial.

Sections Involved

  • Section 147 – Income escaping assessment
  • Section 148 – Issue of notice for reassessment
  • Section 151 – Sanction for issue of notice
  • Section 143(1) & 143(3) – Assessment provisions
  • Section 260A – Appeal to High Court
  • Section 292B – Return of income, etc., not to be invalid on certain grounds

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:2064-DB/MMH15072021ITA12020_223205.pdf


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