2026 (4) TMI 1709

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.... the approval for issuance of the notice under Section 148 and for passing the order under Section 148A(d) has been granted by an authority not competent in law, the impugned action having been taken beyond a period of three years from the end of the relevant assessment year. It is also the case of the Petitioner that none of the notices and orders forming part of the reassessment and penalty proceedings were ever served upon the Petitioner and that the proceedings were completed ex-parte in breach of principles of natural justice. 4. Briefly stated, the facts are as under:- (a) The Petitioner is a company incorporated in India. The record indicates that the Petitioner had not been engaged in active business for several years and had not filed Return of Income for the relevant period. It is the specific case of the Petitioner that at the relevant time it did not even have an account on the income-tax e-filing portal and that such account came to be opened only on 16 October 2024 after the Petitioner became aware of the reassessment and penalty proceedings. (b) For Assessment Year 2018-19, a notice dated 23 March 2022 is stated to have been issued under Section ....

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....d. (g) According to the Petitioner, it became aware of these proceedings only when the assessment order and penalty orders were received by its director on 10 October 2024. Thereafter, an e-filing account was created on 16 October 2024, upon which the Petitioner downloaded various notices and orders. 5. Mr. Gandhi, learned counsel appearing for the Petitioner, submitted that the impugned notice under Section 148 and the order under Section 148A(d) are wholly without jurisdiction since they were issued after expiry of three years from the end of Assessment Year 2018-19 and yet the approval admittedly was granted by the Principal Commissioner of Income Tax. According to him, in such a case, the competent specified authority under Section 151(ii), as it then stood, had to be the Principal Chief Commissioner / Principal Director General or, in the absence thereof, the Chief Commissioner / Director General, and not the Principal Commissioner. 6. Mr. Gandhi submitted that the law on the issue is no longer res integra. He relied upon the decision of this Court in Vodafone Idea Limited vs. Deputy Commissioner of Income Tax in Writ Petition No. 2768 of 2022 decided on 06 Febr....

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.... therefore, shall not apply to notices and orders issued prior thereto. 9. Developing this submission further, Mr. Gandhi submitted that the proviso to Section 151 itself refers to four provisos to Section 149(1). According to him, two of those provisos (i.e., the third and fourth provisos to Section 149) themselves came to be enacted with effect from 01 April 2023. Therefore, when the provisos to Section 149 are themselves prospective, the proviso to Section 151 cannot be pressed into service retrospectively so as to validate earlier proceedings. He submitted that in any event, a jurisdictional defect cannot be cured by retrospective implication where the Legislature itself has expressly made the proviso effective prospectively. 10. Mr. Gandhi also submitted that, independently of the issue of approval, the entire proceedings stand vitiated since the notices under Section 148A(b), the order under Section 148A(d), the notice under section 148, the notices under Section 142(1), the show cause notices and even the assessment and penalty orders were never properly served upon the Petitioner. It was urged that the record itself demonstrates failed attempts at service on an incorr....

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....ourt in Vodafone Idea Limited vs. Deputy Commissioner of Income Tax decided on 06 February 2024. In that case also, for Assessment Year 2018-19, the notice under Section 148 and the order under Section 148A(d) had been issued beyond three years and the sanction had been accorded by the Principal Commissioner. Incidentally, the notice in the said case was also dated 07 April 2022. This Court held that the sanctioning authority had to be the Principal Chief Commissioner as provided under Section 151(ii) and that the proviso to Section 151, inserted only with effect from 01 April 2023, would not apply. Consequently, the notice and order were quashed. Relevant paragraphs of the said judgment are as under: "3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The provisio to Section 151 has bee....

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....t be strictly adhered to because it contains "important safeguards. ... 73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. ITO [1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534... 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under ....