Reopening of assessment beyond three years requires sanction by the designated competent authority; notice invalidated when lower authority sanctioned it.

Reopening of assessment more than three years after the end of the relevant year requires sanction by the statutorily designated competent authority (Principal Chief Commissioner/Principal Director General or equivalent). The notice was sanctioned by a lower-level Principal Commissioner, which the tribunal found inconsistent with the prescribed sanctioning hierarchy; consequently the notice to reopen was held vitiated and all subsequent proceedings were declared null and void. The operative legal effect is that reopening without proper authority invalidates the notice and terminates further assessment action in that matter, resulting in relief to the taxpayer.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 is valid where the sanction for issuance of the notice (required by section 151 for reopenings beyond three years) was granted by the Principal Commissioner instead of the competent authority.

Analysis: The appeal concerns assessment year 2018-19 and a notice under section 148 issued on 05.04.2022. Section 151 prescribes that when more than three years have elapsed from the end of the relevant assessment year, sanction for issuance of notice under section 148 must be granted by the specified higher authority (Principal Chief Commissioner/Principal Director General/Chief Commissioner/Director General). The sanction in this case was given by the Principal Commissioner, which does not meet the statutory requirement where the three-year threshold is crossed. The Revenue did not dispute the identity of the sanctioning authority.

Conclusion: The notice issued under section 148 is vitiated for want of valid sanction under section 151 and the subsequent proceedings are null and void; the appeal is allowed in favour of the assessee.

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