Twylight Infrastructure Pvt Ltd vs Income Tax Officer Ward 25 3 Delhi and Ors.

Court/Forum: HC

Bench: Hon'ble Mr Justice Rajiv Shakdher, Hon'ble Ms Justice Tara Vitasta Ganju

Order Date: 2024-01-05

Outcome: Assessee

Sections: Section 143(1), Section 148, Section 148A(b), Section 148A(d), Section 149, Section 151

Core Ratio

Approval from the specified authority is mandatory for issuing reassessment notices under Section 148.

Outcome

The impugned notices and orders were quashed due to the absence of approval from the specified authority as required under Section 151(ii) of the Income Tax Act. The revenue was granted liberty to initiate reassessment proceedings afresh, if deemed necessary, in accordance with the law.

Favourability

Assessee

Core Issue

The central legal question was whether the reassessment notices and orders were valid without the approval of the specified authority as mandated by the Income Tax Act.

Facts of the Case

The petitioner filed returns for AY 2017-18, which were processed by the revenue. Subsequently, a notice under Section 148A(b) was issued, and an order under Section 148A(d) was passed, alleging escaped income. The petitioner challenged the validity of these notices and orders due to the lack of approval from the specified authority.

Arguments by Assessee

The assessee argued that the reassessment notices and orders were invalid as they were not backed by the approval of the specified authority as required by the Income Tax Act.

Arguments by Revenue

The revenue contended that the reassessment proceedings were valid and relied on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and CBDT instructions.

Key Sections & Provisions

Section 148 - Notice for reassessment; Section 151 - Approval of specified authority; Section 148A - Procedure before issuing notice.

Ratio Decidendi

The court held that the approval of the specified authority is a mandatory requirement under the amended provisions of Section 148 and Section 151 of the Income Tax Act. The absence of such approval renders the reassessment notices and orders invalid.

Court Reasoning & Analysis

The court noted that the approval of the specified authority is mandatory under the amended provisions of the Income Tax Act.
The specified authority changes depending on the time elapsed since the end of the relevant assessment year.
The court referred to its previous ruling in Ganesh Dass Khanna, which dealt with similar issues of limitation and specified authority.
The court found that the revenue's argument that approval was not mandatory was untenable.

Key Observations

The approval of the specified authority is embedded in the first proviso to Section 148.
The specified authority changes depending on the timeframe as per Section 151.

Case Laws Cited

Ganesh Dass Khanna v. Income Tax Officer & Anr.

Related Issues

Validity of reassessment notices without proper approval.
Interlinkage between limitation and specified authority.
Impact of amendments to the Income Tax Act on reassessment proceedings.

Important Passages

The approval of the specified authority is mandatory as per the first proviso to Section 148.
The specified authority changes depending on the applicable timeframe, as per Section 151 of the Act.

Not Decided / Remanded

The court left open the possibility for the revenue to initiate reassessment proceedings afresh, if deemed necessary.

Practical Takeaway

Practitioners should ensure that reassessment notices are backed by the approval of the specified authority as required by the Income Tax Act to avoid invalidation.

Supporting Judgments

Manisha Agarwal vs Income Tax Officer, Ward 59(1), Delhi & Ors. (HC) — A reassessment notice issued beyond the surviving time limit under the Income Tax Act read with TOLA is time-barred.
Hexaware Technologies Limited vs Assistant Commissioner of Income Tax (HC) — Reassessment notices issued after 1st April 2021 must comply with the amended provisions of the Income Tax Act, 1961, and cannot rely on the erstwhile provision
Mon Mohan Kohli vs Assistant Commissioner of Income Tax & Anr (HC) — The government cannot extend the applicability of statutory provisions through notifications without explicit legislative authority.
Chhugamal Rajpal vs S. P. Chaliha & Ors. (SC) — A notice under Section 148 cannot be issued without the Income-tax Officer having prima facie grounds and the Commissioner's satisfaction based on recorded reas
Chhugamal Rajpal vs S. P. Chaliha & Ors. (SC) — The Income-tax Officer must have prima facie grounds and record reasons before issuing a notice under Section 148, and the Commissioner must apply his mind befo
Manju Somani vs Income Tax Officer Ward-70(1) & Ors. (HC) — A reassessment notice issued post-01 April 2021 must comply with the time limits prescribed by the pre-amendment provisions of Section 149 if the assessment yea

Contrary Judgments

Union of India & Ors. vs Ashish Agarwal (SC) — Reassessment notices issued under the unamended Section 148 post-01.04.2021 are deemed valid under Section 148A of the Finance Act, 2021.
Union of India & Ors. vs Rajeev Bansal (SC) — Reassessment notices issued under the old regime are deemed valid under the new regime due to the application of TOLA and judicial directions.
Union of India & Ors. vs Rajeev Bansal (SC) — Reassessment notices issued after 1 April 2021 should be treated as issued under the new regime, with TOLA extending the time limits for compliance.
Pawan Sachdeva vs Income-Tax Officer, Ward 19(3), Delhi & Anr. (HC) — Issuance of notice within the limitation period is sufficient for jurisdiction, even if the service occurs later or with errors.
GKN Driveshafts (India) Ltd. vs Income Tax Officer and Ors. (SC) — When a notice under Section 148 is issued, the noticee should file a return and may seek reasons, which the assessing officer must provide, allowing the noticee
Arya Roadways Company Pvt. Ltd. vs I.T.O., Ward-12(1), Kolkata (ITAT) — The case was remanded to ensure a fair opportunity for the assessee to substantiate its claims regarding the expenditure.