Invalid sanction under section 151 vitiates reassessment notice and all consequential tax orders

Reopening notice issued on sanction under the wrong limb of section 151 of the Income-tax Act, 1961 was invalid because the relevant assessment year required approval under section 151(ii), not section 151(i). Once the sanction was held to be defective, the notice founded on it could not survive, and the assessment order as well as all consequential notices and orders were liable to be quashed.

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Issues: Whether the reopening notice and the assessment and consequential orders founded on sanction under the wrong limb of section 151 of the Income-tax Act, 1961 were liable to be quashed.

Analysis: The petition related to Assessment Year 2017-18. The parties accepted that the issue of improper sanction was covered by the earlier decision holding that, on the facts of the relevant assessment year, sanction ought to have been granted under section 151(ii) and not under section 151(i) of the Income-tax Act, 1961. On that basis, the sanction was invalid and the notice issued on its strength could not survive. Any assessment order and other consequential orders passed pursuant to such invalid sanction were also liable to be set aside.

Conclusion: The notice, assessment order and all consequential notices and orders were quashed and set aside.

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