2024 (8) TMI 130 - HC - Income Tax

Reassessment proceedings u/s 148 - reassessment sought to be undertaken more than three years after the end of the relevant AY - sanction accorded as required to be granted u/s 151 (ii) or not? - HELD THAT - It is apparent that the sanction accorded in the instant case was required to be granted u/s 151 (ii) of the Act since more than three years had lapsed from the end of the relevant Assessment Year. The period of three years would expire on 31st March, 2020 while the first notice (which now was purported to be a notice under Section 148A), came to be issued on 30th June, 2021 i.e. one year and three months after the lapse of three years. The sanction in the instant case has been granted by the Principal Commissioner of Income-tax-3. For cases where the reassessment is sought to be undertaken more than three years after the end of the relevant AY, the specified authorities who may sanction the reassessment are of a more senior and higher rank. Section 151 of the Act contains an inherent check and balance when the reopening is sought to be initiated after a longer period, application of mind by the specific authorities who are even more senior (as compared with the authorities who are relatively subordinate, who are listed in Section 151 (i) to sanction reassessments initiated within three years) would have to be involved. It is an admitted position that the sanction in the instant case had not been granted by any authority empowered u/s 151 (ii). We make it clear that having disposed of this Petition on the ground of absence of sanction by the specified authority having jurisdiction u/s 151 (ii) of the Act, we express no opinion on other facets of the law and issues based in the Writ Petition.

Summary

Issues:
Challenge to reassessment proceedings under Section 148 of the Income Tax Act, 1961; legality of initial notice under Section 148A (b) and order under Section 148A (d); challenge to sanction for reassessment under Section 151 of the Act.

Analysis:
1. The Writ Petition challenges reassessment proceedings initiated by the Respondent-Revenue under Section 148 of the Income Tax Act, 1961, asserting that the initial notice under Section 148A (b) and the order under Section 148A (d) were illegal. The Petition also contests the sanction for reassessment granted under Section 151 of the Act.

2. The Assessment Year in question is 2016-17, with the show-cause notice under Section 148 dated 29th July, 2022. The Petitioner had filed returns on 9th December, 2021, and requested a copy of reasons for the reassessment and the sanction for reopening the assessment.

3. The National Faceless Assessment Centre issued a notice under Section 142 (1) on 3rd March, 2022, and the Petitioner requested a copy of reasons for reassessment on 4th March, 2022. The Supreme Court's directions in a related case were cited, leading to a notice dated 24th May, 2022, treating the original notice as under Section 148A(b).

4. The Petitioner sought time for objections under Section 148A due to health reasons. Subsequently, orders under Section 148A (d) and Section 148 were issued, followed by a notice under Section 144B.

5. The judgment referred to a Division Bench decision in Siemens and a subsequent case Cipla, emphasizing the importance of obtaining sanction under Section 151, especially after three years from the end of the relevant Assessment Year.

6. The court found that the sanction in the present case was not granted by the appropriate authority under Section 151 (ii), as required for cases where more than three years had lapsed. Consequently, the Writ Petition was allowed, quashing the impugned notices and order.

7. The judgment clarified that the decision was based on the absence of the required sanction under Section 151 (ii) and did not delve into other legal aspects raised in the Writ Petition.

8. The Rule was made absolute, and the Writ Petition was disposed of without costs.