High Court Quashes Reassessment Notice for Lack of Sanction u/s 151 of the Finance Act, 2021
In this case, a notice dated 12.04.2021 was issued under Section 148 of the Income Tax Act, 1961, after obtaining approval from the Joint Commissioner of Income Tax, on 09.04.2021. Thereafter, an order dated 15.07.2022 under Section 148A(d) was passed by the Jurisdictional Assessing Officer. On the same date, a notice under Section 148 was issued. The approval for the issuance of this notice was taken from the Principal Commissioner of Income Tax. The petition challenged the notice dated 15.07.2022 and all follow-up proceedings, because the statutory condition of sanction had not been met in the terms of Section 151 as substituted by the Finance Act, 2021.
It was submitted that since more than three years had expired from the end of the relevant assessment year, the approval should have been obtained from the Principal Chief Commissioner of Income Tax or equivalent authority. The sanction in this case having been taken only from the Principal Commissioner, the proceedings were without jurisdiction. The respondents supported the reassessment proceedings, but were unable to dispute the requirement under the substituted statutory provisions.
Issue Raised: Whether reassessment proceedings initiated under Section 148 after 01.04.2021 could be sustained when a sanction was obtained only from the Principal Commissioner and not from the Principal Chief Commissioner or equivalent authority as required under Section 151.
HC’s Decision: The Court held that a sanction by the concerned authority under Section 151 is a protection of jurisdiction. The sanction for notice under Section 148 dated 15.07.2022 was received from the Principal Commissioner of Income Tax. Since more than three years had lapsed from the end of the concerned assessment year, sanction was necessary from the Principal Chief Commissioner of Income Tax or Principal Director General. The requirement of law had not been satisfied. Therefore, the Assessing Officer had no jurisdiction to issue the notice or to continue reassessment proceedings.
The Court ruled that following Section 151 in its substituted form is obligatory, and reassessment without sanction of the said authority is jurisdictional. On this ground, the writ petition was allowed. Notice dated 15.07.2022 issued under Section 148 and followed proceedings were quashed. It was also ordered that pending applications also stood disposed of.
To Read Full Judgment, Download PDF Given Below