Sanction validity for reassessment beyond three years: incorrect sanctioning authority renders the notice and order invalid.

For reassessment notices issued beyond three years the statutory requirement as to the designated sanctioning authority must be satisfied; an amending proviso effective 1 April 2023 could not validate actions taken in April 2022. The impugned order and notice recorded sanction by the Principal Commissioner rather than the Principal Chief Commissioner, causing a jurisdictional defect, and the petitioner was unlawfully denied a copy of the sanction; the sanction was held invalid and the Section 148A(d) order and Section 148 notice were quashed in favour of the assessee.

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Issues: Whether the sanction for issuance of an order under Section 148A(d) and notice under Section 148 of the Income-tax Act, 1961, issued by the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax is valid for reassessment proceedings initiated beyond three years for AY 2018-19.

Analysis: For reassessment notices issued beyond a period of three years, the statutory scheme requires the sanctioning authority specified by Section 151 of the Income-tax Act, 1961. The proviso to Section 151 relied upon by the Revenue was inserted with effect from 1 April 2023 and is not applicable to actions taken in April 2022. The impugned order dated 5 April 2022 and the notice dated 6 April 2022 record that sanction was accorded by the Principal Commissioner of Income Tax, Mumbai-5, rather than by the Principal Chief Commissioner of Income Tax as required for reassessments beyond three years. The sanction therefore suffers from a jurisdictional defect. The petitioner was also unlawfully denied a copy of the sanction, and respondents were directed to supply the approval form and sanction to the petitioner within one week.

Conclusion: The sanction issued by the Principal Commissioner of Income Tax is invalid; the impugned order under Section 148A(d) and the notice under Section 148 are quashed and set aside, in favour of the assessee.

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