Section 151 — Sanction for Issue of Notice

Section 151 of the Income-tax Act, 1961, deals with the requirement of obtaining prior approval before issuing a notice for reassessment under Section 148. This section mandates that the Assessing Officer must secure the sanction of the appropriate authority before proceeding with the reassessment notice. The level of authority required for sanction depends on the time elapsed since the end of the relevant assessment year. If the notice is to be issued within four years, the Joint Commissioner’s approval is sufficient. However, if more than four years have passed, the approval of the Principal Chief Commissioner or Chief Commissioner is necessary. This provision is significant as it acts as a safeguard against arbitrary reassessment proceedings, ensuring that there is a legitimate basis for reopening an assessment. The burden of proof lies on the tax authorities to justify the need for reassessment, thereby protecting taxpayers from undue harassment.

Common Litigation Flashpoints

1. Validity of sanction obtained for issuing notice
2. Authority level required for sanction
3. Timeliness of obtaining sanction
4. Adequacy of reasons recorded for reassessment

Judgments on Section 151 — Sanction for Issue of Notice

• Voltas Limited vs Assistant Commissioner of Income Tax Circle -8(3) (1), Mumbai — HC, 2022
  Reopening of assessment based solely on a change of opinion is impermissible under the Income Tax Act.
• 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.
• 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 provisions.
• 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 reasons.
• T.K.S. Builders Pvt. Ltd. vs Income Tax Officer Ward 25(3) New Delhi — HC,
  Notices under Section 148 must be issued through automated allocation and in a faceless manner as per the Faceless Assessment Scheme.
• Twylight Infrastructure Pvt Ltd vs Income Tax Officer Ward 25 3 Delhi and Ors. — HC,
  Approval from the specified authority is mandatory for issuing reassessment notices under Section 148.
• 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.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• 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 before granting sanction.
• Aditya Birla Nuvo Limited vs The Deputy Director of Income-tax — HC,
  The beneficial ownership of shares, despite being registered in the name of a permitted transferee, determines the taxability of capital gains in India.
• 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.
• 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 year is prior to 01 April 2021.
• Mon Mohan Kohli vs Assistant Commissioner of Income Tax & Anr — HC,
  The Government cannot extend the applicability of legislative provisions beyond the dates specified by the Legislature through notifications.
• 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.