Reassessment notice invalid without proper sanction, and electronic issue date triggered the amended reopening regime.

A reassessment notice issued after four years from the end of the relevant assessment year required prior approval from the statutorily designated higher authority; approval only by the Joint Commissioner did not satisfy section 151(1), so the notice was without jurisdiction. Although the notice was dated 31.03.2021, electronic transmission and receipt on 01.04.2021 meant issuance occurred under the amended reopening regime introduced by the Finance Act, 2021, and the pre-amended framework could not be applied; the reassessment action was therefore vitiated. The Tribunal also stated that section 40A(2)(b) does not apply to a co-operative society, so reopening on that basis was unsustainable.

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Issues: (i) whether the reassessment notice was invalid for want of approval from the competent authority under section 151(1); (ii) whether the notice dated 31.03.2021 could be treated as issued only when received by email on 01.04.2021 so as to attract the amended reopening regime; and (iii) whether section 40A(2)(b) applied to a co-operative society.

Issue (i): whether the reassessment notice was invalid for want of approval from the competent authority under section 151(1).

Analysis: The notice was issued after expiry of four years from the end of the relevant assessment year. In such a case, the statutory scheme required prior approval of the higher specified authority and not merely the Joint Commissioner. The approval reflected in the notice was from the Joint Commissioner, which did not satisfy the mandatory requirement. The defect went to the root of jurisdiction and could not be treated as a procedural irregularity.

Conclusion: The notice under section 148 was without proper sanction and was invalid.

Issue (ii): whether the notice dated 31.03.2021 could be treated as issued only when received by email on 01.04.2021 so as to attract the amended reopening regime.

Analysis: The material showed that although the notice bore the date 31.03.2021, it was actually transmitted and received by email on 01.04.2021 at 5.29 a.m. For electronic communication, issuance is complete when the notice leaves the control of the originator and enters the recipient-side electronic domain. Since the transmission occurred after 31.03.2021, the proceedings were required to conform to the amended reopening framework brought in by the Finance Act, 2021. The department nevertheless proceeded on the basis of the pre-amended regime, and the later proceedings under the amended provisions were also not carried through to a fresh valid notice.

Conclusion: The reassessment action could not be sustained on the basis of the pre-amended notice and stood vitiated.

Issue (iii): whether section 40A(2)(b) applied to a co-operative society.

Analysis: The reopening itself rested on alleged non-disallowance of payments to related parties under section 40A(2)(b). The Tribunal held that the provision does not apply to a co-operative society, following the settled view that a co-operative society is distinct from the category contemplated by that provision and that the mutuality-based character of such entities matters for this purpose.

Conclusion: Section 40A(2)(b) was held inapplicable to the assessee being a co-operative society.

Final Conclusion: The reassessment was held to be without jurisdiction and the consequential additions were quashed, with the assessee succeeding and the revenue's challenge failing.

Ratio Decidendi: A reassessment notice issued beyond four years must bear approval of the statutorily designated higher authority, and where an electronic notice is actually issued after the relevant cut-off date, the reopening must comply with the law in force on the date of such issuance; additionally, section 40A(2)(b) does not apply to a co-operative society.

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