“within four years”
The decision most relied on for within four years is (P.) Ltd. v. ITO (221 ITR 538), cited in 125 judgments on BharatTax.
Leading authorities on within four years
The sanction of a specified authority under Section 151 is a mandatory procedural check before issuing a notice under Section 148. This procedural safeguard aims to prevent mechanical reopening of assessments and harassment of the assessee.
When no specific statutory period of limitation exists, proceedings under Section 201(1) and 201(1A) of the Income-tax Act, particularly for payments to non-residents, must be initiated within a reasonable period of four years. This limitation also applies to consequential penalty proceedings under Section 271C.
The authority required to grant prior approval under Section 151 of the Income-tax Act for reassessment proceedings varies based on the applicable time limit for reassessment, as limitation is inextricably intertwined with the rank of the specified approving authority.
Reopening an assessment within four years to re-examine a deduction under Section 80HHC, which was wrongly allowed in the original assessment, is valid. This is illustrated by cases where reassessment was held valid for re-examining deductions based on how excise duty was treated in the balance sheet.
The first proviso to section 147 of the Income Tax Act applies when an assessment is re-opened within four years from the end of the assessment year. If the assessment year is within four years, the conditions of the proviso are met.
The approval for reopening of assessment must be obtained from the prescribed authority, which depends on whether the assessment is being reopened within four years or beyond four years from the end of the relevant assessment year.
Reopening assessment proceedings under Section 147 is permissible within four years, even if full and true particulars were provided during the original assessment, provided the Assessing Officer forms a prima facie opinion of underassessment or escapement of income.
Sanction for reopening an assessment under Section 151 requires approval from the specified authority, and approval from a superior but different authority is invalid. Even if the reopening is within four years, the correct authority must grant approval.
