2024 (1) TMI 759 - HC - Income Tax

Validity of reopening of assessment - approval of specified authority u/s 151 - whether the impugned notices and orders as sustainable in law, having regard to the contention of the petitioners that they are not backed by the approval of the specified authority? - HELD THAT - After amendment, Section 151 has been split and the part which enjoins that the approval of the specified authority is mandatory stands embedded in the first proviso to Section 148. The concerned specified authorities, depending on the applicable timeframe, are adverted to in Section 151 of the Act.The first proviso to Section 148 and Section 151, when read conjointly, demonstrate the untenability of the submission made on behalf of the revenue. We may also note that in Ganesh Dass Khanna 2023 (11) TMI 763 - DELHI HIGH COURT we were considering the provision of Section 149 of the Act and have taken the view that since the escaped income was less than Rs. 50,00,000/-, the time limit as prescribed in Section 149(1)(a) of the Act would apply. As indicated above, the specified authority changes depending on the time limit prescribed in Section 151 of the Act. It is on this account that there is linkage between ruling rendered in Ganesh Dass Khanna and the instant matters. In these cases, there is no dispute that although three (3) years had elapsed from of the end of the relevant AY, the approval was sought from authorities specified in clause (i), as against clause (ii) of Section 151. Before us, the counsel for the revenue continue to hold this position. The only liberty that they seek is that if, based on the judgement in Ganesh Dass Khanna, the impugned orders and notices are set aside, liberty be given to the revenue to commence reassessment proceedings afresh. Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law.

Summary

Issues Involved:
1. Sustainability of impugned notices and orders in law.
2. Approval of the specified authority under Section 151 of the Income Tax Act, 1961.

Summary:

Issue 1: Sustainability of Impugned Notices and Orders in Law
The core issue in these writ petitions is whether the impugned notices and orders are sustainable in law, considering the petitioners' contention that they lack the approval of the specified authority. The petitions concern Assessment Year (AY) 2016-17 and AY 2017-18. For instance, in WP(C) 7289/2023, the petitioner filed its return of income for AY 2017-18, which was processed by the revenue. Subsequently, a notice under Section 148A(b) was issued, followed by an order under Section 148A(d) and a consequential notice under Section 148, all after obtaining approval from the Principal Commissioner of Income Tax-10, Delhi. The petitioner challenged the absence of approval from the specified authority, leading to a stay on reassessment proceedings. The reassessment proceedings were triggered by an authority not specified as per Section 151(ii) of the Income Tax Act, 1961.

Issue 2: Approval of the Specified Authority under Section 151 of the Income Tax Act, 1961
The revenue defended the writ petitions by relying on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and CBDT Instruction No. 1 of 2022. The court referred to its previous ruling in Ganesh Dass Khanna v. Income Tax Officer, where it ruled in favor of the assessees concerning limitation. The court emphasized that the approval of the specified authority is mandatory, as evident from the provisions of Sections 148, 149, and 151 before and after the Finance Act 2021. The specified authority changes depending on the time limit prescribed in Section 151. The court concluded that the impugned notices and orders are quashed due to the absence of approval from the specified authority as indicated in Section 151(ii) of the Act. However, the revenue is given the liberty to commence reassessment proceedings afresh, albeit as per law. The rights and contentions of both sides remain open in the event of reassessment proceedings.

Conclusion:
The impugned notices and orders in the writ petitions are quashed due to the lack of approval from the specified authority, with the caveat that the revenue may initiate reassessment proceedings afresh as per law. The writ petitions are disposed of accordingly, and pending applications are closed.