Core Logistic Company Vs ACIT (Madras High Court)
No reassessment as Department failed to obtain prior approval u/s 151(ii) for cases over Rs. 50 Lakh beyond Three Years: Madras High Court
Conclusion: Under section 151(ii), where the alleged escaped income was more than Rs. 50 lakh, and where more than three years have passed since the relevant assessment year require approval from a higher-level authority. Since this condition was not met in the present case, the reassessment notice was issued without jurisdiction.
Held: Assessee-company filed the writ petition challenging the validity of the reassessment proceedings initiated by the National Faceless Assessment Centre. It argued that the reassessment notice under Section 148 was issued beyond the statutory three-year time limit from the end of the relevant assessment year. According to Section 151(ii), in such cases where the time limit exceeds three years and the escaped income was over Rs. 50 lakh, approval must be obtained from senior tax authorities such as the Principal Chief Commissioner, Chief Commissioner, Principal Director General, or Director General. The approval in this case was obtained only from the Principal Commissioner, which was permitted only when the reassessment was initiated within three years under Section 151(i). Assessee further argued that the Income Tax Department’s failure to obtain approval from the correct authority rendered the reassessment proceedings invalid and without jurisdiction. They contended that the approval was not a mere formality but a mandatory precondition under law to safeguard taxpayers from arbitrary reassessments. Department referred to the Supreme Court’s judgment in Union of India vs. Ashish Agarwal and submitted that the procedural changes had been acknowledged, and the approval process followed was adequate. They did not dispute that the approval came from an authority not empowered under Section 151(ii) for such cases. It was held that under Section 151(ii), cases where the alleged escaped income was more than Rs. 50 lakh, and where more than three years have passed since the relevant assessment year require approval from a higher-level authority. Since this condition was not met in the present case, the reassessment notice was issued without jurisdiction. The court ruled that the initiation of reassessment proceedings was not legally valid and therefore quashed the assessment order. The writ petition was allowed.
