JCIT Not Empowered To Issue Sanction For Reassessment Under Proviso To S.151(1) Of Income Tax Act: Delhi High Court

The Delhi High Court has held that sanction for initiation of reassessment action against an assessee under the proviso to Section 151(1) of the Income Tax Act 1961, cannot be issued by the Joint Commissioner of Income Tax.Section 151(1) contemplates issuance of sanction by JCIT for initiating reassessment action under Section 148 against an assessee who has already undergone scrutiny assessment.The proviso to Section 151(1) however adds that if the reassessment action is sought to be initiated after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer.In the case at hand, JCIT had issued sanction for initiating action under Section 148 against the Petitioner-assessee for AY 2006-07 in the year 2013, i.e. after lapse of four years.The Petitioner had already undergone scrutiny assessment for the said AY and thus, contended that prior approval under Section 151 was not obtained.The AO however made an addition of ₹5,18,27,005/- on account of long term capital gain from sale of agricultural land at ₹5,46,23,012/- as against ₹21,87,500/- as declared by the Assessee.The AO reasoned that the action was premised on an excel sheet, which was recovered from the device of a search conducted under Section 132 in respect of a third party, reflecting part payment in cash for the acquisition of the agricultural land in question.After ITAT upheld the AO's decision, the assessee approached the High Court.The principal questions before the Court was whether the initiation of reassessment proceedings is invalid for want of necessary approval.The High Court noted that the scrutiny assessment had culminated into an assessment order and thus, in terms of the proviso to Section 151(1), “no notice under Section 148 of the Act could be issued unless, the Commissioner of Income Tax [CIT] or the Chief Commissioner of Income Tax [CCIT] was satisfied on the reasons recorded by the AO that it was a fit case for issuance of such notice.”The division bench of Justices Vibhu Bakhru and Tejas Karia added, “Admittedly, in the present case, no approval was obtained from the CIT or the CCIT. The notice under Section 148 of the Act was issued with the approval of the JCIT and not CCIT or CIT. Clearly, the notice under Section 148 of the Act was invalid as issued contrary to the provisions of Section 151(1) of the Act.”It thus set aside the impugned order and the assessment order.Appearance: Mr Ved Jain, Mr Nischay Kantoor, Ms Soniya Dodeja, and Mr Sarthak Abrol, Advocates for Petitioner; Mr Sunil Kumar Agarwal, SSC, Mr Shivansh B Pandya, Mr Viplav Acharya, JSCs and Mr Utkarsh Tiwari, Advocate for RespondentCase title: Sukhbir S. Dagar v. Income Tax Officer, Ward 24(3)Citation: 2025 LiveLaw (Del) 490Case no.: ITA 741/2023 Click here to read order

JCIT Not Empowered To Issue Sanction For Reassessment Under Proviso To S.151(1) Of Income Tax Act: Delhi High Court

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JCIT Not Empowered To Issue Sanction For Reassessment Under Proviso To S.151(1) Of Income Tax Act: Delhi High Court

Kapil Dhyani

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