Sanction requirement under Section 151: sanction by higher commissioner required for post three year reopenings; notice quashed for invalid sanction.

Section 151 (as applicable after 01/04/2021) requires that reopenings under section 148 issued after the three year period must be sanctioned by the Principal Chief Commissioner/Chief Commissioner or other specified higher authority; a sanction by the Principal Commissioner of Income Tax is not the prescribed authority for such post three year notices. Because the final notice dated 06/04/2022 related to A.Y.2018 19 was issued after three years and bore sanction only from the PCIT, the notice and consequent reassessment proceedings were held invalid and quashed; the appeal succeeded in favour of the assessee.

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Issues: Whether the notice issued under section 148 dated 06/04/2022 (reopening assessment for A.Y.2018-19) is valid where the prior sanction was granted by the Pr. Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner/Chief Commissioner when more than three years had elapsed.

Analysis: Section 151 as applicable after 01/04/2021 distinguishes the level of authority required to sanction issuance of notices under section 148/148A based on whether the notice is issued within three years or after three years from the end of the relevant assessment year. For notices issued after the three-year period, sanction must be granted by the Principal Chief Commissioner or Chief Commissioner (or corresponding higher specified authority). The record shows the final notice under section 148 was issued on 06/04/2022, which is after the three-year period for A.Y.2018-19, and the sanction recorded is that of the PCIT, who is not the specified authority for sanction in cases where more than three years have elapsed. The Tribunal relies on the mandatory nature of the sanction requirement and the principles articulated by the Hon'ble Supreme Court (including Union of India v. Rajeev Bansal) that grant of sanction by the appropriate authority is a precondition to the Assessing Officer assuming jurisdiction to issue a notice under section 148.

Conclusion: The sanction granted by the PCIT was not by a specified authority for notices issued after three years; therefore the notice under section 148 dated 06/04/2022 is quashed and the reassessment proceedings arising therefrom are quashed. The appeal is allowed in favour of the assessee.

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