Reassessment notices failed for limitation and wrong approval authority, rendering both reassessment proceedings invalid.

Reassessment notices under the new regime were invalid where they were issued beyond the surviving limitation period and where approval was taken from the wrong specified authority. For Assessment Year 2015-16, the notice issued after expiry of the six-year period was not saved by TOLA and the resulting reassessment was quashed. For Assessment Year 2016-17, the notice was issued after three years and required sanction under section 151(ii) from the higher specified authority; approval from the Principal Commissioner was insufficient, so the notice and reassessment were also quashed.

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Issues: (i) whether the reassessment notice issued for Assessment Year 2015-16 was barred by limitation under the new reassessment regime read with TOLA; (ii) whether, for Assessment Year 2016-17, the approval for issuing notice under section 148 was obtained from the correct specified authority under section 151 of the Income-tax Act, 1961.

Issue (i): whether the reassessment notice issued for Assessment Year 2015-16 was barred by limitation under the new reassessment regime read with TOLA.

Analysis: The relevant notice under section 148 was issued on 15.07.2022. For Assessment Year 2015-16, the six-year period had expired on 31.03.2022. The decision in Rajeev Bansal, as followed in later authority, recognized that the relaxation under section 3(1) of TOLA did not save notices issued beyond the surviving limitation for that assessment year. On the facts, the notice fell outside the permissible period and the reassessment proceedings founded on it could not survive.

Conclusion: The notice and the consequential reassessment for Assessment Year 2015-16 were barred by limitation and are quashed, in favour of the Assessee.

Issue (ii): whether, for Assessment Year 2016-17, the approval for issuing notice under section 148 was obtained from the correct specified authority under section 151 of the Income-tax Act, 1961.

Analysis: For Assessment Year 2016-17, more than three years had elapsed from the end of the relevant assessment year when the notice was issued on 22.07.2022. In that situation, the applicable approval provision was section 151(ii), which required sanction of the higher specified authority. The approval was instead obtained from the Principal Commissioner of Income Tax. The defect went to the jurisdiction to issue the notice and the consequent reassessment could not stand.

Conclusion: The approval was obtained from an incorrect authority, the notice under section 148 was invalid, and the reassessment for Assessment Year 2016-17 is quashed, in favour of the Assessee.

Final Conclusion: Both reassessment proceedings failed on jurisdictional and limitation grounds, and the assessee succeeded in both appeals.

Ratio Decidendi: Where reassessment is initiated beyond the applicable limitation or without approval of the statutorily designated specified authority, the notice is invalid and the resulting reassessment is liable to be set aside.

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