2016 (3) TMI 1377 - AT - Income Tax

Validity of reopening of the assessment u/s 148 - valid approval accorded u/s 151 - As per assessee the approval for reopening of the assessment to the Assessing Officer was granted by the JCIT without stating the reasons and without application of his mind - HELD THAT - It is not in dispute that the approval by the JCIT given to the reasons recorded by the Assessing Officer for reopening of the assessment for the Assessment Year 2006-07 was by writing below the reasons yes I agree‟, there was no set out of brief reasons by the JCIT as to why he agreed with the reasons of reopening as stated by the Assessing Officer. Therefore, the approval granted by the JCIT for reopening of the assessment for the Assessment Year 2006-07 was not valid under sec. 151 of the Act. Hence, we quash the issue of notice under sec. 148 of the Act by the Assessing Officer for reopening of the assessment under sec. 148 of the Act and consequently, the assessment order passed, pursuant to such notice, is bad in law and hence, the same is annulled. - Decided in favour of assessee.

Summary

Issues: Validity of reopening of assessment under sec. 148 of the Act

In this case, the assessee challenged the validity of the reopening of the assessment under sec. 148 of the Act. The Authorized Representative of the assessee argued that the approval for reopening was granted by the JCIT without stating reasons or applying his mind, making the reopening bad in law. He cited precedents where mechanical approvals were deemed unsustainable. The Departmental Representative supported the lower authorities' order. The Tribunal found that the approval by the JCIT merely stating "yes I agree" without setting out brief reasons was not valid under sec. 151 of the Act. Consequently, the notice under sec. 148 for reopening the assessment was quashed, rendering the assessment order invalid. As a result, the appeal challenging the additions made by the Assessing Officer on merits became irrelevant and was not adjudicated. The appeal of the assessee was allowed, annulling the assessment order.

This judgment highlights the importance of the sanctioning authority providing brief reasons for approval in reopening assessments under sec. 148 of the Act. The decision emphasizes that mechanical approvals without proper application of mind are unsustainable, following precedents where similar approvals were deemed invalid. The Tribunal's ruling serves as a reminder that the approval process for reopening assessments must involve a meaningful consideration of the reasons presented by the Assessing Officer to ensure compliance with the provisions of the Act.