2023 (1) TMI 430 - HC - Income Tax

Reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - appropriate authority to grant approval for issuance of notice u/s. 148 - Specified authority for the purposes of section 148 and section 148A - HELD THAT - As in the present case is squarely covered by the view taken by this Court in J.M. Financial Investment Consultancy Services (P) Ltd. ( 2022 (4) TMI 1446 - BOMBAY HIGH COURT - We accordingly hold that the approval for issuance of notice u/s. 148 ought not have been obtained from the Additional Commissioner of Income Tax but from the authority specifically mentioned u/s. 151(ii) of the Act. Notwithstanding the fact that there were other grounds urged for challenging the notice impugned u/s. 148 of the Act although feeble since we are allowing the present petition on the issue of sanction we do not feel it absolutely necessary to decide the same. Appeal of assessee allowed.

Summary

Issues:
Challenge to notice under section 148 of the Income Tax Act, 1961 for the assessment year 2015-16 based on approval requirement from the Principal Chief Commissioner of Income-tax in terms of section 151(ii) of the Act.

Analysis:
The petitioner challenged the notice dated 31st March 2021 under section 148 of the Income Tax Act, 1961 for the assessment year 2015-16, arguing that approval from the Principal Chief Commissioner of Income-tax was necessary since it was issued beyond four years. The notice was issued after obtaining satisfaction from Range 3(2), Mumbai, and approval was granted by the Additional Commissioner of Income Tax, Range (3)(2), Mumbai, citing the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. This Act extended the limitation period under sections 151(i) and 151(ii) of the Act to 31st March 2020. However, a previous judgment by the Court held that the Relaxation Act applied only to cases where the limitation expired on 31st March 2020, and for the assessment year 2015-16, the limitation period was six years, expiring on 31st March 2022. Therefore, the Relaxation Act provisions were deemed inapplicable as they did not amend section 151 of the Act.

Before the amendment of section 149 of the Act, the time limit for issuing a notice under section 148 varied based on the elapsed years from the end of the relevant assessment year. The petitioner contended that their case fell under section 149(b), which allowed a six-year limitation for issuing a notice under section 148 for the assessment year 2015-16, expiring on 31st March 2022. The Court held that the petitioner's case aligned with the previous judgment, emphasizing that the approval for the notice under section 148 should have been obtained from the authority specified under section 151(ii) of the Act, not the Additional Commissioner of Income Tax.

Despite other grounds raised to challenge the notice, the Court focused on the issue of sanction and ruled in favor of the petitioner, quashing the notice dated 31st March 2021. The petition was allowed without costs, based on the incorrect approval process for the notice under section 148 of the Act.