2022 (7) TMI 1458 - HC - Income Tax

Reopening of assessment u/s 147 - valid Approval u/s 151 - notice was being issued beyond the four years period prescribed - HELD THAT - Since the issue of grant of approval by an authority as prescribed u/s 151 of the Act goes to the root of the matter we wish to deal only with the said issue and hold that even in the present case the approval ought to have been granted by either the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner and not by the Additional Commissioner of Income tax. Since the notice was being issued beyond the four years period prescribed under the un-amended provisions of section 151(1) of the Act it ought to have the satisfaction accorded by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax which is not so in the present case.

Summary

Issues involved:
Challenge to notice under section 148 of the Income Tax Act, 1961 for reopening assessment for the assessment year 2015-16 and rejection of objections against reopening.

Analysis:

1. Reopening of Assessment:
The petitioner challenged the notice dated 27th March 2021 issued under section 148 of the Income Tax Act, 1961 for reopening the assessment for the assessment year 2015-16. The petitioner also contested the order dated 28th February 2022, where their objections against the reopening were rejected. The petitioner argued that the reassessment was merely a change of opinion without any new material to suggest income escaping assessment. Furthermore, the approval granted for the notice was questioned as it was not in accordance with section 151 of the Act. The petitioner relied on a previous judgment where approval by an Additional Commissioner was deemed invalid due to being beyond the prescribed four-year period. The court emphasized the importance of approval by competent authorities as per the Act, ruling in favor of the petitioner due to the lack of proper sanction by the authorized officials.

2. Approval for Reassessment:
The court highlighted the significance of obtaining approval for reassessment under section 151 of the Act from specific designated authorities. In this case, the approval granted by an Additional Commissioner was deemed inappropriate as it should have been accorded by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner of Income Tax. The court referenced a previous judgment to support its ruling, emphasizing the adherence to statutory provisions regarding approval for reopening assessments. The court held that the notice issued beyond the four-year period specified in the unamended provisions of section 151(1) required sanction from the appropriate authorities, which was lacking in the present case.

3. Legal Interpretation:
The court analyzed the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 in relation to the extension of time for issuing notices under section 148 of the Act. The court clarified that while the Relaxation Act extended the time limit for issuing notices, it did not alter the requirements of section 151 regarding approval for reassessment. The judgment emphasized the distinction between time extensions and amendments to statutory provisions, reinforcing the necessity of complying with the specified approval procedures under the Act. The court's decision was guided by a strict interpretation of legal requirements, ensuring adherence to procedural formalities in matters of income tax reassessment.

4. Final Decision:
Based on the issues raised regarding the validity of the notice and the approval process for reassessment, the court allowed the writ petition. The court set aside the notice dated 27th March 2021 issued under section 148 of the Act and the order dated 28th February 2022 rejecting the petitioner's objections. The judgment underscored the fundamental requirement of obtaining approval from the appropriate authorities as mandated by the Act, thereby upholding the petitioner's challenge against the reopening of the assessment for the assessment year 2015-16.