D. Tamilselvi Vs ITO (Madras High Court)
Conclusion: Reassessment proceedings initiated without obtaining prior approval from the appropriate “specified authority” under Section 151(ii) such as the Principal Chief Commissioner of Income Tax or the Principal Director General were invalid. Consequently, the impugned assessment orders and penalty notices were quashed, and the matters remitted to AO to reinitiate proceedings under Section 148 after obtaining sanction from the competent authority as mandated under the amended provisions effective from 01.04.2021.
Held: In the instant case, the dispute was pertained to reassessment proceedings for Assessment Years 2016–2017 to 2018–2019. Assessee challenged reassessment notices and consequential assessment and penalty orders issued under Sections 148 and 148A, after the substitution of the reassessment regime by the Finance Act, 2021. The key issue concerned whether reassessment notices issued under the old regime between 1 April 2021 and 30 June 2021 were valid, and whether appropriate prior approval had been obtained from the competent authority under Section 151. The Court traced the evolution of law post–Finance Act, 2021, and analyzed the Supreme Court’s directions in Ashish Agarwal (wherein old notices were deemed to be issued under Section 148A(b)) and Rajeev Bansal (clarifying the scope of sanction and limitation). It was held that although the notices issued under the old regime during the transitional period stood validated as deemed notices under Section 148A(b), reassessment under the new regime required prior approval from the specified authority under Section 151(ii) — namely, the Principal Chief Commissioner, Principal Director General, Chief Commissioner, or Director General — where more than three years had elapsed from the end of the relevant assessment year. In the present cases, sanction had been obtained only from the Principal Commissioner of Income Tax, which was insufficient under the amended provision. Accordingly, the Court held that the assessment and penalty orders passed without obtaining the approval of the competent specified authority were without jurisdiction. Therefore, notices issued under the old regime between 1 April 2021 and 30 June 2021 were deemed to be valid under Section 148A(b) as per Ashish Agarwal and Rajeev Bansal. However, reassessment notices issued after three years from the end of the relevant assessment year require prior sanction from higher authorities as per Section 151(ii). Since the impugned notices and assessment orders were sanctioned only by the Principal Commissioner, they were vitiated for want of jurisdiction. Assessment and penalty orders were set aside and matters remanded to the Assessing Officer to redo the proceedings from the stage after passing order under Section 148A(d), after obtaining approval from the competent authority as prescribed under Section 151(ii).
