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of <h1>Reopening of income tax assessment: sanction granted by wrong authority invalidates notice and reassessment, relief to assessee.</h1> Reopening an assessment hinges on prior sanction by the competent authority designated under the substituted sanction regime; where more than three years ... Reopening of assessment u/s 147 - sanction u/s 151(i) from competent authority - prior approval of the specified authority is a precondition at the stage of passing an order u/s 148A(d) - grant of sanctions in comparison to the old regime - Before expiry of four years and After expiry of four years - Three years or less than three years or ore than three years have elapsed from the end of the relevant assessment year HELD THAT:- In the present case, the period of three years from the end of the A.Y. 2016-17 read with TOLA, fell for completion on 30.06.2021. The authority specified u/s 151(i) of the new regime could have granted sanction only till 30th June 2021. On perusal of the Notice dated 30.07.2022 issued under Section 148 of the Act, we find that the aforesaid Notice was issued after taking approval from the Principal Commissioner of Income-tax – 2, Mumbai (i.e. Respondent No. 2). Since the aforesaid Notice was issued after the expiry of three years from the end of the A.Y. 2016-17, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act i.e. the Principal Chief Commissioner (PCCIT) or Principal Director General (PDGIT), or where there is no PCCIT or PDGIT, the Chief Commissioner (CCIT) or the Director General (DGIT), was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified u/s 151(i) of the new regime instead of the authority specified u/s 151(ii) of the new regime. Non-compliance by Respondent No. 1 with the provisions contained in Section 151(ii) vitiates the jurisdiction of Respondent No. 1 to issue a notice under Section 148 of the Act. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UOI V/S Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and decision of Ramesh Bachulal Mehta [2025 (8) TMI 1322 - BOMBAY HIGH COURT] We accordingly hold that the order dated 30.07.2022 passed u/s 148A(d) of the Act and the consequential notice issued under Section 148 dated 30.07.2022, are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence, they are required to be quashed and set aside. Accordingly, the consequential reassessment order dated 30.10.2025 passed under Section 147 of the Act and issuance of penalty Notice dated 07.11.2025 u/s 274 read with Section 271(1)(c) of the Act are also quashed and set aside. Decided in favour of assessee. Issues: Whether the order under Section 148A(d) and the notice under Section 148 dated 30.07.2022 (for A.Y. 2016-17), which were issued after more than three years from the end of the relevant assessment year, are valid when prior approval was obtained from an authority specified under Section 151(i) instead of the higher authority mandated by Section 151(ii).Analysis: Under the substituted re-assessment regime introduced by the Finance Act, 2021, prior approval of the specified authority is a precondition at the stage of passing an order under Section 148A(d) and issuing a notice under Section 148. Section 151(ii) prescribes a higher level of authority to grant sanction when more than three years have elapsed from the end of the relevant assessment year. The time-limit interplay with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) extends the period for grant of sanction only where the three-year expiry date falls between 20 March 2020 and 31 March 2021; otherwise the higher authority under Section 151(ii) is mandatorily required if notices are issued after three years. Where approval is obtained from an authority not competent under Section 151(ii) for notices issued after three years, the assessing officer lacks jurisdiction to issue the Section 148 notice, and consequent proceedings are vitiated.Conclusion: The order under Section 148A(d) dated 30.07.2022 and the notice under Section 148 dated 30.07.2022 are invalid for non-compliance with Section 151(ii). Consequentially, the reassessment order dated 30.10.2025 under Section 147 and the penalty notice dated 07.11.2025 under Section 274 read with Section 271(1)(c) are quashed and set aside.
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