ITAT Quashes Reassessment Proceedings against Toyota Boshoku Corporation for Lack of Mandatory Approval u/s 151 [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings initiated under the Income Tax Act, 1961, holding that notices issued beyond the prescribed period are invalid when the mandatory approval is not obtained from the correct “specified authority” as required under Section 151 of the Act.

Toyota Boshoku Corporation, appealed against reassessment orders passed for the assessment years 2016-17 and 2017-18 due to notices issued under Sections 148 and 148A of the Act. The ground raised by assessee was that the approval for reopening was obtained from the Principal Commissioner of Income Tax, but the amended provisions of Section 151 call for approval from the Principal Chief Commissioner of Income Tax as more than three years had elapsed from the end of the relevant assessment years.

The Tribunal, comprising Vikas Awasthy (Judicial Member) and M. Balaganesh, (Accountant Member), noted that the first notice under Section 148 was issued on June 30, 2021, which was found to be beyond the three-year limitation period under the amended law. In such cases, Section 151(ii) makes it mandatory for the sanction to be granted by the Principal Chief Commissioner or Principal Director General, and not by the Principal Commissioner.

Placing reliance on a series of judicial precedents, including the decision of the Delhi High Court in Communist Party of India (Marxist) v. ITO and subsequent rulings in Twylight Infrastructure Pvt. Ltd. v. Income Tax Officer and Abhinav Jindal HUF v. Income Tax Officer, the Tribunal held that the requirement of approval by the specified authority is a substantive condition and not a procedural formality. Any deviation from the statutory mandate renders the assumption of jurisdiction invalid.

The Tribunal further observed that the extension of limitation under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 does not override the hierarchy of authorities prescribed under Section 151 of the Act.

Consequently, the notices issued under Section 148, the order passed under Section 148A(d), and the subsequent assessment orders were quashed. The appeals filed by the assessee were accordingly allowed.

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