Reassessment jurisdiction fails without proper higher approval and limitation compliance under the new tax notice regime.

Reassessment under the post-01.04.2021 regime was held invalid where notices were issued beyond the surviving limitation or without the higher approval required by section 151(ii) when escaped income exceeded the statutory threshold and more than three years had elapsed from the end of the relevant assessment year. The court applied the Supreme Court rulings in Ashish Agarwal and Rajeev Bansal to exclude the deemed-show-cause period and response time while computing limitation. Consequential assessment orders and penalty notices based on defective reassessment action were set aside, and the matters were remitted for fresh proceedings after obtaining proper statutory sanction.

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Issues: (i) Whether reassessment notices and the consequential orders were valid when the escaped income exceeded the statutory threshold and the approval was obtained only from the lower authority under the reassessment provisions. (ii) Whether the impugned assessment orders and penalty notices, including those passed before the later Supreme Court pronouncements, required to be set aside and the matters remitted for fresh consideration.

Issue (i): Whether reassessment notices and the consequential orders were valid when the escaped income exceeded the statutory threshold and the approval was obtained only from the lower authority under the reassessment provisions.

Analysis: The reassessment regime introduced from 01.04.2021 required the Assessing Officer to proceed under the substituted provisions of sections 148A, 149 and 151 of the Income-tax Act, 1961. The judgment applied the legal effect of the Supreme Court decisions in Ashish Agarwal and Rajeev Bansal to hold that, for notices issued after the old regime had lapsed, the time spent under the deemed-show-cause structure and the permitted response period had to be excluded while computing limitation. It further held that where more than three years had elapsed from the end of the relevant assessment year and the escaped income exceeded the monetary threshold, approval had to come from the higher specified authority under section 151(ii), not merely from the Principal Commissioner.

Conclusion: Reassessment action in the affected matters was held invalid where the requisite approval under section 151(ii) was absent, and the notices/orders were treated as lacking jurisdiction.

Issue (ii): Whether the impugned assessment orders and penalty notices, including those passed before the later Supreme Court pronouncements, required to be set aside and the matters remitted for fresh consideration.

Analysis: The judgment found that some of the impugned proceedings were completed without the correct statutory approval and that other orders were passed before the reassessment law was clarified by the Supreme Court. In that situation, the Court held that the safer course was to set aside the impugned orders and require the Department to restart the process from the appropriate stage, after obtaining the proper sanction under the reassessment provisions. The penalty notices, being consequential to the reassessment action, could not survive independently where the foundational reassessment was defective.

Conclusion: The impugned assessment orders and penalty notices were set aside and the matters were remitted for fresh proceedings in accordance with law.

Final Conclusion: The writ petitions succeeded only to a limited extent, with the reassessment and consequential penalty proceedings invalidated in the affected cases and the remaining proceedings sent back for re-doing from the reassessment stage after obtaining the proper statutory approval.

Ratio Decidendi: A reassessment notice under the new regime is jurisdictionally invalid if issued beyond the surviving limitation or without approval from the authority mandated by section 151(ii) where the escaped income exceeds the statutory threshold and more than three years have elapsed from the end of the relevant assessment year.

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