Case Note & Summary
The petitioner, MA Multi-Infra Development Pvt. Ltd., challenged a notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2015-16. The primary ground was that the notice was issued beyond the period of four years from the end of the relevant assessment year, and therefore, approval for its issuance ought to have been obtained from the Principal Chief Commissioner of Income-tax in terms of Section 151(1) of the Act, rather than from the Joint Commissioner. The court examined Section 151, which provides for sanction for issue of notice under Section 148. Sub-section (1) applies when the notice is issued after the expiry of four years from the end of the relevant assessment year, requiring sanction from the Principal Chief Commissioner or Principal Director. Sub-section (2) applies when the notice is issued within four years, requiring sanction from the Joint Commissioner. The court noted that the assessment year in question ended on 31st March 2016, and the notice was issued on 31st March 2021, which is beyond four years. Therefore, the sanction should have been obtained under Section 151(1) from the Principal Chief Commissioner. However, the record showed that the sanction was granted by the Joint Commissioner, which was not the proper authority. The court held that the notice was invalid due to lack of proper sanction and quashed it. The petition was allowed.
Headnote
A) Income Tax - Reassessment Notice - Sanction under Section 151 - The issue was whether a notice under Section 148 issued beyond four years from the end of the assessment year requires sanction from the Principal Chief Commissioner under Section 151(1) or can be sanctioned by the Joint Commissioner under Section 151(2). The court held that since the notice was issued after the expiry of four years, the sanction must be obtained from the Principal Chief Commissioner as per Section 151(1), and the approval by the Joint Commissioner was invalid. (Paras 1-6) B) Income Tax - Reassessment - Time Limit - Section 149 - The notice under Section 148 was issued on 31st March 2021 for assessment year 2015-16, which is beyond four years from the end of the relevant assessment year (31st March 2016). Therefore, the proviso to Section 149(1)(b) applies, requiring that income chargeable to tax has escaped assessment due to failure to disclose material facts fully and truly. The court did not delve into this aspect as the notice was quashed on the ground of lack of proper sanction. (Paras 1-2)
Issue of Consideration
Whether a notice under Section 148 of the Income Tax Act, 1961 issued beyond four years from the end of the relevant assessment year requires sanction from the Principal Chief Commissioner under Section 151(1) or can be sanctioned by the Joint Commissioner under Section 151(2)?
Final Decision
The court allowed the writ petition and quashed the notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2015-16.
Law Points
- Sanction for notice under Section 148
- Reassessment beyond four years
- Section 151(1) Income Tax Act
- 1961
- Proper authority for approval
- Jurisdictional requirement
