Bombay High Court Quashes Reassessment Proceedings Due to Jurisdictional Defect in Section 151 Approval

Reassessment proceedings under the Income Tax Act 1961 are subject to strict procedural safeguards designed to protect the assessee from arbitrary or legally flawed administrative actions. One of the most critical safeguards is the requirement for the assessing officer to obtain prior sanction from a designated higher authority before initiating reassessment. The rank of the authority competent to grant this approval is strictly dictated by the time elapsed since the end of the relevant assessment year.

In a significant judicial development, the Bombay High Court, in the case of Akshar Developers Vs ACIT, has reinforced the sanctity of these procedural boundaries. The Court unequivocally held that obtaining approval from an authority not explicitly designated for the specific time frame renders the entire reassessment action void ab initio. This article provides a comprehensive analysis of the factual matrix, the legal framework governing reassessment sanctions, the interplay of recent Supreme Court precedents, and the ultimate verdict delivered by the High Court.

The Factual Matrix of the Dispute

The controversy in the present matter revolves around the reassessment initiated against the assessee for the Assessment Year (A.Y.) 2017-18. The chronological sequence of events is crucial for understanding the jurisdictional defect that ultimately led to the quashing of the proceedings.

The assessee had originally filed its return of income for A.Y. 2017-18 on 06.01.2017, declaring a total income of Nil. Years later, the revenue department sought to reopen this assessment.

  1. Initial Notice Under the Old Regime: The assessing officer issued the first notice under the unamended Section 148 on 01.04.2021. This date is significant because it fell exactly one day after the traditional three-year limitation period for A.Y. 2017-18, which ordinarily would have expired on 31.03.2021.
  2. Transition via Supreme Court Intervention: Following the landmark judgment by the Supreme Court in Union of India v. Ashish Agarwal, all such notices issued under the erstwhile regime on or after 01.04.2021 were legally fictioned to be show-cause notices under the newly introduced Section 148A(b).
  3. Fresh Proceedings Under the Amended Law: Complying with the Supreme Court's directive, the revenue department issued a fresh notice to the assessee on 01.06.2022 under Section 148A(b), detailing the reasons for the proposed reopening of the assessment.
  4. Assessee's Response: The assessee submitted comprehensive objections against the proposed reassessment on 10.06.2022.
  5. Impugned Orders and Notices: The assessing officer rejected the assessee's objections and passed an order under Section 148A(d) on 29.07.2022. On the very same day, a consequential reassessment notice under Section 148 was issued. Furthermore, an order disposing of the objections was subsequently recorded with the date 17.02.2026.
  6. The Fatal Flaw: Before issuing the order and the consequential notice on 29.07.2022, the assessing officer obtained the mandatory statutory approval on 28.07.2022. However, this sanction was procured from the Principal Commissioner of Income Tax (PCIT).