Reassessment proceedings beyond three years require Section 151(ii) sanction from specified higher authorities only

The Bombay HC held that reassessment proceedings initiated more than three years after the relevant assessment year require sanction under Section 151(ii) from specified higher-ranking authorities. The court found that reassessment notice issued on 30th June 2021 (over one year after the three-year limitation expired on 31st March 2020) was invalid as sanction was granted by Principal Commissioner rather than the authority empowered under Section 151(ii). The petition was allowed solely on grounds of improper sanction, with no opinion expressed on other legal issues.

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Issues:
Challenge to reassessment proceedings under Section 148 of the Income Tax Act, 1961; legality of initial notice under Section 148A (b) and order under Section 148A (d); challenge to sanction for reassessment under Section 151 of the Act.

Analysis:
1. The Writ Petition challenges reassessment proceedings initiated by the Respondent-Revenue under Section 148 of the Income Tax Act, 1961, asserting that the initial notice under Section 148A (b) and the order under Section 148A (d) were illegal. The Petition also contests the sanction for reassessment granted under Section 151 of the Act.

2. The Assessment Year in question is 2016-17, with the show-cause notice under Section 148 dated 29th July, 2022. The Petitioner had filed returns on 9th December, 2021, and requested a copy of reasons for the reassessment and the sanction for reopening the assessment.

3. The National Faceless Assessment Centre issued a notice under Section 142 (1) on 3rd March, 2022, and the Petitioner requested a copy of reasons for reassessment on 4th March, 2022. The Supreme Court's directions in a related case were cited, leading to a notice dated 24th May, 2022, treating the original notice as under Section 148A(b).

4. The Petitioner sought time for objections under Section 148A due to health reasons. Subsequently, orders under Section 148A (d) and Section 148 were issued, followed by a notice under Section 144B.

5. The judgment referred to a Division Bench decision in Siemens and a subsequent case Cipla, emphasizing the importance of obtaining sanction under Section 151, especially after three years from the end of the relevant Assessment Year.

6. The court found that the sanction in the present case was not granted by the appropriate authority under Section 151 (ii), as required for cases where more than three years had lapsed. Consequently, the Writ Petition was allowed, quashing the impugned notices and order.

7. The judgment clarified that the decision was based on the absence of the required sanction under Section 151 (ii) and did not delve into other legal aspects raised in the Writ Petition.

8. The Rule was made absolute, and the Writ Petition was disposed of without costs.

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