Time-barred section 148 notice and wrong section 151 sanction make reassessment invalid, not cured by section 292BB

ITAT Rajkot allowed the assessee's appeal and quashed the reassessment. It held that for A.Y. 2013-14, the outer limitation for issuance of notice under s.148 expired on 31.03.2020, whereas the notice was issued on 16.04.2021, rendering it time-barred and inherently invalid. Further, sanction for issue of notice was obtained from the PCIT instead of the PCCIT, contrary to the mandatory requirement of s.151, vitiating the jurisdiction. The Tribunal held that these jurisdictional defects are not curable under s.292BB, as the basic preconditions for a valid reassessment were not satisfied.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the notice issued under section 148 for Assessment Year 2013-14 was barred by limitation and thereby invalid.

1.2 Whether the sanction for issuance of notice under section 148, obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax, vitiated the reassessment proceedings under section 147.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Validity of notice under section 148 in view of limitation for Assessment Year 2013-14

2.1.1 Legal framework (as discussed)

The Tribunal proceeded on the basis that for Assessment Year 2013-14, the last date for issuance of notice under section 148 was 31 March 2020, and any notice issued thereafter would be time-barred. It treated compliance with the time limit under section 148 as a mandatory pre-condition for a valid reassessment.

2.1.2 Interpretation and reasoning

The Tribunal noted that the assessment year involved was 2013-14. It recorded that in such a case, notice under section 148 could validly be issued only up to 31 March 2020. In the present case, notice under section 148 was in fact issued on 16 April 2021 through the online portal.

The Tribunal held that a notice issued after the permissible last date is time-barred and therefore invalid. It further held that non-compliance with the mandatory time limit prescribed under section 148 amounts to failure to follow the mandatory process for reopening and cannot be cured subsequently.

2.1.3 Conclusions

The Tribunal concluded that the notice dated 16 April 2021 under section 148 for Assessment Year 2013-14 was issued beyond the statutory time limit and was therefore time-barred and invalid. Consequently, the reassessment proceedings founded on such notice were liable to be quashed.

2.2 Validity of sanction for issue of notice under section 148 under section 151

2.2.1 Legal framework (as discussed)

The Tribunal proceeded on the basis that, for reopening after the prescribed period, prior approval of the proper higher authority under section 151(1) is a pre-requisite condition for a valid notice under section 148. It distinguished between sanction by the Principal Commissioner of Income Tax and by the Principal Chief Commissioner of Income Tax.

2.2.2 Interpretation and reasoning

The Tribunal recorded the assessee's contention that where reopening is after three years, sanction should be given by the Chief Commissioner of Income Tax, and that in this case sanction was obtained only from the Principal Commissioner of Income Tax.

On examining the record, the Tribunal found that the sanction for issuance of notice under section 148 had in fact been obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT). The Tribunal treated such approval from an authority other than the proper higher authority envisaged under section 151(1) as a substantive defect.

The Tribunal held that obtaining sanction from the proper authority under section 151(1) is a pre-requisite condition for issuance of a valid notice under section 148. In the absence of such proper sanction, the notice is defective and invalid ab initio. It further held that this defect cannot be cured by resorting to section 292BB of the Act.

2.2.3 Conclusions

The Tribunal concluded that the sanction for the notice under section 148 was obtained from an incorrect authority (PCIT instead of PCCIT), rendering the sanction invalid and, consequently, the notice itself defective and invalid. As the pre-requisite condition under section 151(1) was not fulfilled, the reassessment proceedings were quashed.

2.3 Effect of invalid notice and sanction on other grounds including additions under section 68

2.3.1 Interpretation and reasoning

Having held that the notice under section 148 was time-barred and further vitiated for want of proper sanction under section 151(1), the Tribunal held that the foundational jurisdictional requirement for reassessment was not satisfied. Accordingly, the reassessment proceedings stood quashed at the threshold.

In view of the quashing of reassessment on jurisdictional grounds, the Tribunal considered that the other technical grounds and the grounds on merits, including those relating to addition under section 68 and alleged violation of principles of natural justice, had become infructuous and did not require adjudication.

2.3.2 Conclusions

The Tribunal quashed the reassessment proceedings on jurisdictional grounds arising from an invalid, time-barred notice under section 148 and improper sanction under section 151(1). All remaining grounds, including those on merits of the additions and procedural violations, were treated as infructuous and left undecided. The appeal was allowed.

---