Reassessment notice issued beyond three years is void

Reassessment notice issued beyond three years is void if sanctioned by the incorrect tax authority.

Issue

Whether a reassessment notice issued under Section 148 after the expiry of three years from the end of the relevant assessment year is legally valid when the mandatory administrative sanction under Section 151 was granted by the Principal Commissioner instead of the higher-ranking authorities specified by law.

Facts

The Notice: The tax department initiated reassessment proceedings against the assessee for the assessment year 2019-20 by issuing a notice under Section 148 on April 12, 2023.
The Timeline: The date of issuance (April 12, 2023) fell beyond the standard period of three years from the end of the relevant assessment year.
The Sanction: Prior to issuing the notice, the department obtained administrative approval and sanction under Section 151 from the Principal Commissioner.
The Authority’s Finding: The Principal Commissioner explicitly recorded in the order that the time limit for the case fell under the extended window of Section 149(1)(b), meaning more than three years but less than ten years had elapsed.

Decision

Higher Authority Required: The High Court held that when a Section 148 notice is issued beyond three years from the end of the relevant assessment year, Section 151 mandates that sanction must be obtained from higher-tier officials: the Principal Chief Commissioner, Principal Director General, Chief Commissioner, or Director General.
Incorrect Sanctioning Tier: Since the approval in this case was granted by the Principal Commissioner (who is only authorized to grant sanctions for cases under three years), the statutory requirement was not met.
Proceedings Quashed: The court ruled that the sanction was not in accordance with the law, rendering the Section 148 notice and all subsequent reassessment proceedings entirely without jurisdiction.

Key Takeaways

Jurisdiction Rests on Proper Sanction: Obtaining a tax reassessment approval from the wrong administrative tier is a fatal jurisdictional defect that cannot be cured or overlooked as a minor procedural error.
Time Determines the Approving Level: Under Section 151, the older a tax case gets, the higher the administrative rank required to greenlight a reopening. For cases older than three years, a Principal Commissioner’s approval carries no legal validity.
Strict Statutory Interpretation: Limitation windows and administrative checks exist to protect taxpayers from arbitrary long-term scrutiny; courts will strictly enforce the exact hierarchy laid down by the legislature.

IN THE ITAT DELHI BENCH ‘SMC’

Vishesh Developers (P.) Ltd.

Assistant Commissioner of Income-tax

Vikas Awasthy, Judicial Member

IT Appeal No. 8830 (DEL) OF 2025
[Assessment year 2019-20]

JUNE 19, 2026

Mani Bhadra Jain, Adv. and Ms. Varsha Jain, CA for the Appellant. Manoj Kumar, Sr. DR for the Respondent.

ORDER

1. This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 16.10.2025, for Assessment Year 2019-20.

2. Shri Mani Bhadra Jain, appearing on behalf of the assessee submits that the Assessing Officer (AO) reopened the assessment and issued notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) beyond the period of three years. He submits that where the assessment is reopened beyond the period of three years, sanction for issuance of notice u/s.148 of the Act has to be obtained from the Principal Chief Commissioner (PCCIT) or Chief Commissioner of Income Tax (CCIT). Without prejudice, the ld. Counsel made alternate prayer. Referring to the approval u/s 151 of the Act dated 12.04.2023 at pages 32 and 33 of the paper book, the ld. Counsel submits that while granting approval u/s 151 of the Act, in Row No. 9, the Principal Commissioner of Income Tax (PCIT) records that the time limit for the current proceedings is covered, “u/s. 149(1)(b) of the Act, i.e., more than three years but not more than ten years”. Even if it is accepted that notice u/s.148A(b) of the Act is issued within three years and approval is by the Competent Authority under the Act, the manner in which PCIT has sanctioned approval is itself testimony to the fact that the same has been accorded in mechanical manner without application of mind by the PCIT. To buttress his submissions, the ld. Counsel placed reliance on judgment of the Hon’ble Bombay High Court in the case of ITO v. Nikhil Chandrakant Dharia 469 ITR 262 (Bombay) to contend that where approval u/s 151 of the Act has been granted in a mechanical manner without application of mind, the notice issued for reopening is liable to be set aside. He further submits that the Hon’ble Supreme Court of India in appeal by the Revenue ITO v. Nikhil Chandrakant Dharia 469 ITR 315 (SC) dismissed appeal of Revenue.

3. Per contra, Shri Manoj Kumar, representing the Department strongly supported the impugned order and submits that the approval u/s 151 of the Act has been granted by the competent authority.

4. Both sides heard, orders of the lower authorities examined. For reopening of Assessment Year 2019-20, notice u/s 148 of the Act was issued to the assessee on 12.04.2023. The notice issued u/s 148 of the Act is visibly issued beyond the period of three years from the end of relevant assessment year. As is evident from the copy of approval dated 12.04.2023 available at pages 32 and 33 of the paper book, the approval u/s 151 of the Act for reopening the assessment was accorded by the PCIT. In Row No. 9 of the approval, the PCIT records that the time limit for the current proceedings is covered u/s 149(1)(b) of the Act, i.e., more than three years but not more than ten years. Thus, the PCIT is accepting that reopening is after three years and still proceeded to grant approval for issuance of notice in contravention of the provisions of section 151 of the Act. The provisions of section 151 of the Act, as applicable at the relevant point of time, unambiguously provide that where more than three years have elapsed from the end of the relevant assessment year, sanction for issuance of notice has to be obtained from the PCCIT or Principal Director General or Chief Commissioner or Director General. Thus, in light of the material available on record, I am of considered view that the sanction for issuance of notice u/s 148 of the Act is not in accordance with the provisions of section 151 of the Act. Hence, the sanction is invalid. As a sequitur, the notice issued u/s 148 of the Act and the subsequent proceedings arising therefrom are without jurisdiction. Therefore, the notice issued u/s 148 of the Act and the assessment made pursuant thereto are quashed being void ab initio.

5. In the result, appeal of the assessee is allowed.