Patna High Court Upholds Validity of Reassessment Notice under Section 148

A writ petition was moved in front of the Court challenging reassessment proceedings under Section 148 of the Income Tax Act for AY 2020-21. It was contended that due procedure laid down under Section 148A was not followed, the order was time-barred, and sanction under Section 151 was not obtained from a competent authority. The petitioner placed reliance on the fact that the reply was filed in June 2024, and therefore, the order under Section 148A(d) was required to be completed within one month thereafter. It was contended that the proceedings were wrongly extended up to September 2024 and that such extension was not authorised. And since more than three years had expired from the end of the assessment year, a sanction was required from a higher authority, whereas approval in the case was recorded by the Principal Commissioner.

The Department submitted that the material gathered in the survey established receipts significantly higher than the income disclosed and that an adequate opportunity of hearing was provided, including fixing of a personal hearing on request. It was pointed out that the extension of time was justified in law as the assessee had sought a personal hearing, and therefore, the order under Section 148A(d) was within time. The Department also maintained that since the notice was issued within three years from the end of AY 2020-21, approval by the Principal Commissioner was in accordance with Section 151. The Court considered the pleadings, documents and the scheme of Sections 148A and 151, and confined itself to the question of limitation and sanction while examining whether the initiation of reassessment was in accordance with law.

Issue Raised: Whether the reassessment proceedings started under Section 148 for the year AY 2020-21 were invalid or time-barred because there was no sanction as per Section 151.

Court’s Ruling: The Court was of the view that proceedings under Section 148 for AY 2020-21 were valid and sustainable in law. The Court noted that the return was received in June 2024, requesting a personal hearing, and where such is granted, the authority would be right in taking proceedings beyond the first month period. The order dated 25.09.2024 under Section 148A(d) was within the limitation. Where a sanction was granted, the Court held that since the notice had been served within a period of three years from the last day of the relevant year, sanction by the Principal Commissioner was lawful in law under Section 151. The argument that sanction was only to be made by the Principal Chief Commissioner or Director General was rejected.

The Court declared reassessment proceedings valid, dismissed the writ petition, and reaffirmed that statutory safeguards were complied with. It relied upon the construction of Section 148A and Section 151 in the present case, clarifying that after the requirements of time and authority under the statute are met, reassessment cannot be invalidated on technical grounds.

Therefore, the Court reserved all merits of assessment to be determined by the assessing authority according to law, and the writ petition was dismissed accordingly.

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