Facts of the Case

The petitioners, including Twylight Infrastructure Pvt. Ltd. and several other assessees, challenged reassessment notices issued by the Income Tax Department for reopening completed assessments.

The reassessment proceedings were initiated by issuing notices under Section 148 of the Income Tax Act, 1961 alleging that income had escaped assessment.

The petitioners contended that the reassessment notices had been issued without obtaining valid approval from the “specified authority” as required under Section 151 of the Income Tax Act.

Since proper sanction is a statutory prerequisite for initiating reassessment proceedings, the petitioners approached the Delhi High Court by filing writ petitions under Article 226 of the Constitution of India seeking quashing of the impugned notices and consequential proceedings.

Issues Involved

  1. Whether reassessment notices issued under Section 148 of the Income Tax Act are valid when approval from the specified authority under Section 151 is not properly obtained.
  2. Whether reassessment proceedings initiated without complying with the mandatory requirement of statutory sanction can sustain in law.
  3. Whether such procedural defects invalidate the reassessment proceedings initiated by the Income Tax Department.

Petitioner’s Arguments

  • The reassessment notices were issued without valid sanction from the specified authority, which is mandatory under Section 151 of the Income Tax Act.
  • The approval granted by the authority was either mechanical or not in accordance with the statutory requirements.
  • Since proper sanction is a jurisdictional condition precedent, absence of valid approval renders the entire reassessment proceedings illegal.
  • The reassessment notices and subsequent proceedings therefore deserved to be quashed.

Respondent’s Arguments

  • The reassessment notices were issued in accordance with the statutory provisions governing reassessment proceedings.
  • The competent authority had granted approval before issuance of the notices.
  • The reassessment proceedings were initiated based on material indicating escapement of income and therefore were legally justified.
  • The writ petitions were premature as the reassessment proceedings were still ongoing. 

Court Findings

The Delhi High Court examined the statutory scheme governing reassessment proceedings under the Income Tax Act, 1961, particularly the requirement of sanction under Section 151.

  • Approval from the specified authority is a mandatory statutory requirement before issuing reassessment notices under Section 148.
  • Such approval must be granted after proper application of mind and cannot be mechanical.
  • In the present case, the reassessment notices had been issued without proper approval from the specified authority as mandated by law.

Therefore, the Court held that the impugned reassessment notices suffered from a jurisdictional defect.

Court Order


  • Quashed the reassessment notices and the consequential proceedings initiated against the petitioners.
  • Held that the reassessment proceedings were invalid due to absence of proper approval under Section 151 of the Income Tax Act.
  • However, the Court granted liberty to the Revenue to initiate fresh reassessment proceedings in accordance with law, if permissible.

 

Important Clarification by the Court

  • Approval under Section 151 of the Income Tax Act is not a mere procedural formality.
  • The sanctioning authority must apply its mind and grant approval in accordance with statutory requirements.
  • If the approval is defective or not obtained from the competent authority, the entire reassessment proceeding becomes unsustainable in law.

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


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