Calcutta High Court: Delay in Income Tax Appeal Not Excused, Department Told to Fix Approval Lapse

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Case Name

Income Tax Officer, Ward 7(1), Kolkata vs. Krushana Infra Property Private Limited and Ors. (High Court of Calcutta)

APOT/308/2024 IA NO: GA/1/2025, GA/2/2025

Date: 21st May 2025

Key Takeaways

• Approval Required: For reopening assessments after three years, approval from the “specified authority” (here, the Principal Chief Commissioner of Income Tax) under Section 151(ii) (of Income Tax Act, 1961) is mandatory.
• Procedural Compliance: The court emphasized that statutory procedures cannot be waived by the assessing officer; compliance is not optional.
• Remand, Not Quash: Instead of quashing the entire reassessment, the court allowed the process to be redone correctly from the point of error.
• Delay Not Excused: The department’s appeal was filed 397 days late and was dismissed, with the court noting the department should have complied with the original order instead of appealing.
• Time Extension: The court granted an additional eight weeks for the department to comply with the original order after receiving the court’s decision.

Issue

Did the Income Tax Department obtain the necessary approval from the “specified authority” under Section 151(ii) (of Income Tax Act, 1961), before issuing a notice under Section 148A(d) (of Income Tax Act, 1961) for reopening the assessment, and what should be the consequence if this approval was missing?

Facts

• Parties: The Income Tax Officer, Ward 7(1), Kolkata (appellant) vs. Krushana Infra Property Private Limited and others (respondents).
• Timeline: The original order under Section 148A(d) (of Income Tax Act, 1961) was challenged for the assessment year 2017-18. The Single Judge’s order was dated 21st June 2023. The department filed its appeal on 21st August 2024, with a delay of 397 days.
• Dispute: The respondent (Krushana Infra) argued that the Income Tax Department did not get the required approval from the “specified authority” (Principal Chief Commissioner of Income Tax) before issuing a notice to reopen the assessment.
• Relevant Law: Section 148A(d) (of Income Tax Act, 1961) (procedure for issuing notice for reassessment) and Section 151(ii) (of Income Tax Act, 1961) (approval from specified authority for notices issued after three years) of the Income Tax Act, 1961.

Arguments

Respondent (Krushana Infra Property Pvt. Ltd.)

• Claimed that the notice under Section 148A(d) (of Income Tax Act, 1961) was invalid because the required approval from the “specified authority” under Section 151(ii) (of Income Tax Act, 1961) was not obtained.
• Pointed to CBDT Instruction No. 101/20-22 dated 11th May 2022, which clarified that for the relevant assessment year, the Principal Chief Commissioner is the specified authority.

Appellant (Income Tax Department)

• Did not dispute that the Principal Chief Commissioner was the specified authority.
• Appealed against the Single Judge’s order, but the main contention was procedural rather than substantive.

Key Legal Precedents & Provisions

• Section 148A(d) (of Income Tax Act, 1961): Deals with the procedure for issuing a notice for reassessment.
• Section 151(ii) (of Income Tax Act, 1961): Requires approval from the “specified authority” (Principal Chief Commissioner) for notices issued after three years from the end of the relevant assessment year.
• CBDT Instruction No. 101/20-22 dated 11th May 2022: Clarifies the authority required for approval in such cases.

The court relied on these statutory provisions and the CBDT instruction to determine that the required approval was not obtained, and that this procedural step could not be skipped by the assessing officer.

Judgement

• Delay Condoned, Appeal Dismissed: The court condoned the delay in filing the appeal but ultimately dismissed it, finding no merit.
• No Interference with Single Judge’s Order: The court agreed with the Single Judge that the lack of approval was a procedural defect.
• Remand to Assessing Officer: Instead of quashing the entire reassessment, the court sent the matter back to the assessing officer to redo the process from the point of error, this time obtaining the proper approval.
• Time Extension: The department was given an additional eight weeks from the date of receiving the court’s order to comply.
• Criticism of Department: The court noted the department should have complied with the original order instead of appealing so late, especially since the order was not adverse to the department’s interests (it allowed reassessment after correcting the defect).

FAQs

Q1: What was the main procedural error by the Income Tax Department?

A: The department failed to get approval from the “specified authority” (Principal Chief Commissioner of Income Tax) under Section 151(ii) (of Income Tax Act, 1961) before issuing a notice to reopen the assessment.

Q2: Did the court quash the entire reassessment?

A: No, the court did not quash the proceedings. Instead, it sent the matter back to the assessing officer to correct the procedural defect and proceed afresh.

Q3: Why was the department’s appeal dismissed?

A: The appeal was dismissed because it was filed late (397 days after the order) and lacked merit, as the original order was not adverse to the department and simply required compliance with the law.

Q4: What does this mean for the parties?

A: The Income Tax Department must now redo the reassessment process, this time obtaining the required approval, within the extended time frame.

Q5: What legal provisions were central to this case?

A: Section 148A(d) (of Income Tax Act, 1961) and Section 151(ii) (of Income Tax Act, 1961), and CBDT Instruction No. 101/20-22 dated 11th May 2022.