Reassessment sanction requirement: notice issued after three years was void because approval came from an incompetent authority.

Reassessment initiated after three years from the end of the assessment year required prior sanction from the authority prescribed under section 151 of the Income-tax Act. Approval granted by the Pr. CIT instead of the Pr. CCIT did not satisfy that statutory requirement, so the notice under section 148 was void ab initio and the reassessment proceedings were quashed in favour of the assessee.

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Issues: Whether the reassessment notice issued under section 148 was invalid for want of the requisite sanction under section 151, where the reopening was made after three years from the end of the assessment year.

Analysis: The reopening having been initiated after the expiry of three years from the end of the assessment year required prior approval of the Pr. CCIT under section 151 of the Income-tax Act, 1961. The approval, however, had been granted by the Pr. CIT. Relying on the Supreme Court decision in Rajeev Bansal and subsequent decisions following the same principle, the approval was held to be contrary to the statutory requirement and the notice founded on such approval could not sustain.

Conclusion: The notice under section 148 was invalid and void ab initio, and the reassessment proceedings were quashed in favour of the assessee.

Ratio Decidendi: Where reassessment is initiated after three years from the end of the assessment year, prior sanction must be granted by the authority prescribed under section 151, and a notice issued on the basis of sanction by an incompetent authority is void ab initio.

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