DY. COMMISSIONER OF INCOME TAX, GHAZIABAD vs. RITU CANSAL, GHAZIABAD

This Revenue’s appeal and assessee’s cross objection C.O. No. 82/Del/2025 for assessment year 2017- 18, are directed against Commissioner of Income Tax & C.O. No. 82/Del/20245 (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1060657201(1), involving proceedings under section 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case files perused.

For the reasons stated in the assessee’s condonation averments, delay of 296 days in filing of instant cross objection is hereby condoned in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).

It transpires during the course of hearing that there arises the first and foremost issue of validity of the impugned reopening/reassessment itself as the learned lower authorities appear to have set into motion the amended section 148 proceedings against the assessee in assessment year 2017-18; vide show-cause notice dated 29.07.2022 under section 148A(d) of the Act; for the purpose of assessing its alleged unexplained transactions. The Revenue could hardly dispute the clinching fact that the learned lower authorities had obtained the necessary approval of the learned Principal Commission of Income Tax,

Faced with the foregoing factual position, we are of the considered view that the impugned reopening itself is not sustainable in law as the learned lower authorities have not obtained the necessary approval under section 151(ii) of the Act in light of Union of India Vs. Rajeev Bansal [2024] 167 taxmann.com 70, deciding the same against the department as under: “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. 128 A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151(2) of Before expiry of four Joint the old regime years from the end of the Commissioner relevant assessment year Section 151(1) of After expiry of four years Principal Chief the old regime from the end of the Commissioner or relevant assessment Chief years Commissioner or Principal Commissioner or Commissioner Section 151(i) of the Three years or less than Principal new regime three years from the end Commissioner or of the relevant Principal Director assessment year 3 | P a g e & C.O. No. 82/Del/20245 or Commissioner or Director Section 151(ii) of More than three years Principal Chief the new regime have elapsed from the Commissioner or end of the relevant Principal Director assessment year General or Chief Commissioner or Director General 74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under Section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

After 1 April 2021, the new regime has specified different authorities for granting sanctions under Section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under Section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining PART E the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

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 4 | P a g e & C.O. No. 82/Del/20245 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 Section 151 affects their jurisdiction to issue a notice under Section 148.

Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre- conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will PART E accordingly extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.”

We thus find merit in the assessee’s instant first and foremost legal grievance raised in the cross-objection C.O. No. 82/Del/2025 which goes to the root of the matter. The impugned reopening is hereby quashed in above terms therefore. All other pleadings on merits as well as Revenue’s appeal stand dismissed as rendered infructuous at this stage.

This Revenue’s appeal is dismissed and the assessee’s cross objection C.O. No.82/Del/2025 is allowed