2026 (3) TMI 326 - AT - Income Tax

Sanction under Section 151 is required from specified authority; absence renders reassessment proceedings invalid and ineffective.

Challenge concerned validity of notice under Section 148 and order under Section 148A(d) where sanction after three years was furnished by an authority ... Reopening of assessment - validity of the sanction granted u/s 151 for issuance of notice u/s 148 - Competent authority for sanction under section 151 after three years - HELD THAT: - The Tribunal examined the sanction and found that the approval for initiating reassessment beyond three years from the end of the relevant assessment year was accorded by the Principal Commissioner (Pr. CIT-20, Mumbai), who was not the authority competent under section 151(ii) as the law stood prior to its amendment by Finance Act, 2023. Reliance was placed on binding jurisdictional precedent in Shabbir Taheri [2025 (10) TMI 1372 - ITAT MUMBAI] which held that where more than three years have elapsed the sanction must be granted by the authority specified in section 151(ii) and that the proviso subsequently inserted into section 151 w.e.f. 01.04.2023 cannot be given retrospective effect. In light of these settled legal positions and the coordinate decisions analysed, the Tribunal concluded that the Assessing Officer's assumption of jurisdiction lacked valid sanction and therefore the notice under section 148, the order under section 148A(d) and all consequential reassessment proceedings were invalid. Because the reassessment was quashed on this legal ground, the Tribunal did not adjudicate the merits of the additions made in the assessment order. [Paras 8, 9] The sanction was invalid, and the notice, the order under section 148A(d) and the reassessment proceedings are quashed. Final Conclusion: On the ground that the sanction for reassessment beyond three years was accorded by an authority not competent under section 151 as it stood prior to 01.04.2023, the Tribunal quashed the notice, the order under section 148A(d) and all consequential reassessment proceedings. Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 and the order under Section 148A(d) of the Income-tax Act, 1961 are invalid for want of sanction by the competent authority under Section 151 of the Income-tax Act, 1961 after the expiry of three years from the end of the relevant assessment year.Analysis: Section 151 of the Income-tax Act, 1961 prescribes the specified authority competent to grant sanction for initiation of proceedings under Section 148/148A after expiry of three years from the end of the relevant assessment year. Prior to the amendment by Finance Act, 2023 w.e.f. 01.04.2023, the authority specified for sanction after three years was the Principal Chief Commissioner or Chief Commissioner (or equivalent) under Section 151(ii). The proviso subsequently inserted by Finance Act, 2023 does not operate retrospectively to validate sanctions granted before 01.04.2023. Binding decisions of the jurisdictional High Court and coordinate benches interpret Sections 149 and 151 as separate; the limitation extensions in Section 149 provisos cannot be read into Section 151 prior to its amendment. In the present matter the sanction for proceedings beyond three years was accorded by an authority not specified by Section 151(ii) prior to the 2023 amendment, resulting in a jurisdictional defect that vitiates the reassessment proceedings. Consequently, proceedings founded on such invalid sanction cannot stand and related merits issues fall away.Conclusion: The notice under Section 148 of the Income-tax Act, 1961, the order under Section 148A(d) of the Income-tax Act, 1961, and all consequential reassessment proceedings are invalid and are quashed; decision is in favour of the assessee.