Prior sanction requirement under Section 151: reassessment invalid without empowered authority's approval despite TOLA time extension.

Question addresses whether reassessment notices issued after the three-year limitation were valid where prior sanction was obtained from an authority not empowered by law, taking into account the temporal extension under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The article explains that where the three-year period for AY 2017-18 expired during TOLA's suspended period and notices and 148A(d) orders were issued after the surviving period, sanction from an unlisted authority does not satisfy the statutory prior-approval requirement and creates a jurisdictional defect, rendering the reassessment proceedings invalid.

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Issues: Whether the reassessment notice and consequent proceedings for assessment year 2017-18 issued after the three-year period were valid where prior sanction was obtained from an authority not specified under section 151(ii) of the Income-tax Act, 1961, having regard to the temporal extension under Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

Analysis: The question concerns the statutory requirement of prior approval by the authority specified in section 151 of the Income-tax Act, 1961 for issuance of notice under section 148 and for passing an order under section 148A(d) when the notice is issued beyond three years from the end of the relevant assessment year. Application of Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) extends certain time limits falling between 20.03.2020 and 31.03.2021; where the three-year limit falls within that period, the specified authority under section 151(i) had extended time till 30.06.2021. For notices issued after the surviving three-year period, section 151(ii) prescribes higher level authorities (Principal Chief Commissioner/Principal Director General/Chief Commissioner/Director General) to grant sanction. The record shows the relevant three-year period for AY 2017-18 expired on 31.03.2021 and the subsequent order under section 148A(d) and notice under section 148 were issued after that period; approval was obtained from an authority not empowered by section 151(ii). Non-compliance with section 151(ii) is a jurisdictional defect making the notice and ensuing reassessment proceedings invalid and time barred despite TOLA's temporal relief.

Conclusion: The reassessment notice and order are quashed for want of valid sanction under section 151(ii) of the Income-tax Act, 1961 read with Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; appeal allowed in favour of the assessee.

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