Sanctioning Authority Has To Be PCCIT For Issuing Reopening Notice After Expiry Of Three Years: Bombay High Court

The Bombay High Court has held that the sanctioning authority has to be the Principal Chief Commissioner of Income Tax (PCCIT) for issuing a reopening notice after the expiry of three years.

The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that, as per the order and the notice, the authority that has accorded the sanction is the PCIT-27, Mumbai. The matter pertains to Assessment Year 2017-2018, and since the order as well as the notice were issued on July 20, 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT, as provided under Section 151(ii) of the Income Tax Act. The proviso to Section 151 has been inserted only with effect from April 1, 2023, and, therefore, shall not be applicable to the matter at hand.

Section 151(ii) of the Income Tax Act states that no notice shall be issued under section-148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.

The petitioner/assessee has challenged a notice issued under Section 148 of the Income Tax Act, 1961, and the order passed under Section 148A(d) of the Act, both dated July 20, 2022, and the notice dated May 25, 2022, issued under Section 148A(b). One of the grounds raised is that the sanction to pass the order under Section 148A(d) and the issuance of notice under Section 148 are invalid as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (PCIT) and not by the Principal Chief Commissioner of Income Tax (PCCIT).

The assessee contended that this raised the question of the maintainability of the petition because the assessee did not even respond to the notice issued. But even if the assessee has not responded, would that make an invalid notice valid?

The court held that the sanction given by PCIT is invalid, and consequently, the order notice under Sections 148A(d) and 148 are liable to be quashed and set aside.

Counsel For Appellant: Jitendra Singh

Counsel For Respondent: Arjun Gupta

Case Title: Balkrishna Barsha Sutar Versus The Income Tax Officer

Case No.: Writ Petition No. 6192 Of 2024

Click Here To Read The Order