Reopening under section 148/148A invalid where approval under section 151(ii) was granted by PCIT not PCCIT

ITAT, Delhi - AT held the reopening invalid for procedural defect: notices under section 148/148A were issued but the Assessing Officer obtained prior approval from PCIT rather than the prescribed competent authority (PCCIT) under section 151(ii). Relying on precedent, the Tribunal allowed the assessee's grounds and set aside the assessment order, directing that the reopening not be sustained in view of improper approval.

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ISSUES PRESENTED AND CONSIDERED

1. Whether delay in filing the appeal (11 days) caused by non-service of the impugned order on the assessee and communication to an old/disengaged counsel constitutes sufficient cause to condone the delay.

2. Whether a notice issued under section 148 of the Income-tax Act (reassessment notice) dated 30.07.2022 is valid where the prior approval for issuance was obtained from the Commissioner of Income-tax (PCIT) rather than the authority specified under amended section 151(ii) (Principal Chief Commissioner/Principal Director General or other specified higher authority) applicable to reassessments beyond three years.

3. Whether the amended regime of sections 147-151 (new law) and the Supreme Court decisions (treating "extended reassessment notices" under old law as show-cause notices under section 148A(b) of the new law and directing application of new law defences) require fresh compliance with section 151's specified authority provision when reassessment proceedings are continued or notices are issued after applicability of the new law.

4. Whether the failure to obtain approval from the authority prescribed under section 151(ii) renders subsequent 148A(d) orders, section 148 notices and assessment orders unsustainable and liable to be set aside.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Condonation of delay

Legal framework: Principles governing condonation of delay require demonstration of sufficient cause and bona fide circumstances preventing timely filing; courts/tribunals may exercise discretion where delay is reasonable and caused by lack of proper service or reasonable mistake.

Precedent treatment: No contrary precedent analysis required in the judgment; established discretionary standard applied.

Interpretation and reasoning: The assessee demonstrated that the impugned order was served by e-mail to an old/disengaged counsel's email id, preventing timely receipt; affidavit filed corroborated the factual position; revenue did not press strong objection.

Ratio vs. Obiter: Ratio - the Tribunal exercised discretion to condone an 11-day delay where non-receipt of order by the assessee due to communication to an old counsel constituted sufficient cause.

Conclusions: Delay of 11 days in filing the appeal is condoned; appeal admitted for adjudication on merits.

Issue 2 - Validity of notice under section 148 where approval obtained from PCIT instead of specified authority under section 151(ii)

Legal framework: Amended sections 147-151 (new law) prescribe that for reassessments beyond three years, the specified authority under section 151(ii) (Principal Chief Commissioner/Principal Director General or other prescribed senior authority) must give prior approval before issuance of notice under section 148. Where reassessment falls within three years, a different specified authority applies.

Precedent treatment: The Tribunal follows and relies upon (i) the Supreme Court decision recognizing applicability of the new law and treating extended reassessment notices as show-cause notices under section 148A(b) (thereby making new law safeguards available), (ii) High Court decisions (e.g., Rajesh Gupta HUF) and coordinate/bench decisions (including Durga Agencies and other ITAT/High Court rulings) holding that notices issued without approval from the authority specified under section 151(ii) are not valid where such approval was mandated.

Interpretation and reasoning: The reassessment activity for the relevant assessment year was initiated by a notice dated 30.07.2022 which, on the material, required approval under section 151(ii) (because the reassessment related to a period beyond three years). The Assessing Officer obtained approval from PCIT (Commissioner), not the Principal Chief Commissioner or other authority specified by section 151(ii). In light of the amended statutory text and the Supreme Court's direction that new-law defences and requirements apply to extended reassessment notices, the prior approval obtained from an incorrect authority does not satisfy the mandatory requirement of section 151(ii).

Ratio vs. Obiter: Ratio - where section 151(ii) mandates prior approval by the specified higher authority for reassessments beyond three years, approval by a lower authority (PCIT/Commissioner) is not compliant and renders the subsequent section 148 notice and downstream orders invalid. The Tribunal expressly follows coordinate and High Court authority to this effect.

Conclusions: The notice under section 148 issued on 30.07.2022 is invalid for want of approval by the authority specified under section 151(ii); consequential orders (order under section 148A(d), the section 148 notice and the assessment order passed thereon) cannot be sustained and are set aside.

Issue 3 - Applicability of new law and effect of Supreme Court rulings/CBDT instruction on handling "extended reassessment notices"

Legal framework: The Supreme Court held that "extended reassessment notices" issued under the old law (during the TOLA extension period) shall be deemed show-cause notices under clause (b) of section 148A of the new law and that defences and rights under the new law (including section 149/151 protections) are available to assessees; CBDT's instructions (under section 119) set out implementation procedure and clarified application of section 149/151 and timeframes for providing information/material and replies.

Precedent treatment: The Tribunal applies the Supreme Court's pronouncements and the CBDT instruction as binding direction that extended notices be treated under section 148A(b) and that procedures and approval requirements of the new law must be observed when issuing fresh notices or continuing reassessment proceedings.

Interpretation and reasoning: Because the original notice process traversed the period in question and the final order/notice was issued after the new law came into effect, the safeguards and specified authority requirements in the new law must be applied at the relevant temporal point. Consequently, approval under section 151 must comply with the position under the new law for the type of reassessment (i.e., whether within or beyond three years), and any failure to secure the correct statutory approval taints the subsequent process.

Ratio vs. Obiter: Ratio - the new law's procedural safeguards, including the requirement of approval by the authority specified under section 151 where applicable, govern extended reassessment notices and their continuation; failure to conform results in invalidity of notice/assessment actions. The Tribunal treats the CBDT instruction as clarificatory on the implementation of the Supreme Court decision.

Conclusions: The Supreme Court's characterization of extended reassessment notices and the CBDT implementation instructions require Assessing Officers to adhere to the specified authority and procedural obligations of the new law; non-compliance renders reassessment steps invalid.

Issue 4 - Consequences of invalid approval under section 151(ii) on downstream orders

Legal framework: Valid initiation of reassessment proceedings under section 148 is a condition precedent to conducting reassessment and passing assessment orders; statutory non-compliance in approval procedure undermines jurisdiction to proceed.

Precedent treatment: Tribunal follows coordinate decisions and High Court rulings holding that an invalid notice (for want of proper approval) results in quashing of the section 148A(d) order, the section 148 notice and later assessment/demand orders flowing therefrom.

Interpretation and reasoning: Since the section 148 notice was issued without obtaining the approval required by section 151(ii), the Tribunal finds the section 148A(d) order and the assessment framed under section 147/144B to be vitiated; consistent judicial authority supports setting aside such resultant orders.

Ratio vs. Obiter: Ratio - absence of statutory approval as required under section 151(ii) invalidates the reassessment notice and consequent assessment orders; this ground alone is sufficient to set aside the assessment without reaching the merits of additions.

Conclusions: The reassessment order, the notice under section 148 and the assessment order are unsustainable for lack of requisite approval; the assessment is set aside and the appeal is allowed on this ground.

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