Reopening of income tax assessment under section 147/148: improper sanction from wrong authority led to notice being quashed.

Validity of reopening an income-tax assessment is contested on the ground that the statutory sanction was not granted by the competent authority; the impugned notice under section 148 was issued within four years but expressly records satisfaction of an incorrect officer, and therefore the sanction requirement is not met, resulting in quashment of the notice. The analysis applies the principle that statutory satisfaction must be given by the specific authority designated by law, and reliance on precedent affirming that satisfaction from any other officer cannot validate the reopening.

---

---

Issues: Whether the notice dated 28th March, 2021 issued under Section 148 of the Income-tax Act, 1961 and the consequent assessment order dated 26th March, 2022 are invalid for want of sanction by the competent authority under Section 151 of the Income-tax Act, 1961 (having regard to the time-extension under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020).

Analysis: The impugned notice is dated 28th March, 2021 for A.Y. 2015-16. Under the pre-1 April 2021 regime, Section 151(2) prescribes the Joint Commissioner as the authority to grant sanction where the relevant time-limit of four years falls within 20th March, 2020 to 31st March, 2021. Section 3(1) of TOLA extended time-limits to 31st March, 2021; Rajeev Bansal (supra) confirms that TOLA operates to extend the period so that the old-regime four-year test falls within that interval and the Joint Commissioner remains the sanctioning authority. The notice itself records that satisfaction/approval was obtained from the Commissioner of Income Tax (Exemption), Pune and does not record sanction by the Joint Commissioner. Where the statute prescribes satisfaction by a specified authority, sanction by any other officer is ineffective. The factual record shows the final approval was that of the CIT (Exemption) and not the Joint Commissioner, and alternate arguments that the Joint Commissioner was in substance satisfied are contradicted by the express form of sanction recorded on the notice and supporting documents.

Conclusion: The notice dated 28th March, 2021 under Section 148 and the assessment order dated 26th March, 2022 are quashed for want of sanction by the competent authority under Section 151; decision is in favour of the assessee.

Ratio Decidendi: Where statutory sanction for issuance of a notice under Section 148 is a jurisdictional pre-condition and the statute specifies a particular authority (Section 151(2)) to grant approval within a time-extended period under TOLA, approval given by any other authority is invalid and renders the notice and consequent assessment void ab initio.

---