The Gujarat High Court quashed reassessment notices issued without valid sanction, holding that the proviso to Section 151 is not retrospective. The ruling bars proceedings initiated without compliance with sanction requirements.
Gujarat HC Quashes Reassessment Notices for Lack of Sanction
The Gujarat High Court has quashed reassessment proceedings initiated without proper sanction under the proviso to Section 151 of the Income Tax Act, 1961. The Court held that the proviso, which mandates prior sanction by a specified authority for reopening beyond the statutory period, is procedural and not retrospective. Therefore, it applies to pending proceedings and cannot be bypassed.
The Department had reopened assessments based on information received after the expiry of the limitation period but failed to obtain the required sanction before issuing notices. The Court emphasized that non-compliance with the proviso renders the reassessment notice jurisdictionally invalid, citing CMJ Foundation v. Union of India. It further noted that once Parliament introduced the proviso to curb arbitrary reopens, it must be strictly followed.
This decision strengthens taxpayer protection against time-barred reassessments. Legal practitioners must verify whether notices issued under Section 148A or Section 148 are backed by requisite sanction under Section 151(2), especially for proceedings initiated after insertion of the proviso.
Citations
- CMJ Foundation v. Union of India
