The Income Tax Appellate Tribunal, Delhi, has invalidated reassessment notices issued under Section 148 of the Income Tax Act, 1961, after the expiry of three years from the end of the relevant assessment year, where prior approval was not obtained from the Principal Chief Commissioner of Income Tax as mandated by Section 151(ii). This ruling reinforces the strict procedural compliance required in reopening assessments and aligns with the Supreme Court’s recent interpretation in Union of India v. Rajiv Bansal.
Background & Facts
The Dispute
The appellant, Sushma Garg, challenged reassessment orders issued for Assessment Years 2014-15 and 2016-17, initiated by the Assessing Officer under Sections 148 and 148A of the Income Tax Act, 1961. The notices were issued on 29.07.2022 for AY 2016-17 and similarly for AY 2014-15, after the statutory limitation period had expired. The Revenue relied on approvals granted by the Principal Commissioner of Income Tax (PCIT), Delhi, which the appellant contended was legally incompetent under the amended provisions of Section 151(ii).
Key Facts
- Assessment Year 2016-17: Normal assessment completed by 31.03.2017; limitation for reassessment expired on 31.03.2020
- Assessment Year 2014-15: Normal assessment completed by 31.03.2015; limitation expired on 31.03.2018
- Reassessment notice under Section 148 issued on 29.07.2022 for AY 2016-17
- Reassessment notice under Section 148 issued for AY 2014-15 on a similar date
- Both notices were issued after the expiry of three years from the end of the relevant assessment year
- Approval for issuance of notices was granted by PCIT-07, Delhi, not by the Principal Chief Commissioner of Income Tax (PCCIT)
- The Finance Act, 2021 amended Section 151(ii), effective from 01.04.2021, mandating PCCIT approval for notices issued after three years
- The notices were issued on 29.07.2022, well after the amendment came into force
Procedural History
- 31.03.2017: Completion of original assessment for AY 2016-17
- 31.03.2015: Completion of original assessment for AY 2014-15
- 29.07.2022: Reassessment notice issued under Section 148 for AY 2016-17
- 29.07.2022: Reassessment notice issued under Section 148 for AY 2014-15
- 10.03.2025: Order of Ld. CIT(A) upholding reassessment for AY 2016-17
- 12.03.2025: Order of Ld. CIT(A) upholding reassessment for AY 2014-15
- 26.02.2026: Hearing before ITAT Delhi
- 30.03.2026: ITAT Delhi delivers order allowing appeals
The Parties' Positions
For the Appellant
- The reassessment notices were issued beyond the statutory limitation period of three years from the end of the relevant assessment year
- Section 151(ii), as amended by Finance Act, 2021, requires approval from PCCIT for notices issued after three years
- Approval granted by PCIT was legally invalid and rendered the notices void ab initio
- Relied on Union of India v. Rajiv Bansal (2024) and Rajesh Gupta HUF v. ACIT (Delhi HC, 03.03.2025)
- Argued that the notices were not merely defective but legally non-existent due to lack of competent authority approval
For the Respondent
- Relied on the orders of the lower authorities (CIT(A)) which upheld the reassessment
- Did not contest the timing of the notices or the applicability of the amendment
- Did not produce evidence of approval by PCCIT
- Submitted no independent legal argument to counter the appellant’s reliance on binding precedents
Relief Sought
The appellant sought:
- Quashing of reassessment notices dated 29.07.2022 for both AY 2014-15 and AY 2016-17
- Setting aside of all consequential assessment orders and demands
- Declaration that the proceedings were void ab initio due to non-compliance with Section 151(ii)
The Legal Issue
The central question was whether a reassessment notice issued under Section 148 after the expiry of three years from the end of the relevant assessment year is valid if the prior approval is granted by an authority lower than the Principal Chief Commissioner of Income Tax as mandated by Section 151(ii) of the Income Tax Act, as amended by the Finance Act, 2021.
Arguments Presented
For the Appellant
The appellant relied on the Supreme Court’s decision in Union of India v. Rajiv Bansal (2024) 167 taxmann.com 70, which held that the amended provisions of Section 151(ii) apply to all reassessment notices issued after 01.04.2021, regardless of whether the notice was issued under the old or new regime. The appellant further cited the Delhi High Court’s ruling in Rajesh Gupta HUF v. ACIT (WPC No. 6057/2023, dated 03.03.2025), which explicitly held that only the PCCIT is competent to approve notices issued after three years. The appellant also relied on the ITAT Delhi’s own decision in Durga Agencies Pvt. Ltd. (ITA No. 4923/Del/2024, dated 27.08.2025), which quashed a similar notice for lack of PCCIT approval. The appellant argued that the approval by PCIT was not merely a procedural lapse but a jurisdictional defect rendering the notice void ab initio.
For the Respondent
The Revenue did not contest the applicability of the amended Section 151(ii) or the binding nature of the precedents cited. It merely reiterated the findings of the CIT(A) without providing any legal rebuttal or evidence of compliance with the mandatory approval requirement. The Revenue failed to produce any document showing that the PCCIT had granted approval, nor did it argue that the PCIT’s approval was sufficient under the amended law.
The Court's Analysis
The Tribunal conducted a detailed review of the statutory framework under Section 151(ii), as amended by the Finance Act, 2021. The provision clearly states that for reassessment notices issued after three years from the end of the relevant assessment year, approval must be obtained from the Principal Chief Commissioner of Income Tax, Principal Director General, Chief Commissioner, or Director General. The Tribunal noted that the approval granted by the PCIT-07, Delhi, was not one of the authorities enumerated under the amended provision.
"In cases where reassessment is sought to be commenced after the lapse of three years from the end of the relevant AY, undisputedly, it would be the Principal Chief Commissioner who would be liable to be recognised as being the competent authority."
The Tribunal emphasized that the Supreme Court in Rajiv Bansal had clarified that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) did not override the amended Section 151(ii). The Tribunal further held that the Delhi High Court’s decision in Rajesh Gupta HUF was directly on point and binding on coordinate benches. The ITAT also relied on its own decision in Durga Agencies Pvt. Ltd., which had similarly quashed a notice for lack of PCCIT approval.
The Tribunal rejected the Revenue’s silence as a failure to discharge its burden of proving compliance with mandatory statutory conditions. It held that non-compliance with Section 151(ii) is not a curable defect but a jurisdictional flaw that renders the entire reassessment proceeding void ab initio. The Tribunal concluded that the notices, being issued without the requisite approval, were legally non-existent and could not support any assessment order.
The Verdict
The appellant succeeded on both appeals. The ITAT Delhi set aside the reassessment notices dated 29.07.2022 for Assessment Years 2014-15 and 2016-17, quashed all consequential assessment orders and demands, and declared the proceedings void ab initio. The Tribunal held that the notices were invalid due to non-compliance with Section 151(ii), as the approval was granted by an incompetent authority. No further directions were issued as the reassessment was entirely nullified.
What This Means For Similar Cases
Approval Authority Must Match Statutory Mandate
- Practitioners must verify the identity of the approving authority for every reassessment notice issued after three years from the end of the relevant assessment year
- Only PCCIT, PDG, CCIT, or DG can approve such notices - PCIT approval is insufficient
- Any reassessment initiated with PCIT approval post-01.04.2021 is void ab initio and must be challenged at the earliest
Limitation and Amendment Are Interlinked
- The Finance Act, 2021 amendments apply to all notices issued after 01.04.2021, even if the underlying assessment is from a pre-amendment year
- The Supreme Court’s ruling in Rajiv Bansal confirms that TOLA does not override Section 151(ii)
- Revenue cannot rely on old approvals or procedural laxity to sustain reassessments beyond the limitation period
Procedural Defects Are Jurisdictional
- Lack of proper approval under Section 151(ii) is not a mere irregularity - it goes to the root of jurisdiction
- Courts and tribunals will not validate proceedings based on technicalities when statutory mandates are ignored
- Taxpayers should raise this ground in all pending reassessment matters where approval was granted by PCIT or lower authorities
