Reassessment approval under amended section 151 must follow the sanction hierarchy in force when granted.

The reassessment regime amended by the Finance Act, 2021 required prior approval under section 151 to be tested against the provision in force on the date sanction was granted. The Delhi HC held that the time extension under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 did not alter the statutory hierarchy of sanction. Where more than three years had elapsed from the end of the relevant assessment year, approval had to come from the authority specified in clause (ii); the notice under section 148, the order under section 148A(d), and the consequential demand were issued without the requisite approval and beyond the permissible time, and were set aside.

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Issues: Whether the reassessment notice and consequential order were vitiated for want of prior approval by the specified authority under the amended regime and for being beyond the prescribed time limit.

Analysis: The assessment related to a period governed by the reassessment framework amended by the Finance Act, 2021. The Court held that the extension of time under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 did not alter the hierarchy of sanction under section 151. The validity of approval had to be tested with reference to the amended section 151 as it stood on the date of sanction, and where more than three years had elapsed from the end of the relevant assessment year, approval had to be obtained from the authority specified in clause (ii). The impugned order under section 148A(d) and the notice under section 148 were found to have been issued without the requisite approval and beyond the permissible time available for completing the statutory steps.

Conclusion: The reassessment notice, the order under section 148A(d), and the consequential assessment and demand were unsustainable and were set aside in favour of the assessee.

Ratio Decidendi: TOLA may extend the time for taking action, but it does not amend the statutory requirement of obtaining approval from the specified authority under section 151 of the Income-tax Act, 1961; the sanction must conform to the provision in force when it is granted.

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