Mandatory sanction for reopening beyond three years: approval by the wrong authority made the reassessment invalid.

An additional ground challenging the validity of approval for a reopening notice was admissible before the ITAT because it raised a pure question of law necessary for effective adjudication and required no fresh factual inquiry. A notice under section 148 issued beyond three years from the end of the assessment year had to be sanctioned by the authority specified in section 151(ii); approval by the Principal Commissioner did not satisfy that mandatory jurisdictional requirement. The defect was fatal to the reopening, and the reassessment was held unsustainable and liable to be quashed.

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Issues: (i) Whether the additional ground challenging the validity of approval for issuance of notice under section 148 could be entertained for the first time before the appellate tribunal; (ii) Whether notice under section 148, issued beyond three years from the end of the relevant assessment year with approval of the Principal Commissioner instead of the authority specified under section 151(ii), was valid and whether the consequent reassessment could survive.

Issue (i): Whether the additional ground challenging the validity of approval for issuance of notice under section 148 could be entertained for the first time before the appellate tribunal.

Analysis: The additional ground raised a pure question going to the legality of the reassessment proceedings. A ground that is necessary for complete and effective adjudication may be entertained even if it was not argued before the first appellate authority. No factual investigation was required for its admission.

Conclusion: The additional ground was rightly admitted.

Issue (ii): Whether notice under section 148, issued beyond three years from the end of the relevant assessment year with approval of the Principal Commissioner instead of the authority specified under section 151(ii), was valid and whether the consequent reassessment could survive.

Analysis: For a notice issued after expiry of three years, the statute requires prior approval of the higher specified authority under section 151(ii). The approval obtained from the Principal Commissioner did not satisfy that statutory mandate. Since prior sanction by the correct authority is a jurisdictional precondition for reopening, non-compliance renders the notice invalid and the reassessment proceedings unsustainable.

Conclusion: The notice under section 148 was invalid and the consequent reassessment was liable to be quashed.

Final Conclusion: The reassessment proceedings failed for want of valid sanction from the authority mandated by the reopening provisions, and the assessee succeeded in both appeals.

Ratio Decidendi: When a notice under section 148 is issued beyond three years from the end of the relevant assessment year, prior approval of the authority specified in section 151(ii) is a mandatory jurisdictional condition, and approval by a lower authority does not cure the defect.

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