Section 151 of the Income Tax Act: Sanction for Issue of Reassessment Notice

Many taxpayers don’t know that before issuing the notice for reopening the assessment under section 147 or for following the procedure laid down under section 148A, an assessing officer needs prior approval from higher authorities as per section 151 of the Income Tax Act. Today, in this article we are going to explain the provisions related to the said section 151.

So, without further ado. Let’s start the discussion. Happy reading.

An assessing officer has the power under section 147 of the Income Tax Act, 1961 to reopen the assessment proceedings if he has sufficient reasons and information to believe that the assessee has escaped income from assessment.

To know more about facts related to regular assessment or reassessment click here (please link to the respective article).

But to initiate reassessment the assessing officer needs to send a notice under section 148 after following the certain procedures (including compulsory issuing a show-cause notice to the assessee) laid down under section 148A of the Income Tax Act, subject to prior approval of higher authority is obtained under section 151.

Please note that notice for reassessment under section 148 can be issued by the assessing officer for income escaped, as per the below-mentioned specified time limits, stated under section 149 (amended by Finance act 2021) of the Income Tax Act.

Up to three years from the end of the relevant financial year or

Up to ten years from the end of the relevant financial year if income has escaped assessment is Rupees 50 lakh or more.

To know more about what procedures need to be followed under section 148A before issuing notice under section 148 as explained above click here (please link to the respective article).

The sanction for the issue of notice for reassessment is needed under section 151

As per section 151 of the Income Tax, a sanction is need to be obtained from the following specified authorities, for issuing notices under section 148 and section 148A:-

Principal Commissioner of Income Tax (PCIT) or Principal Director of Income Tax (PDIT) or Commissioner of Income Tax (CIT) or Director of Income Tax (DIT), if three years or less than three years have elapsed from the end of the relevant assessment year;

Principal Chief Commissioner of Income Tax (PCCIT) or Principal Director General of Income Tax (PDGIT) or where there is no PCCIT or PDGIT, Chief Commissioner of Income Tax (CCIT) or Director General of Income Tax (DGIT) if more than three years have elapsed from the end of the relevant assessment year.

So, in the crux, prior approval is needed from:-

PCIT/PDIT/CIT/DIT, in case within 3 years from the end of the relevant assessment year notice for reopening u/s 148 or show cause notice u/s 148A is to be issued

PCCIT/PDGIT (CCIT or DGIT if there is no PCCIT/PDGIT), in case notice for reopening u/s 148 or show cause notice u/s 148 is to be issued after 3 years from the end of the relevant assessment year.

We hope that now you have clarity as to why the prior approval of higher authority is mandatory to obtain before initiating reassessment. In case you need any help with your assessment proceeding or return filing or any other compliances, please feel free to contact our team of experts.

Section 151 of the Income Tax Act To sanction for issue for notice for reassessment