Reassessment Notice after 4 Years should have the Sanction Of PCIT: Bombay High Court

The Bombay High Court ruled that issuing a reassessment notice after four years is subject to the approval of the Principal Chief Commissioner of Income-tax (PCIT).

The division bench of Justice Dhiraj Singh Thakur and Justice Kamal Khata has ruled that the approval for the issuance of a notice under Section 148 ought not to have been obtained from the Additional Commissioner of Income Tax but from the authority specifically mentioned under Section 151(ii) of the Income Tax Act.

The petitioner/assessee challenged the notice dated March 31, 2021, under Section 148 of the Income Tax Act, 1961, on the grounds that it was issued after the four-year period, which required approval from the Principal Chief Commissioner of Income-tax under Section 151(ii) of the Act.

In terms of the Relaxation Act, the limitation under the provisions of sections 151(i) and 151(ii) of the Income Tax Act, 1961, which were originally expiring on March 31, 2020, was extended to March 31, 2021.

The department urged that since the Relaxation Act had extended the period of limitation, the authority that was otherwise supposed to grant approval in regard to cases falling within the ambit of Section 151(i) could have granted approval beyond the period of three years based upon the Relaxation Act.

The petitioner urged that it fell under Section 149(b), and therefore, the period of limitation of six years for the issuance of a notice under Section 148 for the assessment year 2015–16 would expire on March 31, 2022. The petitioner relied on the decision of the Bombay High Court in the case of J.M. Financial & Investment Consultancy Services (P) Ltd., in which it was held that after four years of expiry from the end of the relevant assessment year, only the Principal Chief Commissioner, Chief Commissioner, or Principal Commissioner or Commissioner (PCIT) can accord approval to the reassessment notice and not the Additional Commissioner of Income Tax (ACIT).

The court has allowed the petition and quashed the reassessment notice.

Case Title: MA Multi-Infra Development Pvt. Ltd. Versus ACIT

Case No - Writ Petition 1650 Of 2022

Citation: 2023 LiveLaw (Bom) 43

Date: 09.01.2023

Counsel For Appellant: Advocates Jeet Kamdar with Sameer G. Dalal

Counsel For Respondent: Advocate Akhileshwar Sharma with Shilpa Goel

Click Here To Read The Order