Reassessment sanction requirement invalidated notice and section 148A(d) order when the wrong authority approved reopening beyond three years.

For reassessment proceedings initiated beyond three years from the end of the relevant assessment year, sanction had to be accorded by the authority prescribed under section 151(ii) of the Income-tax Act, 1961. Where sanction for the notice under section 148 and the order under section 148A(d) was granted by the Principal Commissioner instead of the Principal Chief Commissioner, the statutory precondition was not met. The proviso to section 151, inserted with effect from 1 April 2023, was held inapplicable to the reassessment for assessment year 2017-18. The invalid sanction vitiated both the notice and the consequential order, which were quashed and set aside.

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Issues: Whether the sanction for issuing the notice under section 148 and passing the order under section 148A(d) of the Income-tax Act, 1961 was valid when accorded by the Principal Commissioner of Income-tax instead of the Principal Chief Commissioner of Income-tax for assessment year 2017-18.

Analysis: The reassessment proceedings related to a notice and order dated July 20, 2022 for assessment year 2017-18, i.e. beyond three years from the end of the relevant assessment year. In that situation, the sanctioning authority had to be the Principal Chief Commissioner of Income-tax under section 151(ii) of the Income-tax Act, 1961. The proviso to section 151, inserted with effect from April 1, 2023, was held inapplicable. Since the sanction was admittedly granted by the Principal Commissioner of Income-tax, the statutory requirement was not satisfied.

Conclusion: The sanction was invalid, and the notice under section 148 and the order under section 148A(d) of the Income-tax Act, 1961 were quashed and set aside.

Ratio Decidendi: For reassessment proceedings initiated beyond three years, sanction must be accorded by the authority prescribed under section 151(ii) of the Income-tax Act, 1961, and sanction by a different authority is invalid and vitiates the notice and consequent order.

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