Reassessment beyond three years approved by Principal

Reassessment beyond three years approved by Principal Commissioner instead of Principal Chief Commissioner is invalid.

Issue

Whether reassessment proceedings initiated beyond three years from the end of the relevant assessment year are legally sustainable when approval under Section 151 was granted by the Principal Commissioner instead of the specified higher authority (Principal Chief Commissioner/Principal Director General).

Facts

Initiation Beyond Three Years: The Assessing Officer initiated reassessment proceedings under Section 148A beyond the extended period of three years from the end of the relevant assessment year.
Inappropriate Sanctioning Authority: The sanction for initiating the reassessment under Section 151 was obtained from the Principal Commissioner of Income Tax.
Statutory Requirement: For reopening assessments beyond the three-year threshold, Section 151 explicitly prescribes that approval must be granted by higher-tier authorities, namely the Principal Chief Commissioner or Principal Director General (or equivalent).

Decision

Incompetence of Sanction: Approval granted by the Principal Commissioner for cases beyond the three-year limit is incompetent and without jurisdiction.
Invalidity of Proceedings: Reassessment proceedings initiated on the basis of an invalid approval under Section 151 cannot be sustained in law.
Outcome: The impugned reassessment proceedings were set aside and declared invalid, deciding the issue in favor of the assessee.

Key Takeaways

Strict Adherence to Section 151 Hierarchy: The hierarchy of authorities designated to grant approval under Section 151 is mandatory and strictly linked to the time limit within which reassessment is initiated.
Jurisdictional Fatality: Obtaining sanction from a lower-ranked authority than prescribed for the relevant time period goes to the root of jurisdiction and renders the entire reassessment proceeding void ab initio.
No Scope for Procedural Relaxation: Revenue cannot substitute approvals from lower-ranking officers (such as PCIT) when the statute specifically demands higher-tier authorization (PCCIT/PDGIT) for older cases.

HIGH COURT OF DELHI

Principal Commissioner of Income-tax

Wudstay Travels (P.) Ltd

Dinesh Mehta and Rajneesh Kumar Gupta, JJ.

IT Appeal 519 of 2026

JULY 10, 2026

Puneet Rai, SSC, Ashvini Kumar and Rishabh Nangia, JSC for the Appellant.

ORDER

CM APPL. 42892/2026 (Exemption)

1. Allowed, subject to all just exceptions.

2. Application stands disposed of.

ITA 519/2026

3. The present appeal is directed against the order dated 28.10.2025 passed by the Income Tax Appellate Tribunal, Bench ‘C’ in ITA No. 2996/Del/2025 (hereinafter referred to as ‘the Tribunal’), whereby the appeal preferred by the assessee was allowed, inter-alia, holding the approval granted by the Principal Commissioner of Income Tax (PCIT) to be incompetent.

4. The reasons for holding the approval to be the non est was that though extended period of 3 years was invoked as per the provisions of Section 151 of the Income Tax Act (hereinafter referred to as the Act of 1961), the approval was granted by the PCIT, whereas it ought to have been granted by the Principal Chief Commissioner of Income Tax.

5. While allowing the appeal, the Tribunal has observed as under:-

“5. Ld. Counsel for the assessee has raised the legal ground no.4 and stated that first notice u/s 148 was issued on 30-06-2021 for the A.Y. 2017-18 under the old reassessment tax regime, however due to the introduction of new reassessment tax regime from 01-04-2021 and in the compliance of the Hon’ble Supreme Court Order in the case of Ashish Agarwal notice u/s 148A(b) of the Act was issued on 01-062022 and consequent order under section 148A(d) of the Act on 2107-2022. The case of the assessee relates to the A.Y. 2017-18 and the notice /order was issued on 21-07-2022 after a period of three years from the end of relevant assessment Year, the sanctioning authority should have been Principal Chief Commissioner or Principal Director General or Chief commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. This issue is squarely covered by the Judgement of Hon’ble Jurisdictional Delhi High Court in the case of Communist Party of India (Maxist) V. CIT (Ex) WP 9031/2023 dated 28-04-2025. In the case of Dalpat Baraiya v. Income Tax officer Ward – 3(3)(1) the Co-ordinate bench held that where three years had expired from the end of the Assessment year 2018-19, sanctioning authority u/s 151(ii) of the Act should have been Principal Chief Commissioner and not Principal Commissioner, thus order under section 148A(d) and notice under section 148 issued on basis of approval granted by Principal Commissioner were to be quashed and set aside.

6. The Ld. Sr. DR has relied the order of the lower authorities and submitted that the notice/ order was issued as per the directions of the Hon’ble Supreme Court in the case of Ashish Agarwal [2022] 444 ITR 1 SC. In the present case the notice was issued on 21-07-2022 for the A.Y. 2017-18 from the prior approval of the Pr. Commissioner of Income Tax 07 Delhi, without, the approval of the authority specified u/s 151 of the Act. The notice was issued beyond the period of three years from the end of the relevant assessment year, thus in term of section 151 of the Act the sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. Respectfully following the decision of the Hon’ble High Court and the Co-ordinate Bench we allowed the appeal of the assessee and quashed the assessment order dated 20.04.2023″.

6. On perusal of the impugned order of the Tribunal, we find that the Tribunal has correctly decided the issue, bearing in mind the provisions contained in Section 151 of the Act of 1961, while also relying upon the judgment of this Court rendered in the case of Communist Party of India (Marxist) v. Income-tax Department [2026] 485 ITR 775 (Delhi)/Civil Writ Petition No. 9031/2023 decided on 28.04.2025.

7. We do not find that any illegality or error in the order impugned passed by the Tribunal.

8. The appeal, therefore, fails.