Facts of the Case

The petitioners challenged reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961 for Assessment Year 2015-16. The reassessment notices, though dated 31 March 2021, were digitally signed and dispatched after 01 April 2021. The approvals for issuance of these notices were granted by the Joint Commissioner of Income Tax (JCIT). The reassessment was initiated beyond four years from the end of the relevant assessment year.

 

Issues Involved

Whether reassessment notices issued after expiry of four years from the end of the relevant assessment year could be validly initiated with approval from the Joint Commissioner of Income Tax.

Whether extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) altered the statutory requirement of sanction under Section 151.

Whether the amended provisions of Section 151 introduced by the Finance Act, 2021 were applicable to notices digitally signed or dispatched after 01 April 2021.

 

Petitioner’s Arguments

The petitioners contended that:

Under Section 151(1) (pre-amendment) and Section 151(ii) (post-Finance Act 2021), reassessment initiated beyond four years required approval from the Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner, and not the JCIT.

TOLA merely extended limitation periods and did not amend or dilute the requirement regarding the competent sanctioning authority.

Since the notices were digitally signed and dispatched after 01 April 2021, the amended reassessment regime applied.

Reliance was placed on consistent judicial precedents including Twylight Infrastructure (P.) Ltd. v. CIT, Ganesh Das Khanna v. ITO, JM Financial & Investment Consultancy Services Pvt. Ltd., and Siemens Financial Services Pvt. Ltd.

 

Respondent’s Arguments

The Revenue argued that:

Due to TOLA, the time limit for issuance of reassessment notices stood extended, and therefore approval by the Joint Commissioner under the pre-amended Section 151(2) was valid.

The notices were “issued” on 31 March 2021, and therefore the unamended provisions of Section 151 should apply.

System-related delays in digital signing or dispatch should not invalidate otherwise lawful reassessment proceedings.

 

Court Order / Findings

The Delhi High Court held that:

TOLA does not amend Section 151; it only extends timelines and does not alter the statutory hierarchy of sanctioning authorities.

For reassessment initiated beyond four years, approval by the Joint Commissioner is invalid, both under the pre-amended and post-amended versions of Section 151.

The concept of “issuance” requires actual dispatch, and not merely generation or signing of notices.

Since sanction was not obtained from the specified authority, the reassessment notices and all consequential proceedings were quashed.

The Court followed a consistent line of authority laid down by the Bombay, Madras, Orissa, and Delhi High Courts.

 

Important Clarification

The Court clarified that:

Limitation and the identity of the sanctioning authority are intrinsically linked under Section 151.

Extensions under emergency legislation like TOLA cannot override substantive statutory safeguards.

Revenue authorities must strictly comply with the post-Finance Act 2021 reassessment framework, especially regarding prior approval from the correct “specified authority”.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770203794_SUNSATFOODSPRIVATELIMITEDVSASSISTANTCOMMISSIONAROFINCOMETAXCIRCLE222DELHIANDANR.pdf 


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