The Income Tax Appellate Tribunal, Surat Bench, in Hiteshkumar Poptabhai Borad v. Assistant Commissioner of Income Tax, Central Circle-2, Surat, examined whether reassessment proceedings initiated for Assessment Year 2018-19 were valid when the statutory approval had been obtained from an authority not specified under Section 151(ii) of the Income Tax Act, 1961. The order was pronounced on 23 July 2026 in ITA No. 1262/SRT/2025.
The assessee had originally declared a total income of ₹3,49,530. Based on information alleging receipt of unexplained cash of ₹97 lakh, the Assessing Officer issued a notice under Section 148 and subsequently passed an ex parte reassessment order under Sections 147 read with 144. The amount of ₹97 lakh was added as unexplained money under Section 69A and subjected to taxation under Section 115BBE.
Before the Tribunal, the assessee raised an additional legal ground challenging the jurisdiction of the Assessing Officer. It was argued that more than three years had elapsed from the end of Assessment Year 2018-19 when the order under Section 148A(d) and the notice under Section 148 were issued on 12 April 2022. Consequently, approval was required from the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General under Section 151(ii). However, the approval had been granted by the Principal Commissioner of Income Tax.
Income Tax
The principal issue before the Tribunal concerned the validity of reassessment proceedings where the statutory sanction had been granted by an authority falling under Section 151(i), despite the proceedings having been initiated after the expiry of three years from the end of the relevant assessment year.
The Tribunal held that the requirement of obtaining approval from the specified authority under Section 151 is a jurisdictional condition and not a procedural formality. Where more than three years have elapsed, approval must be obtained from the higher authority prescribed under Section 151(ii). An approval granted by the Principal Commissioner could not satisfy this statutory requirement.
The Revenue relied on the proviso inserted in Section 151 by the Finance Act, 2023, under which the three-year period may be calculated after considering exclusions or extensions under Section 149. The Tribunal rejected the contention that this amendment was merely clarificatory and retrospective. It noted that the Finance Act expressly made the amendment effective from 1 April 2023.
The Tribunal observed that the legislature had specifically given retrospective operation to certain other amendments made by the Finance Act, 2023. In contrast, the proviso to Section 151 was expressly made operative only from 1 April 2023. This indicated a deliberate legislative decision not to apply the amendment retrospectively.
The Tribunal further clarified that Sections 149 and 151 operate in distinct areas. Section 149 governs limitation for issuing reassessment notices, while Section 151 identifies the authority competent to grant approval. Before the 2023 amendment, the exclusions or extensions available under Section 149 could not automatically be imported into Section 151 for determining the appropriate sanctioning authority.
Relying on judicial precedents, including decisions dealing with reassessment notices issued in April 2022 for Assessment Year 2018-19, the Tribunal held that the approval should have been obtained from the Principal Chief Commissioner or another authority specified under Section 151(ii).
Since the approval in the assessee’s case had been obtained from the Principal Commissioner, the Tribunal held that the notice under Section 148 was issued without valid sanction. The entire reassessment proceeding was therefore void ab initio and liable to be quashed.
The assessee’s additional legal ground was allowed and the appeal was decided in favour of the assessee. Since the reassessment itself was invalid for want of jurisdiction, the additions made in the reassessment order could not survive.
Why Read This Judgment?
This decision is relevant for advocates, Chartered Accountants, Company Secretaries, tax consultants, corporate tax teams and professionals handling reassessment litigation. It explains the distinction between limitation under Section 149 and sanction under Section 151, the prospective operation of the Finance Act, 2023 amendment and the jurisdictional consequences of obtaining approval from an authority not empowered under the law.
