Notice under Section 148 of Income Tax Act quashed due to improper approval; Relaxation Act 2020 not applicable.

The Court invalidated the notice issued under section 148 of the Income Tax Act for the assessment year 2015-2016, as it was not approved by the required authority, the Principal Commissioner of Income Tax, as mandated by section 151. The approval was incorrectly granted by the Additional Commissioner, leading to the notice and subsequent orders being set aside. The Court also clarified that the Relaxation Act, 2020, did not extend the limitation period applicable to this case. Consequently, the petition was allowed, and the impugned notices and orders were quashed.

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Issues:
1. Validity of notice under section 148 of the Income Tax Act, 1961 for assessment year 2015-2016.
2. Approval obtained for issuing notice under section 148 of the Act.
3. Interpretation of section 151 of the Income Tax Act regarding the authority required for granting approval.
4. Impact of the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 on the limitation period for issuing notices.

Analysis:

Issue 1: Validity of notice under section 148
The petitioner challenged the notice dated 27.03.2021 issued under section 148 of the Income Tax Act for the assessment year 2015-2016. The petitioner also contested the scrutiny notice dated 07.12.2021 and the order dated 03.02.2022 rejecting objections to reopening. The Court acknowledged that four years had expired from the end of the relevant assessment year, as per section 151(1) of the Act, necessitating approval from specific authorities. As the approval was granted by the Additional Commissioner of Income Tax instead of the required Principal Commissioner of Income Tax, the Court deemed the notice invalid and set it aside, along with consequent orders and notices.

Issue 2: Approval for issuing notice under section 148
The crux of the matter revolved around the approval obtained under section 151 of the Act. The petitioner argued that the approval for issuing the notice was not in compliance with section 151, as it was granted by the Additional Commissioner of Income Tax instead of the mandated Principal Commissioner of Income Tax. The Court concurred with the petitioner's stance, emphasizing that only specific authorities, such as the Principal Chief Commissioner or Commissioner, could accord approval in cases where four years had lapsed from the relevant assessment year.

Issue 3: Interpretation of section 151 of the Act
Section 151(1) of the Income Tax Act stipulates that no notice shall be issued under section 148 after the expiry of four years from the end of the relevant assessment year unless specific authorities are satisfied. The Court reiterated the importance of obtaining approval from the designated authorities, highlighting that the Additional Commissioner of Income Tax was not empowered to grant approval in cases where the statutory timeline had elapsed. This stringent interpretation led to the setting aside of the impugned notice and related orders.

Issue 4: Impact of the Relaxation Act, 2020
The Respondent cited the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020, to argue for an extension of the limitation period for issuing notices. However, the Court clarified that the Relaxation Act provisions did not apply to cases where the limitation was expiring beyond 31.03.2020. As the assessment year in question was 2015-2016, falling under the six-year limitation period expiring on 31.03.2022, the Relaxation Act did not alter the requirements of section 151 of the Act. The Court emphasized that while timelines for issuing notices may have been extended, the statutory provisions remained unaltered.

In conclusion, the Court allowed the petition, quashing the impugned notice, scrutiny notice, and order, emphasizing the necessity of adhering to the procedural requirements outlined in section 151 of the Income Tax Act for the validity of notices issued under section 148.

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