Reassessment Sanction requirement: reassessment notice and orders invalidated where prior approval came from an authority not specified by statute.

Deletion of addition treated as unexplained cash credit was ordered where contemporaneous sales, stock registers, VAT returns and purchase records satisfactorily explained cash deposits and the AO relied only on missing PAN details without identifying specific book defects; consequential special tax-rate issue became academic upon deletion. Separately, reassessment proceedings initiated beyond three years were held invalid because prior approval was obtained from an authority not specified by statute, and that jurisdictional defect vitiated the notice under reassessment and all consequential orders.

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Issues: (i) Whether the addition of Rs. 38,92,692/- treated as unexplained cash credit and added under Section 68, and related application of special tax rate, was justified; (ii) Whether the reassessment proceedings initiated under Section 147/148 and the order under Section 148A(d) are valid where the prior sanction/approval was granted by an authority other than that required under Section 151(ii).

Issue (i): Whether the addition of Rs. 38,92,692/- as unexplained cash credit (invoking Section 68) and consequential tax computation involving special tax rate was sustainable.

Analysis: The assessee produced date-wise stock and sales registers, purchase and sales details, VAT returns and other contemporaneous documentation to explain cash deposits as arising from genuine cash sales during the relevant year. The assessing officer treated part of the cash deposits as unexplained solely on account of non-availability of PAN for some purchasers and rejected books without pointing to specific defects or affording an opportunity to be heard. The appellate authority re-examined the materials but remitted the issue to the assessing officer instead of deciding on merits. Given the verifiable supporting evidence on record, the addition could not be sustained on the limited ground of absent PAN details. The issue as to the applicability of the special tax rate was rendered academic upon deletion of the addition.

Conclusion: In favour of Assessee - the addition of Rs. 38,92,692/- is deleted.

Issue (ii): Whether the reassessment notice and proceedings are invalid for want of sanction from the authority specified under Section 151(ii) where more than three years had elapsed from the end of the assessment year.

Analysis: The order under Section 148A(d) and notice under Section 148 were issued after the three-year period had expired. Under the substituted regime post Finance Act, 2021 and as clarified by subsequent decisions, issuance of a notice after the three-year period requires prior approval from the higher authorities enumerated in Section 151(ii). The approval in the present case was obtained from an authority not specified under Section 151(ii). Reliefs under TOLA and judicial precedents concerning timelines and competent authority were considered; the amended proviso introduced w.e.f. 01.04.2023 does not operate retrospectively to validate earlier actions. Non-compliance with the statutory requirement of obtaining sanction from the specified higher authority vitiates jurisdiction to issue the reassessment notice and all consequential proceedings.

Conclusion: In favour of Assessee - the order under Section 148A(d), the notice under Section 148 and the assessment order passed pursuant thereto are quashed and set aside.

Final Conclusion: The appeal by the assessee is allowed insofar as the addition of Rs. 38,92,692/- is deleted; the Revenue's appeal challenging the quashing of reassessment proceedings is dismissed because the reassessment notice and consequent proceedings were invalid for lack of statutory sanction.

Ratio Decidendi: Where reassessment proceedings are initiated after the three-year period from the end of the relevant assessment year, prior approval must be obtained from the authority specified under Section 151(ii); failure to obtain sanction from that specified authority vitiates the jurisdiction to issue a notice under Section 148 and renders subsequent proceedings invalid.

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