ITO Vs Mangla Gupta (Supreme Court of India)
The matter arose from reassessment proceedings initiated for Assessment Years (AY) 2016-17 and 2017-18, which were challenged before the Delhi High Court. The core issue was whether notices issued under Sections 148A(d) and 148 of the Income Tax Act, 1961 were legally sustainable in the absence of approval from the “specified authority” as mandated under the amended provisions of the Act.
Read HC Judgment in this case: Reassessment Invalid as Approval Taken from Wrong Authority Beyond Three-Year Limit: Delhi HC
In one representative case, the assessee had filed its return of income for AY 2017-18, which was processed under Section 143(1). Following the judgment in Union of India v. Ashish Agarwal, the revenue issued a notice dated 26.05.2022 under Section 148A(b). After receiving the assessee’s reply, the revenue passed an order dated 29.07.2022 under Section 148A(d), holding that income amounting to Rs. 4,37,56,000/- had escaped assessment, and issued a consequential notice under Section 148 on the same date. These were issued after obtaining approval from the Principal Commissioner of Income Tax-10, Delhi.
The assessees contended before the High Court that although more than three years had elapsed from the end of the relevant assessment years, approval had not been obtained from the authority specified under Section 151(ii), but instead from an authority falling under Section 151(i). The revenue relied upon the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and CBDT Instruction No.1 of 2022. It also argued that approval of the specified authority was not mandatory.
