Sanction u/s 151 of Income Tax Act Neither Appealable nor Revisable, Attains Finality: Uttarakhand HC [Read Order]

The Uttarakhand High Court has ruled that a sanction granted or refused under Section 151 of the Income Tax Act, 1961 is neither appealable nor revisable and therefore attains finality.

The Chief Justice G. Narendar and Justice Subhash Upadhyay held that once the competent authority refuses to grant approval for reopening of assessment, the Assessing Officer cannot repeatedly re-submit or re-present the same proposal seeking sanction again, as the Income Tax Act does not provide for any such review or reconsideration mechanism.

The court observed that “The very fact that the scope and ambit of the Act of 1961 does not provide for any remedy / remedies to the A.O. against the order of approval of the Competent Authority under Section 151 of the Act of 1961 would go to show that the Parliament intended to give a finality to the proceeding with the order of the Competent Authority under Section 151 of the Act of 1961.”

An appeal was filed by the Principal Commissioner of Income Tax challenging an ITAT ( Income Tax Appellate Tribunal) order which had quashed reassessmentproceedings against the assessee, Rajan Rajesh Kumar for Assessment Years 2015-16 and 2016-17.

The reassessment was initiated based on loose sheets recovered during search operations on a third party.

The Tribunal had found that the sanction under Section 151 was granted mechanically, without independent application of mind, and only after multiple earlier proposals for sanction had already been rejected by the competent authority.

The High Court observed that Chapter XX of the Income Tax Act provides for appeals and revisions, but nowhere permits an appeal or revision against an order granting or refusing sanction under Section 151.

The Court noted that Sections 246, 246A, 253, 263 and 264 do not contemplate any remedy against such sanction orders, clearly indicating the legislative intent to give finality to the decision of the sanctioning authority.

“A perusal of Section 246A, which provides for Appeal before the Commissioner (Appeals), refers to Sections 115VP, 200A, 206CB, 143, 144, 144BA, 115WE, 115WF, 115WG, 147, 150, 153A, 92CD, 154, 155, 163, 170, 171, 185, 186, 201 etc., but does not provide for an Appeal against the order under Section 151 of the Act of 1961” said the court.

The Court further held that the absence of any statutory remedy against a refusal of sanction demonstrates that Parliament never intended repeated presentations of proposals for reopening of assessment.

According to the bench, permitting multiple attempts would effectively amount to allowing a review of the sanction order, a power which is not inherent and must be expressly conferred by statute. Since the Income Tax Act does not confer any power of review on either the Assessing Officer or the sanctioning authority, repeated re-submission of the same proposal was held to be without jurisdiction.

The High Court also pointed out that reopening of assessments has serious civil consequences for taxpayers and therefore the statutory safeguards under Sections 147 to 151 must be strictly complied with.

The sanction under Section 151 is not a mere administrative formality but a mandatory statutory check requiring due application of mind. Mechanical approval, especially after earlier refusals on the same material, was held to vitiate the entire reassessment proceedings.

The bench, with regards to Section 263 added that “A reading of sub-section (1) and various clauses would further clarify and buttress the view of this Court that the proceedings / the orders passed by the Competent Authority under Section 151 of the Act of 1961 are not revisable under Section 263 of the Act of 1961 but only such of those orders passed by officers/authorities, subordinate to the Competent Authority u/s 151.”

In fact, the Court agreed with the Tribunal that the approval was granted on the fifth attempt without any fresh material, despite earlier refusals citing lack of corroboration. This, according to the Court, clearly reflected non-application of mind.

Additionally, it was noted that the loose papers depended on by the Revenue lacked independent corroboration and that key assumptions drawn by the Assessing Officer were contrary to material already accepted by the Department itself.

Therefore, the Uttarakhand High Court held that sanction under Section 151, once granted or refused, attains finality and cannot be revisited through repeated proposals. Since the reassessment proceedings were founded on an invalid and mechanically granted sanction, the appeal filed by the Revenue was dismissed.

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