Sanction requirement under Section 151 defeats reassessment notice issued beyond three years without required higher-level approval, invalidating proceedings.

The article addresses validity of a reassessment notice issued under section 148 after the three-year period and explains that the amended procedure requires prior sanction from a higher specified authority where notices are issued beyond three years and the escaped income threshold is exceeded. It reasons that because the alleged escaped income fell below the higher threshold yet the notice was issued beyond three years without the requisite higher-level sanction, the issuing officer lacked jurisdiction and the notice is invalid; consequently the reassessment proceedings founded on that notice are quashed, favouring the assessee.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 dated 30/07/2022 (issued under the new regime) is valid when the alleged escaped income is Rs.10,25,756/- and the notice was issued beyond three years without obtaining sanction from the authority specified under section 151 of the Income-tax Act, 1961.

Analysis: The issue engages the scheme of the provisions introduced by the Finance Act, 2021 including section 148A and the linkage to section 151 which prescribes the specified authority to grant prior sanction for issuance of reassessment notices. Under the new regime, if a notice under section 148 is issued after the expiry of three years from the end of the relevant assessment year and the income escaping assessment is less than Rs.50,00,000/-, section 151(1)(b) precludes issuance of such a notice beyond three years. Where more than three years have elapsed, section 151(ii) requires prior sanction from a higher level authority (Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General) for income above the specified threshold. The record shows alleged escaped income of Rs.10,25,756/-, the notice was issued beyond three years, and approval was granted by the Principal Commissioner rather than the higher level authority required under section 151 for notices issued after three years. Reliance on the principles articulated in the reported decision concerning the new regime (including treatment of earlier notices as deemed under section 148A and the requirement to follow section 151 sanctions for orders under section 148A(d) and issuance under section 148) demonstrates that non-compliance with the sanctioning requirement and the time-limit scheme of section 151 affects the assessing officer's jurisdiction to issue a valid notice. Given the facts that the notice was beyond three years and the sanctioning authority did not meet the threshold specified for notices beyond three years, the notice is rendered invalid and the consequent reassessment proceedings are vitiated.

Conclusion: The notice issued under section 148 dated 30/07/2022 is invalid for non-compliance with section 151 of the Income-tax Act, 1961; the reassessment proceedings arising from that notice are quashed. Decision is in favour of the assessee.

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