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Facts
The assessee filed their return of income for AY 2017-18. Subsequently, a notice under section 148 was issued beyond the three-year period from the end of the assessment year. The assessee challenged the assumption of jurisdiction due to a lack of valid sanction from the competent authority as required by section 151.
Held
The Tribunal held that the notice under section 148 was issued beyond the three-year period from the end of the assessment year. The sanction obtained was not from the specified higher authority as mandated by section 151(ii) of the Act, rendering the notice and subsequent reassessment proceedings invalid.
Key Issues
Whether a reassessment notice issued beyond three years requires sanction from the specified higher authority under Section 151(ii) and if its absence invalidates the notice.
Sections Cited
147, 144, 148, 151, 148A(b), 148A(d), 151(ii)
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Income Tax Appellate Tribunal, ‘ SMC ‘
आदेश / O R D E R PER AMIT SHUKLA (J.M): This appeal has been preferred by the assessee assailing the order dated 10.10.2025 passed by the National Faceless Appeal Centre, Delhi, whereby the reassessment framed under section 147 read with section 144 of the Income-tax Act, 1961 (“the Act”) for the Assessment Year 2017-18 has been upheld. The assessee has, through a bouquet of grounds, principally challenged the very assumption of jurisdiction under section 148 of the Act, contending that the reopening of assessment is vitiated at its very inception on account of lack of valid sanction from the competent specified authority as mandated under section 151 of the Act.
At the threshold, it would be apposite to briefly recapitulate the material facts giving rise to the present controversy. The assessee had filed her return of income for the Assessment Year 2017-18 on 14.03.2018 declaring a total income of ₹2,86,870/-. The said return was processed and no scrutiny assessment was undertaken within the time prescribed. Subsequently, a notice dated 30.06.2021 came to be issued under section 148 of the Act. In view of the seminal judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal (2022) 138 taxmann.com 64 (SC), such notice came to be treated as a deemed notice under section 148A(b) of the Act.
The ostensible reason for reopening, as recorded by the Assessing Officer, was that the assessee had allegedly purchased and/or sold an immovable property for a declared consideration of ₹15,00,000/-, whereas the stamp duty valuation of the said property was ₹37,04,000/-, resulting in an alleged difference of ₹22,04,000/-, which, according to the Assessing Officer, represented income chargeable to tax that had escaped assessment. Consequent thereto, an order under section 148A(d) was passed, followed by issuance of a fresh notice under section 148 on 26.07.2022.
It is an undisputed and admitted position on record that the notice under section 148 dated 26.07.2022 was issued well beyond a period of three years from the end of the relevant assessment year, i.e., after 31.03.2021. This jurisdictional infirmity was specifically raised by the assessee before the first appellate authority, contending that in such circumstances, the sanction contemplated under section 151(ii) of the Act was mandatorily required to be obtained from the higher specified authority, namely, the Principal Chief Commissioner of Income-tax / Chief Commissioner of Income-tax, and that approval obtained from the Principal Commissioner of Income-tax-19 was without authority of law. The learned CIT(A), however, dismissed the said contention, leading to the present appeal.
We have carefully considered the rival submissions, perused the material placed on record, and examined the impugned order in the light of the statutory framework and binding judicial precedents. The issue before us lies in a narrow compass, yet goes to the very root of jurisdiction namely, whether the reopening initiated after the expiry of three years from the end of the relevant assessment year, without sanction from the correct specified authority as contemplated under section 151(ii) of the Act, can be sustained in law.
The legal position on this issue is no longer res integra. The Hon’ble Supreme Court, in Union of India v. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), has authoritatively clarified the interplay between the limitation provisions, the pandemic-related extensions, and the requirement of sanction under section 151. Their Lordships have categorically held that in cases where the original limitation of three years expired between 23.03.2020 and 31.03.2021, the benefit of the extended period would be available only up to 30.06.2021. Beyond that date, the reopening would squarely fall within the regime of section 151(ii), thereby necessitating approval from the higher specified authority.
The said legal position has been consistently followed and reiterated by the Hon’ble Jurisdictional High Court and other High Courts in a series of decisions, including:
1. • Pradeep Himatlal Shah v. ITO (2024) 170 taxmann.com 471 (Bom.) • Ramesh Bachulal Mehta v. ITO (2024) 177 taxmann.com 606 (Bom.) • Dhanraj Govindram Kella v. ITO (2024) 177 taxmann.com 194 (Guj.)
7.1. In Ramesh Bachulal Mehta (supra), dealing with Assessment Year 2016-17, the Hon’ble Bombay High Court has unequivocally held that where the notice under section 148 is issued after the expiry of three years from the end of the relevant assessment year, the sanction accorded by the Principal Commissioner of Income-tax would not meet the statutory requirement, and such notice would be rendered invalid ab initio.
Applying the aforesaid settled legal principles to the facts of the present case, it is evident that the notice under section 148 dated 26.07.2022 was issued beyond the period of three years from the end of Assessment Year 2017-18. Consequently, the Assessing Officer was statutorily obliged to obtain sanction from the higher specified authority as envisaged under section 151(ii) of the Act. Admittedly, the approval in the present case has been granted by the Principal Commissioner of Income-tax-19, who does not fall within the ambit of the specified authority prescribed under the said provision. Such approval, therefore, is wholly without jurisdiction and cannot cure the foundational defect in the assumption of jurisdiction under section 148.
Jurisdictional conditions are not mere procedural formalities; they constitute the very edifice upon which the validity of reassessment proceedings rests. Failure to adhere strictly to the statutory mandate renders the entire proceedings null and void. Once the initiation itself is vitiated, all subsequent proceedings fall like a house of cards, without any independent legs to stand upon.
In view of the foregoing discussion and respectfully following the binding precedents of the Hon’ble Supreme Court and the Hon’ble High Courts, we hold that the impugned notice issued under section 148 of the Act is invalid in law, having been issued without obtaining sanction from the competent specified authority under section 151(ii)
1. of the Act. Consequently, the reassessment proceedings and the assessment order passed pursuant thereto are liable to be quashed.
Since the appeal succeeds on this legal issue alone, we refrain from adjudicating the remaining grounds raised on merits, which are left open.
In the result, the appeal filed by the assessee is allowed on legal grounds.
Order pronounced on 30th December, 2025.