Invalid sanction for reassessment beyond three years led to quashing of notice and pre-assessment order.

Reassessment beyond three years for Assessment Year 2018-19 required sanction under Section 151(ii) from the Principal Chief Commissioner of Income Tax. The proviso to Section 151, inserted from 1 April 2023, was held inapplicable to the notice and order issued on 22 April 2022. Because sanction was instead granted by the Principal Commissioner of Income Tax, the approval was invalid. The notice under Section 148 and the order under Section 148A(d) were therefore quashed and set aside in favour of the assessee.

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Issues: Validity of the sanction accorded for issuance of notice under Section 148 and passing of the order under Section 148A(d) of the Income-tax Act, 1961, where the sanction was issued by the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax for a case relating to Assessment Year 2018-2019.

Analysis: The reassessment action related to Assessment Year 2018-2019 and the impugned notice and order were issued on 22 April 2022, i.e. beyond three years. In such a case, Section 151(ii) required sanction by the Principal Chief Commissioner of Income Tax. The proviso to Section 151, inserted with effect from 1 April 2023, was held inapplicable. Since the sanction had been granted by the Principal Commissioner of Income Tax, it was invalid and the reopening action could not stand.

Conclusion: The sanction was invalid and the notice under Section 148 and the order under Section 148A(d) were quashed and set aside in favour of the assessee.

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