Sanctioning authority requirement: inferior authority's sanction invalidated reopening notices and order, favouring the assessee under income tax law.

Reopening beyond three years required sanction by the competent higher authority; where the sanction was recorded as granted by a lower authority (PCIT) instead of the required superior authority, the sanction was treated as invalid. The court applied the statutory scheme for reopening assessments, held the proviso inserted later inapplicable to the 2022 actions, followed precedents on invalid sanctions by incorrect officers, and consequently quashed the notice under Section 148 and the order under Section 148A(d) dated 5 April 2022 in favour of the assessee.

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Issues: Whether the sanction for issuing a notice under Section 148 and for passing an order under Section 148A(d) of the Income-tax Act, 1961, dated 5th April 2022, is valid where the sanction was accorded by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT) for assessment year 2018-2019 (matters beyond three years).

Analysis: The petition challenges notices and an order dated 5th April 2022 issued under Sections 148 and 148A(d) of the Income-tax Act, 1961 on the ground that the sanctioning authority recorded is the PCIT whereas, for actions taken beyond a three-year period, Section 151(ii) requires sanction by the PCCIT. The proviso to Section 151 was inserted with effect from 1st April 2023 and is not applicable to matters decided in 2022. The Court applied the statutory scheme governing reopening of assessments and the requirement as to the competent sanctioning authority for notices/orders issued beyond three years, and followed earlier precedents addressing invalidity of sanction where the incorrect authority granted sanction.

Conclusion: The sanction granted by the PCIT is invalid for the notices and order dated 5th April 2022; consequently the impugned order under Section 148A(d) and the notice under Section 148 dated 5th April 2022 are quashed and set aside, in favour of the assessee.

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