Jurisdictional defect in reassessment sanction beyond three years cannot be cured by later retrospective proviso

Reassessment beyond three years from the end of the assessment year required approval from the authority specified under Section 151(ii), and sanction by the Principal Commissioner was invalid for notices and orders issued in April 2022. The later proviso inserted into Section 151 from 01 April 2023 was held not to operate retrospectively, so it could not cure the jurisdictional defect. Because valid sanction was a statutory pre-condition for reopening, the reassessment initiation was without jurisdiction and the challenge succeeded. The alternate remedy objection was rejected, as writ jurisdiction remained available where the foundational reopening itself was void.

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Issues: (i) Whether reassessment proceedings initiated beyond three years from the end of the relevant assessment year were invalid because sanction for the notice under Section 148 and the order under Section 148A(d) was granted by the Principal Commissioner instead of the authority specified under Section 151(ii) of the Income-tax Act, 1961, and whether the proviso inserted to Section 151 could operate retrospectively. (ii) Whether the writ petition was not maintainable in view of the alternate statutory remedy.

Issue (i): Whether reassessment proceedings initiated beyond three years from the end of the relevant assessment year were invalid because sanction for the notice under Section 148 and the order under Section 148A(d) was granted by the Principal Commissioner instead of the authority specified under Section 151(ii) of the Income-tax Act, 1961, and whether the proviso inserted to Section 151 could operate retrospectively.

Analysis: The impugned order under Section 148A(d) and the notice under Section 148 were issued after expiry of three years from the end of Assessment Year 2018-19. For such cases, the statute required approval of the higher specified authority under Section 151(ii). The record showed that approval was granted by the Principal Commissioner, who was not the competent authority for this time period. The Court followed its earlier view that the proviso inserted into Section 151 with effect from 01 April 2023 does not apply to notices and orders issued in April 2022. The linkage made by Section 151 to the limitation computation under Section 149(1) did not render the later proviso retrospective. The defect was not procedural but went to jurisdiction because valid sanction is a statutory pre-condition for reopening.

Conclusion: The sanction was invalid, the reassessment initiation was without jurisdiction, and the challenge succeeded on this ground.

Issue (ii): Whether the writ petition was not maintainable in view of the alternate statutory remedy.

Analysis: The existence of appealable remedies did not bar writ jurisdiction where the foundational reassessment action itself was without jurisdiction. Since the initiation was vitiated by sanction from an incompetent authority, the petitioner could invoke writ jurisdiction. The Court also noted the asserted non-service of notices, but did not decide that ground separately.

Conclusion: The alternate remedy objection was rejected.

Final Conclusion: The reassessment, demand, and penalty proceedings founded on the impugned reopening were quashed as having been initiated without valid sanction, and the petition was allowed.

Ratio Decidendi: Where a reassessment notice is issued beyond the statutory time threshold, sanction must be granted by the authority specified for that class of cases, and a later proviso cannot retrospectively cure a jurisdictional defect in sanction.

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