Invalidity of Income Tax Notice under Section 148: Compliance Failure with Section 151

The court held that the notice issued under Section 148 of the Income Tax Act for Assessment Year 2015-2016 was invalid due to non-compliance with Section 151. The approval for the notice was granted by the Additional Commissioner instead of the required Principal Commissioner, and the reasons for approval were provided after the four-year limit. As per Section 151(1), only specified authorities can grant approval for such notices after the four-year period. The court quashed the notice, rejection order, sanction, and subsequent notice, emphasizing the necessity of adhering to statutory provisions.

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Issues:
Impugning notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016, rejection of objections to reopening, sanction granted under Section 151 for notice issuance, and subsequent notice under Section 142(1).

Analysis:
The petitioner challenged the sanction granted under Section 151 of the Act, arguing that the approval obtained for issuing the notice under Section 148 was not in accordance with the mandate of Section 151. The petitioner contended that the approval was granted by the Additional Commissioner of Income Tax instead of the required Principal Commissioner of Income Tax. Additionally, the reasons for approval were put up after the expiry of four years from the end of the relevant assessment year, which, according to Section 151, necessitates approval from the Principal Commissioner. The Court agreed that the approval was not in compliance with Section 151, leading to the notice being deemed invalid.

Sub-Section 1 of Section 151 stipulates that no notice shall be issued after four years from the end of the relevant assessment year without approval from specified authorities. In this case, the notice was issued after the four-year limit, and approval was obtained from the Additional Commissioner instead of the required Principal Commissioner. The respondents argued that the approval by the Additional Commissioner was valid due to the Relaxation Act extending limitations. However, the Court found that the Relaxation Act did not apply to the assessment year in question, and the approval should have come from the Principal Commissioner as per Section 151(1).

The Court emphasized that as per Section 151(1) of the Act, only specified authorities could grant approval for issuing notices under Section 148 after the four-year period. Since the approval was not obtained from the correct authority, the notice dated 31st March 2021 under Section 148 was set aside, rendering subsequent orders and notices invalid. The petition was allowed, and a Writ was issued to quash the notice, rejection order, sanction, and subsequent notice. The Court disposed of the petition accordingly, highlighting the importance of compliance with statutory provisions in such matters.

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