Facts of the Case

The petitioners challenged reassessment proceedings initiated by the Income Tax Department through notices issued under Section 148 of the Income-tax Act, 1961.

The reassessment notices were issued after the introduction of the new reassessment regime under the Finance Act, 2021, which substituted Sections 147 to 151 of the Income-tax Act.

The Revenue sought to justify the notices by relying on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), arguing that the limitation period for issuing reassessment notices stood extended.

The petitioners contended that despite the extension of limitation, the notices were issued without obtaining the proper statutory sanction under Section 151 of the Act, and therefore were invalid.

 Issues Involved


  1. Whether reassessment notices issued under Section 148 were valid when the sanction required under Section 151 of the Income-tax Act was not obtained from the appropriate authority.
  2. Whether TOLA could override or alter the statutory requirement regarding the competent sanctioning authority under Section 151.
  3. Whether reassessment proceedings initiated under the amended provisions complied with the mandatory procedural requirements.

 Petitioner’s Arguments


  • The petitioners argued that the reassessment notices were issued without obtaining approval from the competent sanctioning authority as required under Section 151 of the Income-tax Act.
  • They submitted that the extension of time limits under TOLA does not modify the statutory requirement relating to the authority competent to grant sanction.
  • The reassessment proceedings were therefore without jurisdiction and liable to be quashed.
  • It was further contended that the procedural safeguards introduced under the amended reassessment regime must be strictly complied with.

 Respondent’s Arguments


  • The Revenue contended that the reassessment notices were valid and were issued within the extended time limit allowed under TOLA.
  • It argued that the extension of limitation enabled the department to initiate reassessment proceedings beyond the original statutory time frame.
  • The Revenue sought to justify the reassessment actions as legally sustainable under the transitional framework between the old and new reassessment provisions.

 Court Findings


  • The requirement of obtaining sanction from the competent authority under Section 151 is a mandatory statutory condition before issuing a notice under Section 148.
  • The extension of limitation under TOLA does not alter the requirement regarding the authority competent to grant sanction.
  • Even during the transitional phase between the old and new reassessment regime, the statutory safeguards embedded in the Act must be strictly followed.

 Court Order


The Delhi High Court allowed the writ petitions and held that reassessment notices issued without obtaining sanction from the proper authority under Section 151 were invalid.

Accordingly, the Court quashed the impugned reassessment notices and related reassessment proceedings.

 Important Clarification


  • TOLA only extends the limitation period for initiating reassessment proceedings.
  • It does not modify or override the statutory provisions governing approval or sanction under the Income Tax Act.
  • Compliance with procedural safeguards in reassessment proceedings remains mandatory even during legislative transition between the old and amended reassessment regime

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

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