Only PCIT can sanction notice of reassessment after 4-year expiration, not ACIT: Bombay High Court

the Bombay High Court bench Judge NR Borkar and Judge KR Shriram ruled that after four years of expiration from the end of the relevant tax year, only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner (PCIT) may grant approval to the Notice of Reassessment and not the Additional Commissioner of Income Tax (ACI).

The Applicant/Assessed challenged the Notice of Reassessment issued under Section 148 of the Income Tax Act 1961 for the 2015-2016 tax year on the ground that the approval obtained for the issuance of the notice under section 148 of the Income Tax Act 1961 did not comply. pursuant to the mandate of Section 151 of the Income Tax Act 1961, as the approval came from the Additional Commissioner of Income Tax instead of the Principal Commissioner of Income Tax.

For the purposes of section 151 of the Income Tax Act 1961, no notice of reassessment will be issued under section 148 of the Income Tax Act 1961 by an agent responsible for the evaluation after the expiry of a period of four years from the end of the period concerned. year of assessment, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, for reasons recorded by the Valuation Officer, that it is an appropriate case for the issuance of such notice.

The claimant argued that under section 151 of the Income Tax Act 1961, as four years had passed by the time of the reopening, the sanction should be obtained from the Chief Commissioner of income tax and, since the sanction had not been obtained from the Chief Commissioner of Income Tax, the advice issued was wrong in law. The sanction granted itself indicates the non-application of the spirit.

The Respondent/Department relied on a letter dated March 18, 2021, issued by an Income Tax Officer, who had given notice to the Additional Commissioner of Income Tax that, account Having regard to the Taxation and Other Acts (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), the limitations under the provisions of section 151(1) and section 151(2), which originally scheduled to expire on March 31, 2020, are extended until March 31, 2021.

According to the Income Tax Officer, statutory approval for the issuance of an opinion under Section 148 of the Income Tax Act 1961 for the tax year 2015 -2016 can be given by the line manager. The income tax officer was only conveying the view of the chief commissioner of income tax because the letter was issued on the letterhead of the chief commissioner of income tax Income.

The court said that “even if, for a moment, we agree with the view expressed by the Chief Commissioner of Income Tax, it still applies only to cases where the limitation expired March 31, 2020. In this case, the tax year is 2015-2016 and therefore the six-year statute of limitations will not expire until March 31, 2022. Admittedly, the provisions of the law on relaxation may therefore not be applicable. In any case, the notification period may have been extended, but this does not amount to modifying the provisions of Article 151 of the law.”

Case title: JM Financial and Investment Consultancy Services Private Limited Versus Assistant Commissioner of Income Tax

Quote: Written Petition No. 1050 of 2022

Date: 04.04.2022

Applicant’s lawyer: Senior Advocate Shivram

Counsel for the Respondent: Lawyer Akhileshwar Sharma

Click here to read/download the order

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