Revenue Fails to Obtain Mandatory Approval u/s 151(ii) for Cases Over ₹50 Lakh Beyond Three Years: Madras HC Quashes Reassessment [Read Order]
Madras HC quashes reassessment order as revenue fails to obtain mandatory approval under Section 151(ii) for reopening cases beyond three years involving over Rs. 50 lakh
![Revenue Fails to Obtain Mandatory Approval u/s 151(ii) for Cases Over ₹50 Lakh Beyond Three Years: Madras HC Quashes Reassessment [Read Order]](https://images.taxscan.in/h-upload/2025/06/13/2043605-revenue-madras-high-court-taxscan.webp "Revenue Fails to Obtain Mandatory Approval u/s 151(ii) for Cases Over ₹50 Lakh Beyond Three Years: Madras HC Quashes Reassessment [Read Order]")
In a recent judgment, the Madras High Court quashed a reassessment order issued by the Income Tax Department against Core Logistic Company after finding that the notice was issued without the proper legal approval required under Section 151(ii) of the Income Tax Act, 1961. The case involved reassessment for the assessment year 2016–17, where the department sought to reopen the case...
In a recent judgment, the Madras High Court quashed a reassessment order issued by the Income Tax Department against Core Logistic Company after finding that the notice was issued without the proper legal approval required under Section 151(ii) of the Income Tax Act, 1961. The case involved reassessment for the assessment year 2016–17, where the department sought to reopen the case and raised a tax demand exceeding Rs. 3.65 crore.
Core Logistic Company, through its partner Mr. Arul Natarajan, filed the writ petition challenging the validity of the reassessment proceedings initiated by the National Faceless Assessment Centre. The petitioner argued that the reassessment notice under Section 148 was issued beyond the statutory three-year time limit from the end of the relevant assessment year.
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According to Section 151(ii), in such cases where the time limit exceeds three years and the escaped income is over Rs. 50 lakh, approval must be obtained from senior tax authorities such as the Principal Chief Commissioner, Chief Commissioner, Principal Director General, or Director General. The approval in this case was obtained only from the Principal Commissioner, which is permitted only when the reassessment is initiated within three years under Section 151(i).
The petitioner’s counsel further argued that the Income Tax Department’s failure to obtain approval from the correct authority rendered the reassessment proceedings invalid and without jurisdiction. They contended that the approval was not a mere formality but a mandatory precondition under law to safeguard taxpayers from arbitrary reassessments.
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In response, the department’s counsel referred to the Supreme Court’s judgment in Union of India vs. Ashish Agarwal and submitted that the procedural changes had been acknowledged, and the approval process followed was adequate. They did not dispute that the approval came from an authority not empowered under Section 151(ii) for such cases.
The single bench led by Justice Krishnan Ramasamy observed that under Section 151(ii), cases where the alleged escaped income is more than Rs. 50 lakh, and where more than three years have passed since the relevant assessment yea,r require approval from a higher-level authority. Since this condition was not met in the present case, the reassessment notice was issued without jurisdiction.
The court ruled that the initiation of reassessment proceedings was not legally valid and therefore quashed the assessment order dated 30.05.2023. The writ petition was allowed.
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