Facts of the Case

The petitioners filed their income-tax returns for Assessment Years 2016-17 and 2017-18, which were processed under Section 143(1) of the Income Tax Act, 1961.

Subsequently, the Income Tax Department initiated reassessment proceedings on the ground that income chargeable to tax had escaped assessment. The Assessing Officer issued show cause notices under Section 148A(b) and thereafter passed orders under Section 148A(d) followed by notices under Section 148 for reopening the assessments.

The petitioners challenged the validity of these reassessment notices before the Delhi High Court contending that mandatory prior approval from the specified authority under Section 151(ii) had not been obtained before issuing the notices.

 Issues Involved


1.      Whether reassessment notices issued under Sections 148A(d) and 148 of the Income Tax Act are valid without obtaining prior approval of the specified authority under Section 151(ii).

2.      Whether approval obtained from an authority falling under Section 151(i) is sufficient when more than three years have elapsed from the end of the relevant assessment year.

 Petitioner’s Arguments


  • The reassessment notices were issued beyond three years from the end of the relevant assessment year.
  • As per Section 151(ii) of the Income Tax Act, in such cases approval must be obtained from Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General.
  • However, the approval was granted by the Principal Commissioner of Income Tax, which falls under Section 151(i).
  • Since approval was obtained from the wrong authority, the reassessment proceedings were without jurisdiction and liable to be quashed.
  • Reliance was placed on the Delhi High Court judgment in Ganesh Dass Khanna vs ITO, which dealt with similar issues relating to sanction under Section 151.

 Respondent’s Arguments

  • The Revenue contended that reassessment proceedings were initiated under the reassessment framework introduced by the Finance Act, 2021.
  • It was argued that approval had been obtained from the competent authority before issuing reassessment notices.
  • The Revenue also relied upon the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) to justify the initiation of reassessment proceedings.

Court Order / Findings

  • The first proviso to Section 148 mandates prior approval of the specified authority before issuing a reassessment notice.
  • Section 151 specifies different authorities depending upon the time elapsed from the end of the relevant assessment year.
  • If three years or less have elapsed, approval must be obtained from authorities mentioned under Section 151(i).
  • If more than three years have elapsed, approval must be obtained from authorities specified under Section 151(ii).

Important Clarification

  • Approval from the specified authority is mandatory before issuing a notice under Section 148.
  • The authority granting approval depends upon the time limit applicable for reopening the assessment.
  • Extension of limitation under TOLA does not alter the statutory requirement regarding approval from the correct authority under Section 151.

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

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