The Delhi Income Tax Appellate Tribunal has clarified a critical procedural requirement under the Income Tax Act, 1961: the authority competent to grant approval for issuing a notice under Section 148 must be determined by the time the notice is issued, not the time of the original assessment. This ruling has immediate implications for reassessment proceedings initiated after the expiry of three years.
Background & Facts
The Dispute
The appellant, Vinod Chauhan, challenged the validity of a reassessment notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2017-18. The notice, dated 30.07.2022, was issued after the expiry of three years from the end of the relevant assessment year, triggering the requirement for prior approval under Section 148A(b). The appellant contended that the approval granted by the Principal Chief Commissioner of Income Tax (PCIT-10) was invalid because the competent authority at the time of notice issuance was the Principal Commissioner of Income Tax (Pr. CIT), not the PCIT.
Key Facts
- Assessment Year: 2017-18
- Original assessment order issued: 17.05.2023 under Section 147
- Reassessment notice issued: 30.07.2022
- Time elapsed since end of AY 2017-18: More than three years (as of 31.03.2022)
- Approval for notice issued under Section 148A(b): Granted on 25.07.2022 by PCIT-10, Delhi
- Approval document referenced in notice and available at page 42 of paper book
- Notice cited the Supreme Court judgment in Union of India v. Ashish Aggarwal (Civil Appeal No. 305/2022, dated 04.05.2022) as basis for issuance
Procedural History
- 17.05.2023: Assessment order issued by National E-Assessment Centre under Section 147
- 15.12.2025: Order of the National Faceless Appeal Centre (NFAC), Delhi, upholding the assessment
- 22.06.2026: Hearing before ITAT Delhi
- 30.06.2026: Judgment pronounced
Relief Sought
The appellant sought quashing of the reassessment order dated 17.05.2023 on the ground that the notice under Section 148 was issued without valid approval under Section 148A(b), rendering the entire assessment void ab initio.
The Legal Issue
The central question was whether the approval granted by the Principal Chief Commissioner of Income Tax (PCIT) under Section 148A(b) was legally valid for a notice issued in 2022 for Assessment Year 2017-18, when the law required approval by the Principal Commissioner of Income Tax (Pr. CIT) after the expiry of three years.
Arguments Presented
For the Appellant
The appellant’s counsel, Sh. Ankit Kumar, relied on the Supreme Court’s decision in Union of India v. Ashish Aggarwal and the Delhi High Court’s ruling in Rajiv Bansal v. CIT (469 ITR 46). He argued that Section 151(ii) of the Act, as amended, clearly stipulates that for reassessment notices issued after three years from the end of the relevant assessment year, the competent authority for granting approval under Section 148A(b) is the Principal Commissioner of Income Tax (Pr. CIT), not the Principal Chief Commissioner. Since the approval was granted by PCIT-10, which is a higher-ranking authority, the approval was ultra vires and invalid.
For the Respondent
The Revenue, represented by Sh. Bal Krishan Gopal, Sr. DR, contended that the approval granted by PCIT-10 was valid because the notice was issued in light of the Supreme Court’s judgment in Ashish Aggarwal, which had clarified the scope of Section 148. He argued that the technicality of authority hierarchy should not override the substantive intent of the law, especially where the notice was issued with due diligence and proper documentation.
The Court's Analysis
The Tribunal examined the statutory framework under Section 148A(b) and Section 151(ii) of the Income Tax Act. It noted that Section 151(ii) explicitly provides that where the notice under Section 148 is issued after the expiry of three years from the end of the relevant assessment year, the approval must be granted by the Principal Commissioner of Income Tax. The Tribunal observed that the approval dated 25.07.2022 was granted by the Principal Chief Commissioner of Income Tax, a position that is not the statutorily designated authority for such approvals under Section 151(ii) for Assessment Year 2017-18.
"It is the date of issuance of the notice under Section 148 that determines the competent authority for grant of approval under Section 148A(b), not the date of the original assessment or the date of the order under Section 147."
The Tribunal distinguished Ashish Aggarwal as a case concerning the validity of notice issuance in the context of procedural delays and not the hierarchy of approving authorities. It affirmed the correctness of the Rajiv Bansal decision, which held that the authority must be determined strictly by the statutory provision applicable at the time of notice issuance. The Tribunal emphasized that procedural compliance under Section 148A(b) is mandatory and not directory, and any deviation renders the notice void.
The Verdict
The appeal was allowed. The Tribunal quashed the reassessment order dated 17.05.2023 and the order of the National Faceless Appeal Centre dated 15.12.2025. The notice under Section 148 dated 30.07.2022 was held invalid due to non-compliance with Section 148A(b) and Section 151(ii). No further directions were issued regarding reassessment, as the defect was fatal to the entire proceeding.
What This Means For Similar Cases
Approval Authority Must Be Statutorily Correct
- Practitioners must verify the identity of the approving authority against the date of notice issuance, not the date of original assessment
- For notices issued after three years from the end of the relevant AY, only the Principal Commissioner (Pr. CIT) is competent - PCIT approval is invalid
- Any reassessment initiated on the basis of PCIT approval for AYs ending before 2019-20 is vulnerable to challenge
Procedural Non-Compliance Is Fatal
- The Tribunal rejected the argument that substantive intent can override procedural defects
- Even if the notice is issued in good faith and with reference to judicial guidance, failure to comply with Section 151(ii) renders the notice void
- Taxpayers may now successfully challenge reassessments on this ground without needing to prove prejudice
Documentation Must Reflect Correct Authority
- Paper books must clearly show the approval document and the authority granting it
- Notices citing judicial precedents like Ashish Aggarwal do not cure jurisdictional defects
- Revenue authorities must update internal protocols to ensure approvals are sought from the correct officer as per Section 151(ii)
