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of <h1>Approval for reopening assessments invalid where Principal Commissioner acted contrary to statutory scheme; order quashed under s.148A(d) and s.148</h1> <h3>Star Global Multi Ventures Private Limited Versus Assistant Commissioner of Income Tax Circle 22 (2) Delhi & Anr.</h3> Star Global Multi Ventures Private Limited Versus Assistant Commissioner of Income Tax Circle 22 (2) Delhi & Anr. - TMI 1. ISSUES PRESENTED AND CONSIDERED 1. Whether approval for initiation of reassessment (Section 148/148A regime) granted by a Principal Commissioner (or Joint Commissioner in analogous precedent) is valid when Section 151 (as amended by Finance Act, 2021) requires approval by a Principal Chief Commissioner/Chief Commissioner or other higher authority where more than three years have elapsed from the end of the relevant assessment year. 2. Whether the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (the 'Relaxation Act') - which extended statutory timelines during the pandemic - altered or conferred any jurisdictional/power-distribution change upon officers competent to grant approval under Section 151. 3. Consequential relief: validity of the reassessment order/notice issued pursuant to approval granted by an authority not specified by the statutory scheme, and whether such action must be quashed or may be proceeded with afresh. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Competent authority under Section 151 for granting approval to initiate reassessment - Legal framework: Section 151 (post Finance Act, 2021) divides the authorities who may accord approval for issuance of reassessment notices: (i) Principal Commissioner/Principal Director/Commissioner/Director if three years or less have elapsed from end of the relevant assessment year; (ii) Principal Chief Commissioner/Principal Director General or, where none, Chief Commissioner/Director General, if more than three years have elapsed. The reassessment in question relates to AY 2018-19 and was approved by a Principal Commissioner. - Precedent treatment: The Court examined and applied reasoning from earlier decisions including Suman Jeet Agarwal and its own decision in Abhinav Jindal HUF v. CIT, wherein approvals by Joint Commissioner (under unamended s.151) were held non-compliant when the statutory scheme required higher authority. Those principles were followed. - Interpretation and reasoning: The Court held that the statutory bifurcation in Section 151 is determinative of which officer may grant approval based on the lapse of time from the end of the relevant assessment year. The amended Section 151 must be applied to ascertain whether the reassessment was proposed within three years or thereafter; if the time threshold places the matter beyond three years, approval by a Principal Commissioner (or a lower officer) is inconsistent with the scheme. The Court rejected the proposition that mere extension of timelines by the Relaxation Act transmutes or enlarges the set of officers competent to grant approval. Approval must conform to the authority specified by Section 151 as applied to the temporal facts. - Ratio vs. Obiter: Ratio - where reassessment is proposed after the period that makes a higher authority statutorily responsible under s.151, approval by a lower authority (Principal Commissioner/Joint Commissioner) is invalid. - Conclusion: Approval granted by the Principal Commissioner for the reassessment in question is not in accordance with the statutory scheme and is therefore invalid. Issue 2: Effect of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act on distribution of authority under Section 151 - Legal framework: The Relaxation Act extended time limits for completion/commencement of specified actions between certain pandemic-affected dates; it used terms like 'sanction' and extended deadlines 'notwithstanding anything contained in the specified Act.' - Precedent treatment: Applied and relied upon the analysis in Abhinav Jindal HUF (which interpreted the Relaxation Act's remedial purpose and limits) and followed its conclusion that the Relaxation Act did not and could not alter statutory distribution of functions under other enactments. - Interpretation and reasoning: The Court reasoned that the Relaxation Act was remedial - intended to extend timelines and avoid extinguishing authorities' ability to act due to pandemic closures - but it did not amend or reallocate powers or change the command structure established by a specified enactment. The mere extension of time to act does not confer new jurisdiction or empower officers not designated by the relevant statute to grant approvals. The use of the term 'sanction' in the Relaxation Act cannot be read to create or prescribe timeframes or authority where none are provided; it applies only where a specified Act itself prescribes a timeframe for sanction. - Ratio vs. Obiter: Ratio - the Relaxation Act does not alter the distribution of authority under Section 151; it only extends time to act. Obiter - detailed observations on the meaning of 'sanction' in the Relaxation Act and limitations of that term in the context of approval provisions. - Conclusion: The Relaxation Act cannot be invoked to validate approval granted by an authority not specified by Section 151; resulting approvals by such officers remain non-compliant. Issue 3: Consequences of invalid approval and relief - Legal framework: If approval for initiation of reassessment is vitiated for non-compliance with Section 151, consequential notices and orders grounded on such approval are susceptible to quashing. - Precedent treatment: Applied prior conclusion in Abhinav Jindal HUF that notices resting on sanction/approval from an officer lacking statutory competence must be quashed. - Interpretation and reasoning: Given that approval was granted by an officer not empowered under Section 151 (Principal Commissioner rather than the authority required for the elapsed period), the foundational approval is void and the consequent Section 148A(d) order and Section 148 notice cannot stand. However, invalidity of the approval does not preclude the revenue from initiating fresh proceedings in accordance with law and with approval from the correct authority where permissible. The Court therefore quashed the impugned order and notice but expressly left open the respondents' right to proceed afresh consistent with statutory requirements. All substantive rights and contentions on merits are kept open for consideration in any fresh proceedings. - Ratio vs. Obiter: Ratio - quashing of reassessment action/notice that depends on invalid approval; leaving open power to proceed afresh (subject to compliance with Section 151) is part of the operative relief. - Conclusion: The Section 148A(d) order and Section 148 notice based on the impugned approval were quashed; the revenue may, if legally permissible, commence fresh proceedings after obtaining appropriate approval under Section 151; merits of the assessment remain open.
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