2026 (3) TMI 1485 - AT - Income Tax

Reassessment sanction defect invalidates notice when approval under section 151(ii) is missing for a notice issued after three years.

A reassessment notice issued beyond three years from the end of the relevant assessment year required approval from the Principal Chief Commissioner of ... Reassessment notice u/s 148 beyond three years - Sanction by competent authority - Section 151 approval beyond three years HELD THAT: - The Tribunal held that the controlling date for identifying the specified authority under section 151 is the date of issuance of the notice under section 148. Since the impugned notice was issued on 13.04.2022, which was beyond three years from the end of AY 2018-19, approval was required from the PCCIT under section 151(ii). Approval obtained from the PCIT did not satisfy the statutory requirement. The Tribunal also accepted that, under the scheme of section 148A, sanction at the earlier stage could not substitute the separate approval required for issuance of notice under section 148, and therefore the reopening notice was invalid, rendering the consequential reassessment liable to be quashed. [Paras 6, 7, 8] The notice under section 148 was held to be invalid for want of approval from the competent authority, and the reassessment founded on it was quashed. Final Conclusion: The appeal was allowed. The Tribunal quashed the reassessment on the ground that the notice under section 148, having been issued beyond three years from the end of the relevant assessment year, lacked sanction from the competent authority prescribed under section 151(ii). Issues: Whether the reassessment notice issued under section 148 beyond three years from the end of the relevant assessment year was invalid for want of approval from the Principal Chief Commissioner of Income Tax under section 151(ii), and whether the consequential reassessment proceedings were liable to be quashed.Analysis: The notice under section 148 was issued on 13.04.2022 for Assessment Year 2018-19, which was beyond three years from the end of the relevant assessment year. In that situation, the prescribed sanctioning authority under section 151(ii) was the Principal Chief Commissioner of Income Tax or the equivalent higher authority. Approval having been obtained only from the Principal Commissioner of Income Tax, the sanction did not satisfy the statutory requirement. The reassessment could not be sustained on the basis of approval granted for the earlier stage under section 148A(b), because a separate and valid sanction was required for issuance of notice under section 148 and for the order under section 148A(d). The defect went to jurisdiction and vitiated the entire reassessment process.Conclusion: The notice under section 148 was invalid and the reassessment proceedings were liable to be quashed, in favour of the assessee.