2022 (9) TMI 360 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - as argued notice has been issued without proper sanction u/s 151 - Notice beyond a period of 4 years - HELD THAT - This very issue has been dealt with by the decision of this court in JM Financial Investment Consultancy Services Private Limited. 2022 (4) TMI 1446 - BOMBAY HIGH COURT where this court after considering the Relaxation Act as well as the provisions of section 149 as well as section 151 of the Act has observed that even if the Relaxation Act applies to cases of this nature, the provisions of section 149 describing the outer limit 6 years for reopening of an assessment and section 151 dealing with the sanction for an reopening beyond 4 years and within 4 years have not been amended to take care of these eventualities. It is undisputed that the relevant assessment year is 2015-16 and notice for reopening has been issued on 26th March, 2021 which is beyond a period of 4 years. The satisfaction under section 151 has been issued by the Range 3(3), Mumbai which admittedly is a Joint Commissioner, whereas the satisfaction should have been of either the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with section 151(1) of the Act. The notice dated 26th March, 2021, is clearly without jurisdiction and deserves to be quashed and set aside. Hon ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate writ, order or direction, calling for the records of the Petitioner s case and after going into the legality and propriety thereof, to quash and set aside the said Notice dated 26/3/2021 u/s 148. - Decided in favour of assessee.

Summary

Issues:
1. Proper sanction under section 151 of the Income Tax Act for issuing a notice to reopen assessment beyond 4 years.
2. Interpretation of the provisions of the Taxation and other laws, Relaxation of Certain Provisions Act, 2020 in relation to the timeline for issuing notices for reopening assessments.
3. Jurisdictional validity of the notice issued by the Joint Commissioner instead of the required authorities under section 151(1) of the Act.

Analysis:
1. The petitioner challenged a notice seeking to reopen the assessment for the year 2015-16, issued beyond the 4-year period. The petitioner contended that the notice lacked proper sanction under section 151 of the Income Tax Act, as it was issued by the Joint Commissioner instead of the authorities specified in section 151(1). The petitioner relied on a previous court decision supporting their objection.

2. The Revenue argued that the notice was issued based on the impression that the reopening fell within the 4-year period due to the provisions of the Relaxation Act, extending the limitation period. However, the court noted that the Relaxation Act did not amend sections 149 and 151 of the Act, which specify the time limits and sanction requirements for reopening assessments. The court emphasized that the statutory provisions remained unchanged despite the Relaxation Act.

3. The court found that the notice issued on 26th March, 2021, for the assessment year 2015-16, was beyond the 4-year limit. The satisfaction under section 151 was issued by the Joint Commissioner, whereas section 151(1) required the satisfaction of specified higher authorities. As a result, the court held that the notice lacked jurisdiction and ordered its quashing. The court allowed the petition and issued a writ to set aside the notice, objection order, and assessment order.

In conclusion, the court found the notice for reopening the assessment beyond 4 years to be invalid due to the lack of proper sanction under section 151 of the Income Tax Act. The court clarified that the Relaxation Act did not alter the statutory provisions governing the time limits and sanction requirements for reopening assessments. The decision emphasized the importance of adhering to the prescribed procedures and authorities when issuing such notices to maintain jurisdictional validity.