Facts of the Case

The petitioners filed multiple writ petitions challenging reassessment proceedings initiated by the Income Tax Department. The reassessment proceedings were initiated through an order under Section 148A(d) followed by notices issued under Section 148 of the Income Tax Act, 1961 for various assessment years.

The petitioners contended that the reassessment proceedings were initiated after the expiry of three years from the end of the relevant assessment year, and therefore the approval of the specified authority under the amended statutory framework was mandatory.

However, according to the petitioners, the approval for issuance of the reassessment notice had been obtained from an authority not competent under Section 151(ii) of the Income Tax Act, 1961.

Consequently, the petitioners approached the Delhi High Court challenging the validity of the reassessment notices and the orders passed under Section 148A (d).

Issues Involved

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

Petitioner’s Arguments

  • The reassessment notices were issued after the expiry of three years from the end of the relevant assessment year.
  • As per the amended provisions introduced by the Finance Act, 2021, the Assessing Officer must obtain prior approval from the specified authority mentioned under Section 151(ii) before issuing such notice.
  • The approval in the present case was obtained from an authority specified under Section 151(i) instead of Section 151(ii), which was legally impermissible.
  • Since mandatory statutory approval was not obtained from the correct authority, the entire reassessment proceedings were 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 before issuing the notice under Section 148.
  • The approval obtained should be considered valid and sufficient for the purposes of initiating reassessment proceedings.

 Court Findings


  • The first proviso to Section 148 mandates that prior approval from the specified authority must be obtained before issuing a notice for reassessment.
  • Section 151 categorically specifies two categories of authorities depending upon the time elapsed from the relevant assessment year.
  • If more than three years have elapsed, the approval must be obtained from the authority specified under Section 151(ii).
  • In the present case, the approval had been taken 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.
  • The mandatory approval required under Section 151(ii) was not obtained.
  • Therefore, the reassessment proceedings were quashed.

Important Clarification by the Court

  • Approval of the correct specified authority under Section 151 is a mandatory statutory condition for initiating reassessment proceedings.
  • Any reassessment notice issued without such approval is legally unsustainable.
  • Compliance with the procedural safeguards introduced by the Finance Act, 2021 must be strictly followed by the Revenue authorities.

 

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


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