Reassessment notice beyond three years challenged for wrong s.151 approval authority; s.148A(d) order and notice quashed.

Reassessment initiation under the post-2021 regime was challenged on the ground that sanction for issuing notice under s.148A(b) and the consequent order under s.148A(d) was granted by an authority not competent under s.151. Applying SC rulings holding that the "appropriate authority" requirement is mandatory and cannot be diluted, the Tribunal held that where the notice is issued beyond three years from the end of the relevant AY, approval must be accorded under s.151(ii) by the Principal Chief Commissioner. Since sanction was taken from a Principal Commissioner, the jurisdictional precondition failed; consequently, the s.148A(d) order and notice dated 28/07/2022 were quashed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the reassessment notice issued under Section 148 (pursuant to an order under Section 148A(d)) was void for want of sanction from the correct "specified authority" under Section 151, where more than three years had elapsed from the end of the relevant assessment year.

(ii) If the notice under Section 148 is quashed as invalid, whether the consequential reassessment order and the addition made therein survive.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Validity of notice under Section 148 for lack of approval by the correct specified authority under Section 151

Legal framework (as applied by the Court): The Court treated prior approval by the "specified authority" under Section 151 (new regime) as a jurisdictional precondition for passing an order under Section 148A(d) and for issuing a notice under Section 148. The Court applied the principle that, after the coming into force of the new regime, approvals must be obtained from the authority specified under Section 151 corresponding to the elapsed time from the end of the assessment year; where more than three years have elapsed, approval must be from the higher authority contemplated by Section 151(ii).

Interpretation and reasoning: On the admitted facts, the order under Section 148A(d) and the notice under Section 148 were issued on 28/07/2022, i.e., beyond three years from the end of the relevant assessment year. The approval for the action was taken from a Principal Commissioner. The Court held that, in such a situation, the approving authority must be the authority prescribed under Section 151(ii) (i.e., the higher authority applicable where more than three years have elapsed), and that the approving authority cannot be substituted or altered. Since the approval in the present case was not from the appropriate specified authority mandated by Section 151(ii), the statutory precondition for valid assumption of jurisdiction to issue the notice was not satisfied.

Conclusion: The notice dated 28/07/2022 (and the connected action under Section 148A(d)) was held not to be in accordance with the procedure laid down under the Act and was therefore quashed.

Issue (ii): Effect of quashing the reassessment notice on the reassessment order and additions

Interpretation and reasoning: The Court held that once the initiation of reassessment proceedings is quashed, the consequential reassessment order lacks foundation and becomes null and void. As a result, the substantive addition made in the reassessment (including the challenged treatment of cash deposits as unexplained money) did not require adjudication, being rendered academic due to the invalidity of the reopening itself.

Conclusion: The reassessment order was quashed as null and void, and the appeal was allowed on the jurisdictional ground; the merits of the addition were not decided.

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