Section 148A Reassessment Notices Beyond Three Years Need Section 151 Sanction, Rules Bombay High Court

MUMBAI — Reassessment notices issued more than three years after the end of the relevant assessment year on the sanction of a Principal Commissioner, rather than the Principal Chief Commissioner the statute names, are without jurisdiction and must be quashed, the Bombay High Court has held, disposing of the lead petition in a batch of more than three hundred challenges to notices issued between 2022 and 2024. A Division Bench delivered the judgment on 16 October in Meadow Foods v. Assistant Commissioner of Income-tax, and directed the registry to list the remaining petitions for orders in terms of it.

"Jurisdiction is not a technicality. It is the foundation," the bench said.

The reassessment regime since 2021

The Finance Act, 2021 rewrote the law on reopening assessments with effect from 1 April 2021. Section 148A requires the assessing officer, before issuing a notice under Section 148, to conduct any enquiry with the prior approval of the specified authority, to serve a show-cause notice with the information suggesting that income has escaped assessment, to consider the taxpayer's reply and to pass a reasoned order under Section 148A(d), again with the specified authority's approval. Section 149 fixes the time limits: three years from the end of the relevant assessment year, extended to ten years only where the escaped income, represented as an asset, expenditure or an entry in the books, is fifty lakh rupees or more.

Section 151 identifies the "specified authority" by reference to time:

Time elapsed from end of assessment year	Specified authority (Finance Act, 2021 regime)
Three years or less — Section 151(i)	Principal Commissioner or Principal Director, or Commissioner or Director
More than three years — Section 151(ii)	Principal Chief Commissioner or Principal Director General, or where there is none, Chief Commissioner or Director General

The regime was recast by the Finance (No. 2) Act, 2024 for notices issued from 1 September 2024, which shortened the outer limit to five years and restructured the approval process, and the Income-tax Act, 2025, in force from 1 April 2026, carries the structure forward. The notices in the batch were issued under the 2021 regime.

What the court held

1. The wrong authority sanctioned the notices. In each petition in the batch, the assessment year was more than three years in the past when the Section 148A(d) order and the Section 148 notice issued, and the sanction had been given by a Principal Commissioner under Section 151(i). The authority competent under Section 151(ii) was the Principal Chief Commissioner.
2. The law was already settled. The bench followed its own decisions in Siemens Financial Services v. Deputy Commissioner (2023) and Cipla Pharma and Life Sciences v. Deputy Commissioner (2024), the Delhi High Court's decision in Twylight Infrastructure v. Income Tax Officer (2024), and the Supreme Court's judgment in Union of India v. Rajeev Bansal (3 October 2024), which held that the sanction requirements of the new Section 151 apply to notices issued under the new regime and that approval from the appropriate authority is mandatory.
3. Section 292B does not help. The department argued that the defect was a mistake or omission that Section 292B saves where the notice is in substance in conformity with the Act. The court held that the identity of the sanctioning authority is a condition of jurisdiction, not a matter of form, and that a notice issued without jurisdiction is not in conformity with the Act at all.
4. Consequences. The Section 148A(d) orders, the Section 148 notices and all reassessment proceedings pursuant to them are quashed. The department remains free to issue fresh notices with the correct sanction, but only where the time limit under Section 149 has not expired — which, the bench noted, it had in most of the batch.

Jurisdiction is not a technicality. It is the foundation.

From the judgment

Why so many notices were sanctioned by the wrong officer

Between 2021 and 2024 the department issued reassessment notices in very large numbers, many of them triggered by the Supreme Court's decision in Union of India v. Ashish Agarwal (May 2022), which treated notices issued under the old Section 148 after 1 April 2021 as show-cause notices under the new Section 148A and required the department to complete the new procedure. In the rush to meet the time limits that followed, sanction was routinely obtained at the Principal Commissioner level regardless of the age of the assessment year. The department's position, rejected first by the High Courts and then by the Supreme Court in Rajeev Bansal, was that the relaxation legislation of 2020 preserved the old sanctioning structure.

What it means for taxpayers

• Check the sanction. The order under Section 148A(d) records the authority that approved it. If more than three years had elapsed from the end of the assessment year and the approving officer is a Principal Commissioner or Commissioner, the notice is vulnerable.
• Raise the objection early. The point goes to jurisdiction and can be taken in reply to the Section 148A(b) show-cause notice, in a writ petition against the Section 148 notice, or in appeal against the reassessment order. Taking it early avoids a completed reassessment.
• Mind the time limits on both sides. A writ petition should be filed promptly; the department, for its part, cannot cure the defect by a fresh notice once Section 149 has run out.
• Notices from September 2024 onwards are governed by the recast regime and need separate analysis.

What it means for the department

The judgment confirms what the Supreme Court said in 2024 and applies it across a batch large enough to require a listing direction. Fresh notices with the correct sanction are possible only within time; for assessment years more than ten years old under the 2021 regime, or beyond the five-year limit under the 2024 regime, the matters are closed. The bench also recorded the department's statement that internal instructions now require sanction at the Principal Chief Commissioner level in every case beyond three years.

The Counsel will report the disposal of the remaining petitions in the batch. Taxpayers who have received a reassessment notice for an older assessment year should consult a qualified tax practitioner about the sanction recorded on the Section 148A(d) order.

This report is for general information only and does not constitute legal advice. Readers should consult a qualified lawyer about their own circumstances. Case citations are to The Counsel Reports (TCR) unless otherwise stated.