2026 (4) TMI 113 - AT - Income Tax

Jurisdictional sanction for reassessment reopening must come from the competent authority; incorrect approval vitiates reassessment.

Reassessment initiated beyond three years required prior approval from the higher authority specified under the Income-tax Act. The record showed ... Validity of reopening of assessment - sanction under section 151 - Approval by competent specified authority - reassessment initiated beyond three years from the end of the relevant assessment HELD THAT: - The Tribunal held that, where reopening was made beyond three years from the end of the relevant assessment year, the approval contemplated by law had to be obtained from the competent specified authority. In the present case, the order under section 148A(d) referred to prior approval of the Principal Chief Commissioner, while the notice under section 148 stated that approval had been obtained from the Principal Commissioner. Tribunal treated this inconsistency as fatal, observing that the law envisages approval by only the competent authority and that approval from a wrong authority vitiates the assumption of jurisdiction. Following decision in Kids Dream International Private Limited [2025 (2) TMI 1234 - DELHI HIGH COURT] and H and M Hennes and Mauritz Retail P Ltd [2025 (5) TMI 1799 - DELHI HIGH COURT] the reassessment proceedings were held invalid. [Paras 4, 5, 6] The reassessment proceedings were quashed and the assessee's cross objection on the legal ground was allowed. Final Conclusion: The Tribunal quashed the reassessment for AY 2018-19 on the ground of invalid sanction under section 151, and accordingly allowed the assessee's cross objection. The Revenue's appeal was dismissed, with the remaining grounds left open. Issues: Whether the reassessment proceedings were vitiated because approval for issuance of notice under section 148 was obtained from an authority other than the competent authority prescribed under section 151 of the Income-tax Act, 1961.Analysis: The reassessment for the relevant assessment year had been initiated beyond three years from the end of the assessment year, and therefore the approval contemplated by section 151 had to be obtained from the specified higher authority. The record showed inconsistency in the sanction noted in the order under section 148A(d) and in the notice under section 148, and the approval was not traced to the competent authority required by law. Since sanction by the proper authority is a jurisdictional precondition for valid reopening, approval by an incorrect authority vitiates the reassessment.Conclusion: The reopening and consequent reassessment proceedings were invalid and were quashed, in favour of the assessee.