2022 (4) TMI 1446 - HC - Income Tax

Reopening of assessment u/s 147 - valid sanction granted u/s 151 or not? - Notice beyond 4 Years - petitioner s case that the approval obtained for issuing notice under Section 148 of the Act is not in accordance with the mandate of Section 151 as the said approval is of Additional Commissioner of Income Tax instead of Principal Commissioner of Income Tax - HELD THAT - According to the Income Tax Officer Assessment Year 2015-2016 which falls under the category within four years as on 31st March 2020 the statutory approval for issuance of notice under Section 148 of the Act for the Assessment Year 2015-2016 may be given by the Range Head as per the said provisions. As respondent clarifies that the Income Tax Officer is only conveying the view of the Principal Commissioner of Income Tax because this letter has been issued on the letterhead of Principal Commissioner of Income Tax. Even for a moment we agree with the view expressed by the Principal Commissioner of Income Tax still it applies to only cases where the limitation was expiring on 31st March 2020. In the case at hand the assessment year is 2015-2016 and therefore the six years limitation will expire only on 31st March 2022. Certainly therefore the Relaxation Act provisions may not be applicable. In any event the time to issue notice may have been extended but that would not amount to amending the provisions of Section 151 of the Act. Thus since four years had expired from the end of the relevant assessment year as provided under Section 151(1) of the Act it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Additional Commissioner of Income Tax. On this ground alone we will have to set aside the notice dated 31st March 2021 issued under Section 148 of the Act which is impugned in this petition. In view thereof the consequent orders and notices will also have to go. Thus we quash and set aside the said Notice u/s 148 - Decided in favour of assessee.

Summary

Issues:
Impugning notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016, rejection of objections to reopening, sanction granted under Section 151 for notice issuance, and subsequent notice under Section 142(1).

Analysis:
The petitioner challenged the sanction granted under Section 151 of the Act, arguing that the approval obtained for issuing the notice under Section 148 was not in accordance with the mandate of Section 151. The petitioner contended that the approval was granted by the Additional Commissioner of Income Tax instead of the required Principal Commissioner of Income Tax. Additionally, the reasons for approval were put up after the expiry of four years from the end of the relevant assessment year, which, according to Section 151, necessitates approval from the Principal Commissioner. The Court agreed that the approval was not in compliance with Section 151, leading to the notice being deemed invalid.

Sub-Section 1 of Section 151 stipulates that no notice shall be issued after four years from the end of the relevant assessment year without approval from specified authorities. In this case, the notice was issued after the four-year limit, and approval was obtained from the Additional Commissioner instead of the required Principal Commissioner. The respondents argued that the approval by the Additional Commissioner was valid due to the Relaxation Act extending limitations. However, the Court found that the Relaxation Act did not apply to the assessment year in question, and the approval should have come from the Principal Commissioner as per Section 151(1).

The Court emphasized that as per Section 151(1) of the Act, only specified authorities could grant approval for issuing notices under Section 148 after the four-year period. Since the approval was not obtained from the correct authority, the notice dated 31st March 2021 under Section 148 was set aside, rendering subsequent orders and notices invalid. The petition was allowed, and a Writ was issued to quash the notice, rejection order, sanction, and subsequent notice. The Court disposed of the petition accordingly, highlighting the importance of compliance with statutory provisions in such matters.