Only PCIT Can Sanction Reassessment Notice After Expiry Of 4 Years, Not ACIT: Bombay High Court

The petitioner/assessee has challenged the reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016 on the grounds that the approval obtained for issuing the notice under Section 148 of the Income Tax Act, 1961 was not in accordance with the mandate of Section 151 of the Income Tax Act, 1961 as the approval was from the Additional Commissioner of Income Tax instead of the Principal Commissioner of Income Tax.

For the purposes of Section 151 of the Income Tax Act, 1961, no reassessment notice shall be issued under Section 148 of the Income Tax Act, 1961 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, for the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such a notice.

The petitioner submitted that, as per Section 151 of the Income Tax Act, 1961, as four years had elapsed at the time of reopening, the sanction was required to be obtained from the Principal Commissioner of Income Tax and, since the sanction had not been obtained from the Principal Commissioner of Income Tax, the notice issued was bad in law. The sanction granted itself indicates non-application of mind.

The respondent/department relied upon a letter dated March 18, 2021, issued by one income tax officer, who had given an opinion to the Additional Commissioner of Income Tax that, in view of the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), limitations under provisions of Section 151 (1) and Section 151 (2), which were originally due to expire on March 31, 2020, stand extended to March 31, 2021.

According to the Income Tax Officer, the statutory approval for the issuance of a notice under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2015-2016 may be given by the Range Head. The Income Tax Officer was only conveying the view of the Principal Commissioner of Income Tax because the letter had been issued on the letterhead of the Principal Commissioner of Income Tax.

The court said, "even if for a moment we agree with the view expressed by the Principal Commissioner of Income Tax, it still applies to only cases where the limitation was expiring on March 31st, 2020. In the case at hand, the assessment year is 2015-2016 and, therefore, the six years limitation will expire only on 31st March 2022. Certainly, therefore, the Relaxation Act provisions may not be applicable. In any event, the time to issue notice may have been extended, but that would not amount to amending the provisions of Section 151 of the Act."

Case Title: J M Financial and Investment Consultancy Services Private Limited Versus Assistant Commissioner of Income Tax

Case No: Writ Petition No. 1050 Of 2022

Citation: 2022 LiveLaw (Bom) 142

Dated: 04.04.2022

Counsel For Petitioner: Senior Advocate Shivram

Counsel For Respondent: Advocate Akhileshwar Sharma

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