Reassessment limitation and mandatory approval under section 151(ii) defeated reopening where the notice was time-barred and improperly sanctioned.

Reassessment notices issued after the extended limitation framework under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 were treated as time-barred where they did not survive the applicable statutory timeline. Where the notice was issued beyond three years from the end of the relevant assessment year, prior approval had to be obtained from the higher specified authority under section 151(ii) of the Income-tax Act, 1961; approval by the Principal Commissioner was treated as insufficient. On that basis, the reassessment notice and the proceedings founded on it were quashed, and the remaining grounds were rendered academic.

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Issues: (i) Whether the reassessment notice and proceedings were barred by limitation under the extended time regime and the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. (ii) Whether the notice issued beyond three years from the end of the relevant assessment year was invalid for want of approval by the correct specified authority under section 151(ii) of the Income-tax Act, 1961.

Issue (i): Whether the reassessment notice and proceedings were barred by limitation under the extended time regime and the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

Analysis: The notice under section 148 of the Income-tax Act, 1961 was issued on 29.07.2022, after the period governed by the relaxation provisions relied upon for reopening proceedings. The Tribunal followed the binding view that the notices issued in the relevant period, when tested against the statutory limitation framework and the relaxation legislation, could not survive.

Conclusion: The reassessment proceedings were held to be barred by limitation and invalid.

Issue (ii): Whether the notice issued beyond three years from the end of the relevant assessment year was invalid for want of approval by the correct specified authority under section 151(ii) of the Income-tax Act, 1961.

Analysis: Since the notice was issued beyond three years from the end of the relevant assessment year, prior approval had to be obtained from the higher specified authority mandated by section 151(ii) of the Income-tax Act, 1961. Approval by the Principal Commissioner, instead of the competent higher authority, did not satisfy the statutory requirement, rendering the initiation defective.

Conclusion: The notice and the proceedings founded on it were quashed for lack of approval by the competent specified authority.

Final Conclusion: The reassessment was set aside in both appeals, and the remaining grounds were rendered academic.

Ratio Decidendi: A reassessment notice issued beyond the statutory time threshold is unsustainable unless it is preceded by approval from the exact authority prescribed by section 151(ii) of the Income-tax Act, 1961, and proceedings failing that requirement are liable to be quashed.

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