Sampark Management Consultancy LLP Vs DCIT (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT), Delhi Bench, has set aside reassessment notices issued to Sampark Management Consultancy LLP for the assessment years 2016-17 and 2017-18. The Tribunal’s decision, pronounced on June 25, 2025, primarily hinges on the finding that the notices were issued with an invalid sanction from an incompetent authority, in contravention of the amended provisions of Section 151 of the Income-tax Act, 1961, as substituted by the Finance Act, 2021.
Case Background
Sampark Management Consultancy LLP had filed its income tax returns for AY 2016-17 on September 29, 2016, and for AY 2017-18 on September 18, 2017. Notices under the old Section 148 of the Act were initially issued on June 31, 2021, for both years. However, the Finance Act, 2021, had replaced Section 148 with effect from April 1, 2021, meaning notices under the old provisions should have been issued by March 31, 2021.
The assessee company was part of the broader litigation addressed by the Supreme Court in Union of India vs. Ashish Agarwal, 444 ITR 1 (SC), which clarified the applicability of the new reassessment regime. Following this, the Assessing Officer (AO) issued fresh notices under the new framework. Specifically, a notice under Section 148A(b) was issued on May 27, 2022. Subsequently, an order under Section 148A(d) was passed on July 28, 2022, for AY 2016-17, and on July 27, 2022, for AY 2017-18, followed by the issuance of Section 148 notices on July 28, 2022, for both years.
The Core Dispute: Invalid Sanction
The central point of contention raised by the assessee was the irregularity in the assumption of jurisdiction by the tax authorities, specifically concerning the approval obtained for issuing the Section 148 notices. The assessee argued that the approval was granted by an authority not competent to do so under Section 151 of the Act, as amended by the Finance Act, 2021.
The notices dated July 28, 2022, for both assessment years, were shown to have been issued after obtaining approval from the Principal Commissioner of Income-tax, Noida.
ITAT’s Analysis and Judicial Precedents
The ITAT meticulously examined the provisions of Section 151 of the Act, which dictates the authority required to grant sanction for reassessment proceedings. The Tribunal noted that under the substituted Section 151, if more than three years have elapsed from the end of the relevant assessment year, the approval of a higher authority—specifically, the Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General—is required.
In the present case, the Section 148 notices were issued on July 28, 2022. For AY 2016-17, the relevant assessment year ended on March 31, 2017, meaning more than three years had elapsed by July 28, 2022. Similarly, for AY 2017-18, the relevant assessment year ended on March 31, 2018, also exceeding the three-year threshold. Therefore, the approval from the Principal Commissioner of Income-tax was deemed insufficient.
The ITAT explicitly relied on the Supreme Court’s decision in Union of India vs. Rajeev Bansal, 2024 (10) TMI 264 – SUPREME COURT. This landmark ruling, along with other similar decisions, has reinforced the strict adherence to the procedural requirements for reassessment, particularly regarding the sanctioning authority. The Supreme Court’s pronouncement in Rajeev Bansal clarified that any deviation from the prescribed hierarchy for obtaining approval renders the reassessment proceedings invalid.
Conclusion
Based on this critical procedural infirmity, the ITAT concluded that the approval obtained for the reassessment notices was not sustainable under law. Consequently, the Tribunal allowed the appeals filed by Sampark Management Consultancy LLP, setting aside the reassessment proceedings. This decision underscores the judiciary’s emphasis on strict compliance with statutory provisions, particularly those related to the assumption of jurisdiction in tax matters, following the significant amendments introduced by the Finance Act, 2021.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals are preferred by the assessee against the orders dated 06.12.2024 of the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeals No.NFAC/2015-16/10261741 and No.NFAC/2016-17/10261748 arising out of the appeals before it against the orders dated 22.05.2023 and 30.05.2023 passed u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the Assessment Unit, IT Deptt. (hereinafter referred to as the Ld. AO).
2. The return of income u/s 139 of the Act in AY 2016-17 as filed on 29.09.2016 and in AY 2017-18 it was filed on 18.09.2017. Notices u/s 148 of the Act in both the years were issued on 31.06.2021. On hearing both the sides, we find that primarily the dispute raised by the assessee is challenging assumption of jurisdiction on the basis of irregularity in assumption of jurisdiction on the basis of approval from an authority which was not competent to grant approval u/s 151 of the Act. The relevant ground in that regard, the grounds No.2 and 3 for AY 2016-17 which are common to both the years are reproduced below:-
“2. On the facts and circumstances of the case and in law, the reassessment proceedings initiated is bad in law, without jurisdiction and contrary to the provisions of law including the specific provisions of section 147 to section 151A of Income Tax Act, 1961 and therefore, the reassessment proceeding initiated along with assessment order passed are liable to be quashed and CIT(A) erred in not holding so.
3. On the facts and circumstances of the case and in law, the ld. CIT(A0 erred in upholding the initiation of reassessment proceedings by wrongly relying upon the decision of Hon’ble Apex Court in the case of Rajeev Bansal v UOI whereas as per this decision of apex court itself, the reassessment proceeding initiated was liable to be quashed.”
3. We find that section 148 of the Act was substituted by the Finance Act, 2021 w.e.f. 01.04.2021. Notice u/s 148 of the Act as per the old provisions of section 148 of the Act applicable till 31.03.2021 should have been issued only upto 31.03.2021. The issue stands settled by the Hon’ble Supreme Court in Union of India vs. Ashish Agarwal, 444 ITR 1 (SC). The assessee company was part of the litigations. The AO has issued notice u/s 148A(b) on 27.05.2022 and on 28.07.2022 order was passed u/s 148A(d) and issued notice u/s 148 of the Act on the same date, i.e., on 28.07.2022 in AY 2016-17 and while in AY 2017-18 on 27.07.2022 order was passed u/s 148A(d) and issued notice u/s 148 of the Act on 28.07.2022 . This notice dated 28.07.2022 u/s 148 of the Act, available at page 14-15 of the paper book for AY 2016-17 and on pages 16-17 for PB for AY 2017-18, and same are shown to be issued after obtaining approval of Principal Commissioner of Income-tax, Noida. This approval is contrary to the provisions of section 151 of the Act as amended/substituted by the Finance Act, 2021 because, as per section 151 of the Act, if more than three years have lapsed from the end of the relevant assessment year, approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. In the present assessment years, notices u/s 148 have been issued on 28.07.2022 after expiry of three years from the end of relevant assessment years. Accordingly, sanction/approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal, 2024 (10) TMI 264 – SUPREME COURT) and various decisions. Thus, the approval is not sustainable under law. The grounds as raised deserves to be sustained.
Consequently, the appeals of the assessee are allowed.
Order pronounced in the open court on 25.06.2025.
