Prior sanction under section 151 required for reassessment notices beyond three years; lack of correct authority invalidates s148/148A(d).

Prior sanction under section 151(ii) is a mandatory precondition to assume jurisdiction for issuing a notice under section 148 and for passing an order under section 148A(d) where more than three years have elapsed; TOLA extended temporal deadlines but did not alter the identity of the competent sanctioning authority and CBDT instructions did not dispense with the statutory sanction requirement. Because the notice was issued after three years with approval from an authority not specified in section 151(ii) and the Assessing Officer supplied particulars only after prescribed timelines, the notice, the 148A(d) order and consequential proceedings under section 147 were held invalid and quashed, and the appeal allowed for the assessee.

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Issues: Whether the notice issued under section 148 and the order under section 148A(d) (and consequential proceedings under section 147) for AY 2016-17 are invalid for lack of prior sanction by the specified authority under section 151(ii) of the Income-tax Act, 1961, having regard to the effect of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and relevant CBDT instructions and Supreme Court decisions.

Analysis: The statutory scheme prescribes that prior approval from the specified authority under section 151 is a precondition to assume jurisdiction for issuance of notice under section 148 and for passing the order under clause (d) of section 148A where more than three years have elapsed from the end of the relevant assessment year. TOLA relaxes time limits for actions falling between 20.03.2020 and 31.03.2021, thereby extending certain deadlines, but does not change the identity of the specified authority required under section 151(ii) when the three-year period has elapsed. CBDT instructions require provision of information and material within prescribed timelines and that, where extended reassessment notices are treated under section 148A, the prior approval under section 151 must still be obtained in accordance with the new regime. Supreme Court authority (as applied in subsequent decisions) confirms that notices issued beyond three years require sanction from the higher specified authority under section 151(ii) and that TOLA may extend temporal deadlines but does not substitute the statutory requirement of sanction by the proper authority. On the facts, the notice under section 148 was issued after the three-year period and the approving authority was the Principal Commissioner of Income Tax (PCIT), who is not the competent authority under section 151(ii); additionally, the Assessing Officer furnished correct particulars only after the CBDT-prescribed timeline. As a result, the mandatory precondition of valid sanction by the authority specified in section 151(ii) was not satisfied.

Conclusion: The notice under section 148 and the order under section 148A(d) are invalid for want of prior approval by the authority specified under section 151(ii). The consequential proceedings and assessment under section 147 are unsustainable and are quashed. The appeal is allowed in favour of the assessee.

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