Bombay High Court: Reassessment Notice After 4 Years Should Have The Sanction Of PCIT

The Bombay High Court in the case MA Multi-Infra Development Pvt. Ltd. Versus ACIT observed and has stated that issuing of a reassessment notice after four years is being subject to the approval of the Principal Chief Commissioner of Income-tax (PCIT). The division bench comprising of Justice Dhiraj Singh Thakur and Justice Kamal Khata in the case observed and has ruled that the approval for the issuance of a notice under Section 148 ought not to have been obtained from the Additional Commissioner of Income Tax but from the authority which is specifically being mentioned under Section 151(ii) of the Income Tax Act, 1961. In the present case, the petitioner/ assessee challenged the notice dated March 31, 2021, under Section 148 of the Income Tax Act, 1961, on the grounds that it was being issued after the four-year period and the same was required for approval from the Principal Chief Commissioner of Income-tax under Section 151(ii) of the Act. However, in terms of the Relaxation Act, the limitation under the provisions of sections 151(i) and 151(ii) of the Income Tax Act, 1961, which was originally to be expired on 31.03.2020 and the same was extended to 31.03.2021. Further, it has been urged by the department that since the Relaxation Act had extended the period of limitation, the authority that was otherwise supposed for granting approval in regards to cases falling under the ambit of Section 151(i) which could have granted approval beyond the period of three years based upon the Relaxation Act. Before the court, it has been urged by the petitioner that it fell under Section 149(b), and therefore, the period of limitation of six years for the issuance of a notice under Section 148 for the assessment year 2015–2016 would expire on 31.03.2022. Therefore, the petitioner relied on the decision taken by the Bombay High Court in the case of J.M. Financial & Investment Consultancy Services (P) Ltd., wherein the court held that after four years of expiry from the end of the relevant assessment year, only the Principal Chief Commissioner, Chief Commissioner, or Principal Commissioner or Commissioner (PCIT) can accord approval to the reassessment notice and not the Additional Commissioner of Income Tax (ACIT). Accordingly, the court quashed the reassessment notice and allowed the plea.