Section 151 of the Income Tax Act
Income-tax Act, 2025: s.284
Section 151 of the Income-tax Act, 1961 corresponds to section 284 (Sanction for issue of notice) of the Income-tax Act, 2025.
Read section 284 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 151 is CIT v. Kelvinator of India Ltd. (320 ITR 561), cited in 1,673 of the 4,323 judgments on BharatTax that turn on this section.
Leading authorities on Section 151
An Assessing Officer cannot initiate reassessment proceedings under Section 147 of the Income Tax Act based on a mere change of opinion. Reassessment is permissible only when there is fresh tangible material leading to the belief of income escapement, not merely a review of existing facts.
For assessments under Section 153C, a notice is legally unsustainable if there is no incriminating material correlated to the specific assessment years for which reassessment is sought.
When a notice under Section 148 of the Income Tax Act is issued, the Assessing Officer is bound to furnish reasons for reopening upon the assessee's request and must dispose of the assessee's objections to the notice by passing a speaking order.
For reassessment proceedings under Section 148, the Assessing Officer only needs prima facie material to have a reason to believe income has escaped assessment. Conclusive proof or evaluation of the sufficiency and correctness of such material is not required at the stage of issuing the notice.
For reassessment proceedings, the 'reason to believe' that income has escaped assessment must be based on some material and not mere suspicion, establishing a live link between the information and the belief. Furthermore, for reassessment beyond four years, there must be a specific finding of the assessee's failure to disclose fully and truly all material facts.
The legal fiction created by the Ashish Agarwal judgment stops the limitation clock for Section 148 notices from the date of the deemed notice. Orders issued without proper jurisdiction, or those inconsistent with statutory prescriptions, are a nullity, and there can be no waiver of such fundamental jurisdictional requirements.
The Assessing Officer loses jurisdiction and the entire reassessment becomes invalid if no addition is made in respect of the income that formed the basis of the reopening. Explanation 3 to Section 147 does not permit assessing other escaped income unless an addition is made for the original income forming the reason to believe.
Completed assessments can be interfered with under Section 153A or 153C only on the basis of incriminating material unearthed during the search, necessitating a direct correlation between the discovered material and the power to assess or reopen concluded assessments.
Assessments under Section 153A cannot be sustained without any incriminating material found during the search that substantiates the additions. This principle applies even to completed assessments where no additional income is disclosed.
Notices issued under the unamended Section 148 of the Income-tax Act between April 1, 2021, and May 4, 2022, must be treated as notices issued under the new Section 148A(b) of the amended law. This requires the Assessing Officer to follow the procedure prescribed under the amended reassessment provisions, including issuing an order under Section 148A(d) before a fresh notice under Section 148.
