Got an Old Income Tax Reassessment Notice? The Wrong Officer May Have Approved It — And That Makes It Void: ITAT Ruling Explained

If you have ever received an income tax reassessment notice — that letter from the department saying they want to reopen your old tax return and assess it again — you know how unsettling it can be. But here is something very few taxpayers know: such a notice may be completely illegal if the officer who approved it did not have the legal authority to do so.

The Income Tax Appellate Tribunal (ITAT), Delhi Bench recently quashed the entire reassessment proceedings in the case of Arihant Agrifoods Private Limited, holding that a reassessment notice issued beyond three years from the end of the relevant assessment year must be approved by a senior-most level officer — the Principal Chief Commissioner of Income Tax (PCCIT). Approval from a lower-ranking officer — even a Principal Commissioner (PCIT) — is simply not good enough. And getting it wrong makes the entire reassessment void from the very beginning.

Facts and Issues of the Case

Arihant Agrifoods Private Limited is a company engaged in agri-food products business, duly registered and assessed to tax under the Income Tax Act, 1961. The case pertains to Assessment Year (AY) 2017-18, meaning the financial year April 2016 to March 2017.

At some point after the original assessment for AY 2017-18 was completed, the Assessing Officer (AO) formed a belief that income had escaped assessment — in plain terms, that the company had not reported some income in its tax return. The AO decided to reopen the case under Section 147 of the Income Tax Act, 1961. Before issuing the formal notice under Section 148 to the taxpayer, the AO was required by law to obtain prior approval from a specified authority under Section 151.

The AO obtained this approval — but from the wrong officer. The approval was granted by the Principal Commissioner of Income Tax (PCIT), Delhi. The notice under Section 148 was subsequently issued and the AO completed the reassessment, making additions to the company’s income and raising a tax demand.

Aggrieved by the reassessment order, the company appealed to the Commissioner of Income Tax (Appeals) under the National Faceless Appeal Centre (NFAC). The CIT(A) upheld the reassessment order vide its order dated 27 March 2025. The company then appealed to the ITAT, Delhi Bench, raising a fundamental and purely legal ground:

Since the reassessment notice under Section 148 was issued more than three years after the end of AY 2017-18 — i.e., after 31 March 2021 — the law required approval from the Principal Chief Commissioner of Income Tax (PCCIT), not the Principal Commissioner (PCIT). The approval obtained was from an incompetent authority. The notice is therefore invalid, and the entire reassessment is void.

Observations by the Tribunal

The ITAT, Delhi Bench examined the legal ground raised by Arihant Agrifoods and made the following key observations:

First, the Tribunal verified the critical timeline. AY 2017-18 ended on 31 March 2018. Three years from that date is 31 March 2021. The notice under Section 148 in this case was issued after this cut-off date. This single fact was decisive — it meant the case fell squarely within the ‘more than three years’ bracket, triggering the higher approval requirement under Section 151(ii).

Second, the Tribunal placed strong reliance on the decision of the Coordinate Bench of ITAT Mumbai in PCIT v. Ms. Asha P. Kedia (2025), which in turn relied on the Bombay High Court’s landmark judgment in Vodafone Idea Ltd. v. Deputy CIT (Writ Petition No. 276 of 2022, decided 6 February 2024). That High Court had clearly held that for AY 2018-19, where the notice under Section 148 was issued beyond three years, the sanctioning authority had to be the PCCIT under Section 151(ii) — not the PCIT. The same principle applied squarely to this case.

Third, the Tribunal addressed an important timing question: a proviso was inserted into Section 151 with effect from 1 April 2023, which modified some of the approval requirements. However, the Bombay High Court had already clarified that this proviso is prospective in operation — it does not apply to earlier assessment years like AY 2017-18. The older, stricter two-tier framework therefore continued to govern this case.

Fourth, and most critically, the Tribunal held without any hesitation that choosing the wrong sanctioning authority is not a technical or minor error that can be overlooked. It is a jurisdictional defect — a fundamental legal infirmity that strikes at the very root of the AO’s power to issue the notice. It cannot be cured, condoned, or brushed aside under Section 292B of the Act, which only protects against minor clerical or technical mistakes. In short: the AO went to the wrong officer for permission. That error was fatal to everything that followed.

The Law Applicable

To fully understand why this judgment matters, it is essential to understand how the reassessment framework works — and specifically the requirement of prior sanction under Section 151.

Section 147 of the Income Tax Act gives the Assessing Officer the power to reopen a completed assessment if there is reason to believe that income has escaped assessment. However, this power comes with strict procedural safeguards. The AO cannot simply issue a notice at will. Before issuing the formal notice under Section 148 to the taxpayer, the AO must obtain prior written approval from a specified authority as prescribed under Section 151.

The Finance Act, 2021 completely overhauled this framework with effect from 1 April 2021. Under the amended Section 151, Parliament introduced a strict two-tier hierarchy of approving authorities based on the age of the case:

When Notice is Issued	Required Approving Authority	If Wrong Authority Approves
Within 3 years from end of Assessment Year	PCIT / CIT (Principal Commissioner)	Notice invalid — reassessment void
After 3 years from end of Assessment Year	PCCIT / CCIT (Principal Chief Commissioner)	Notice invalid — reassessment void

The logic behind this two-tier system is straightforward and taxpayer-protective: older cases involve greater disruption to a taxpayer who has already settled their affairs in good faith. Parliament therefore mandated that such cases be examined and approved by the most senior tax officers in the country — the Principal Chief Commissioners — who are expected to apply their minds more rigorously before allowing any disturbance to old settled assessments.

Additionally, the Finance Act, 2021 introduced a new pre-notice procedure under Section 148A. Before issuing a Section 148 notice, the AO must first issue a show-cause notice under Section 148A(b), give the taxpayer an opportunity to respond, and then pass a reasoned order under Section 148A(d) — which itself requires approval from the specified authority. In the Arihant Agrifoods case, both the Section 148A(d) order and the Section 148 notice were infected by the same fatal defect: approval from an officer not legally competent to grant it.

The Supreme Court of India, in Union of India v. Rajeev Bansal (2024), reaffirmed this strict framework, holding that compliance with Section 151 is mandatory and jurisdictional in character. Non-compliance renders the notice void ab initio — void from the very beginning, as if the notice was never issued at all. The tax demand that flows from such a void notice is equally void.

Conclusion by the Tribunal — and What It Means for You

The ITAT, Delhi Bench allowed the appeal of Arihant Agrifoods Private Limited in full and held as follows:

• The reassessment notice under Section 148, issued after three years from the end of AY 2017-18, required prior approval from the PCCIT under Section 151(ii) of the Income Tax Act, 1961.
• Approval was instead obtained from the PCIT — a lower-ranking authority not legally competent to grant such sanction for a case beyond three years.
• This was not a curable, technical defect. It was a jurisdictional error going to the very root of the AO’s authority to reopen the assessment. Section 292B could not save it.
• The notice under Section 148, the Section 148A(d) order, and all subsequent reassessment proceedings were declared void ab initio — null and of no legal effect whatsoever.
• The entire reassessment order, including all additions to income and tax demands raised by the AO, stood quashed. The taxpayer’s appeal was allowed.

This ruling carries a clear and urgent message for every taxpayer, business owner, or professional who has received or is contesting an income tax reassessment notice. Here is what you must check immediately:

Received a Reassessment Notice? Check These 3 Things Immediately: How old is the case? Find the Assessment Year in your notice. If the notice was issued more than three years after 31 March of that AY, the higher approval requirement under Section 151(ii) applies — and only a PCCIT or CCIT can lawfully approve it.Who approved the notice? The Section 148A(d) order will mention the designation of the approving officer. If only a PCIT or Commissioner has signed — not a PCCIT or Chief Commissioner — the notice may be legally invalid.Act quickly. There are strict timelines for filing appeals before the ITAT and for raising legal grounds. A valid ground not raised in time can be lost permanently. Consult a qualified CA immediately.

The Arihant Agrifoods judgment is part of a clear and growing judicial consensus. Courts and tribunals across India — from the Bombay High Court to the Delhi, Allahabad, and Punjab & Haryana High Courts — have consistently held that the mandatory approval hierarchy under Section 151 is a jurisdictional safeguard, not a mere administrative formality. Where it is violated, the reassessment falls — no matter how strong the department’s case might otherwise be on merits.

Reassessment is a powerful tool in the hands of the Income Tax Department. But with great power comes strict procedure. The law has deliberately placed senior gatekeepers — the Principal Chief Commissioners — as a filter to protect taxpayers from arbitrary or casual reopening of old settled matters. When the department bypasses these gatekeepers, the law hands taxpayers a complete and powerful remedy.

Know your rights. Check your notices. Act in time.