Validity of reopening notices beyond three years requires specified authority approval, failure to obtain it leads to invalidation.

Reopening of assessment by issue of notice beyond three years required prior approval from the specified authority under Section 151; absence of sanction from the Principal Chief Commissioner or equivalent rendered the notice invalid, following the High Court precedent in Communist Party of India (M). The determination of which senior officer must grant approval depends on whether the section 148 notice was issued after the threeyear limitation period or within it; where issued after three years the higher specified authority's sanction is mandatory. Consequence: the impugned reopening notice was set aside and decision favoured the assessee.

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Issues: Whether the reassessment proceedings initiated by issuance of notice under Section 148 (and order under Section 148A(d)) for AY 2017-18 are valid when the notice was issued beyond three years from the end of the relevant assessment year but prior approval was obtained from an authority not specified under Section 151(ii) of the Income-tax Act, 1961.

Analysis: The statutory scheme assigns the authority to grant prior approval for issuance of notice under Section 148/148A based on the lapse of time since the end of the relevant assessment year; where more than three years have elapsed, approval must be granted by the authorities specified in clause (ii) of Section 151. The proviso to Section 148 makes prior approval by the specified authority mandatory. Judicial decisions cited establish that extensions of limitation under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) do not alter which authority is statutorily specified for grant of approval under Section 151; the amended distribution of powers in Section 151 governs determination of the specified authority irrespective of any temporary extension of limitation. Applying this framework, the approval obtained from the Principal Commissioner (or other authority under clause (i)) when the notice was issued after the three-year period is inconsistent with Section 151(ii) and therefore deficient. Consequent procedural acts (the Section 148A(d) order, the Section 148 notice, the resulting assessment and demand) flow from that defective initiation and cannot be sustained.

Conclusion: The reassessment initiation, the order passed under Section 148A(d), the notice under Section 148, the assessment order dated 23.05.2023 and the consequent demand are quashed and set aside; the appeal is allowed in favour of the assessee.

Ratio Decidendi: Where reassessment is initiated after more than three years from the end of the relevant assessment year, prior approval must be obtained from the authority specified in clause (ii) of Section 151 of the Income-tax Act, 1961; an approval from an authority specified in clause (i) is legally ineffective and renders the subsequent Section 148/148A proceedings void, and temporal extensions of limitation under TOLA do not alter the identity of the specified authority under Section 151.

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