The Bombay High Court has ruled that an order issued under Section 148A(d) of the Income Tax Act, without proper sanction as required by Section 151, must be declared illegal.
Section 151 outlines the necessary sanctions for issuing notices. According to Section 151(1), no reassessment notice can be issued after eight years from the relevant assessment year unless the Board is satisfied with the reasons recorded by the income-tax officer. Section 151(2) stipulates that no reassessment notice can be issued after four years from the relevant assessment year unless the Commissioner is satisfied with the recorded reasons.
The petitioner/assessee contested the notice issued by the respondent department under Section 148 for the 2016-17 assessment year. This notice followed an initial notice under Section 148A(b) and an order under Section 148A(d), both of which were also challenged.
The assessee argued that the necessary approval for the Section 148A(d) order was improperly granted by the Principal CIT, Mumbai, under Section 151(i) instead of the required Section 151(ii), as more than three years had passed since the relevant assessment year.
The bench, comprising Justice G. S. Kulkarni and Justice Somasekhar Sundaresan, highlighted that for orders under Section 148A(d) issued more than three years after the relevant assessment year, sanction must be obtained under Section 151(ii). However, in this case, sanction was incorrectly obtained under Section 151(i).
Bharat Raichandani appeared for the Petitioner whereas Sushma Nagaraj represented the respondent.
The Division Bench of the Bombay High Court agreed with the submission of the petitioner, quashing both the order under Section 148A(d) and the consequent notice under Section 148.
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