The Delhi High Court has clarified that the Supreme Court ruling in Union of India & Ors. v. Rajeev Bansal (2024) does not validate the authority of a Joint Commissioner to grant approval under Section 151 of the Income Tax Act, 1961 for initiating reassessment proceedings.
Section 151 of the Act restricts the issuance of reassessment notices beyond four years from the end of the relevant assessment year, unless sanctioned by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner based on the Assessing Officer’s recorded reasons.
Notably, the Finance Act, 2021 removed the Joint Commissioner from the list of authorities authorized to approve reassessment under the amended Section 151. A Division Bench of Justices Yashwant Varma and Dharmesh Sharma observed that the Supreme Court in Rajeev Bansal only highlighted the time frames for obtaining approvals under Section 151 without endorsing the authority of the Joint Commissioner.
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In the case at hand, the petitioner-assessee challenged reassessment proceedings initiated with the Joint Commissioner’s approval. The court cited its earlier judgment in Abhinav Jindal HUF v. Commissioner of Income Tax (2024), which emphasized that only the authorities explicitly mentioned in Section 151 of the amended Act could grant such approvals.
The counsel appearing for the respondents, however contended that the view expressed by us in Abhinav Jindal would no longer sustain in light of the judgment in Rajeev Bansal. According to the counsel, the Supreme Court in Rajeev Bansal has ultimately held that the grant of approval under Section 151 would have to be in consonance with the extended time limits which came to be introduced by TOLA.
The court reiterated that Section 151 categorically distributes approval powers based on specific criteria, precluding the Joint Commissioner’s involvement in cases where reassessment is initiated post the expiry of four years from the relevant assessment year.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
It was noted that, “We thus come to conclude that the reassessment action impugned before us in this petition cannot be sustained basis the pecuniary threshold as comprised in Section 149(1)(b) as well as on the action having not been approved by the competent authority under Section 151.”
The Department contended that the Abhinav Jindal judgment was outdated due to Rajeev Bansal. However, the court clarified that Rajeev Bansal did not support Joint Commissioner approvals under the amended regime. Consequently, the reassessment proceedings in question were held to be invalid under law.
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