Madras High Court Quashes Income Tax Reassessment Notices Issued Beyond 3-Year Limitation Without Mandatory Approval From Higher Authority Under Section 148 Of Income Tax Act
Isabella Mariam
The High Court of Judicature at Madras, Single Bench of Justice C. Saravanan held that under the new reassessment regime of the Income Tax Act, a notice under Section 148 issued after the expiry of three years requires prior approval from a higher authority such as the Principal Chief Commissioner of Income Tax or the Principal Director General. In a common order disposing of multiple writ petitions concerning reassessment and penalty proceedings under the National Faceless Assessment Centre, the Court ruled that notices issued without obtaining such approval are invalid. The Bench also directed the Registry to correct an administrative error by substituting a draft order that had been mistakenly uploaded on the court’s website with the final signed judgment dated September 15, 2025, confirming that the latter represents the operative decision.
The batch of writ petitions concerned reassessment proceedings initiated for the Assessment Years 2016–2017, 2017–2018, and 2018–2019. The petitioner challenged the assessment orders issued under Section 147 following notices under Section 148 of the Income Tax Act and also questioned penalty notices issued under Sections 271(1)(c), 271AAC (1), and 272A(1)(d). The prayers across petitions sought quashing of the assessment orders and the corresponding penalty notices.
The petitioner asserted that notices were issued beyond the permissible time limits prescribed under the law and allegedly without proper statutory sanction as mandated after the amendments that came into effect on 01.04.2021. The petitioner also highlighted issues relating to digital signatures appearing on earlier orders and contended that the orders lacked jurisdiction. It was further stated that revised procedural steps under Section 148A were not adhered to in the manner contemplated under the amended regime.
On the other hand, the respondents argued that the assessments were validly initiated. They submitted that discrepancies in the initial digital signature did not invalidate the proceedings since a subsequent order under Section 148A(d) bore a proper signature. They also contended that the petitioner had an alternative remedy of appeal under the Act. The respondents relied on precedent from the Supreme Court and High Courts to support their position and argued that the writ petitions were not maintainable.
The dispute ultimately revolved around whether the notices issued under Section 148 were permissible in law in view of the amended requirements, particularly the need for prior approval from the designated authority under Section 151(ii) and adherence to time limitations under Section 149. The petitions required examination of whether the authorities had complied with statutory mandates applicable for reopening assessments during the relevant period.
The Court recorded that “the dispute in these Writ Petitions pertains to the Assessment Years 2016–2017 to 2018–2019” and noted that the “entire ecosystem for the assessment/reassessment under the Act was altered with effect from 01.04.2021 in view of the amendments made to the provisions of the Act.”
It stated that prior to the amendments, “a Notice under Section 148 of the Act could be issued in the circumstances specified therein, which had to ultimately culminate in an Assessment/Reassessment Order under Section 147 of the Act.” The Court further observed that an assessee could file a return after issuance of such a notice and seek the reasons for reopening following the precedent in GKN Driveshafts.
The Court recorded that after 01.04.2021 the procedure changed. It noted that “under the new regime… a notice under Section 148A(b)… has to be issued… [and] has to culminate in an order under Section 148A(d) of the Act… [before] a notice under Section 148 of the Act can be issued.” The Bench stated the layered structure introduced by the statute and the requirement for compliance with each stage.
On the issue of sanction, the Court observed that “three years from the end of the Assessment Year 2016–2017, 2017–2018 and 2018–2019 to issue Section 148 Notice under the new regime had already expired” and that notices were issued only on 29.07.2022. It stated that they were issued “with approval from Principal Commissioner instead of approval from the Principal Chief Commissioner… as in force for the period in dispute.”
The Court recorded that although this did not automatically vitiate the proceedings, the statute required that “before issuing notice under Section 148 of the Act, [the officer] ought to have obtained sanction from Principal Chief Commissioner of Income Tax or the Principal Director General… under Section 151(ii) of the Act.”
It then noted that “since sanction was obtained only from Principal Commissioner of Income Tax, and since more than 3 years have lapsed, the Notices issued under Section 148 of the Act and orders passed thereafter and the notices issued under Section 271(1)(c) are liable to be set aside.”
The Court held that the defect required reopening of the entire process and recorded its determination to remit the matter for fresh initiation in accordance with the statute applicable after 01.04.2021.
The Court directed that “the impugned assessment orders and the penalty notices are set aside and the cases are remitted back to the Respondents to re-do the exercise after the stage of issuance of Order under Section 148A(d) for issuing Notice under Section 148 of the Act under the new regime with effect from 01.04.2021, after obtaining necessary approval from the Specified Authority as is contemplated under Section 151(ii) of the Act read with Section 149(1)(b) of the Act.”
“In case such an approval is granted… the proceedings shall thereafter be continued” and required that “this exercise shall be completed… within a period of 6 months from the date of receipt of the copy of this Order.”
“These Writ Petitions are disposed of with the above observations. No costs. Connected Miscellaneous Petitions are closed.”
Advocates Representing The Parties
For the Petitioner: Mr. T. Antony Arulraj
For the Respondents: Mr. S. Ravi Kumar, Senior Standing Counsel
Case Title: D. Tamilselvi v. Income Tax Officer & National Faceless Assessment Centre
Case Numbers: W.P.(MD) Nos. 30938, 30939, 30940 of 2024 and 5328, 5329, 5330 of 2025
Bench: Justice C. Saravanan
