Competent sanction under Section 151 is mandatory after three years, invalidating reassessment approved by an unauthorized authority.

For reassessment action initiated after three years from the end of the relevant assessment year, Section 151(ii), before insertion of its proviso from 1 April 2023, required approval from the Principal Chief Commissioner or, in that authority's absence, the Chief Commissioner. Extensions under Section 149 did not alter the independently applicable sanctioning-authority requirement. Approval by the Principal Commissioner was therefore incompetent, and the later proviso could not apply retrospectively. Consequently, the Section 148 notice, Section 148A(d) order, and consequential reassessment proceedings were invalid and unsustainable in law.

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Issues: Whether reassessment proceedings for Assessment Year 2017-18 were valid where sanction for action after expiry of three years from the end of the relevant assessment year was granted by the Principal Commissioner rather than the authority specified under Section 151(ii).

Analysis: Before insertion of the proviso to Section 151 with effect from 01.04.2023, the period and competent sanctioning authority under Section 151 operated independently of extensions under Section 149. Once three years from the end of the relevant assessment year had expired, approval could only be accorded by the Principal Chief Commissioner, or in the absence of such authority, the Chief Commissioner. The approval granted by the Principal Commissioner was therefore not by the specified authority, and the subsequently inserted proviso could not apply retrospectively.

Conclusion: The sanction was invalid; the notice under Section 148, the order under Section 148A(d), and all consequential reassessment proceedings were invalid and unsustainable in law.

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