2022 (3) TMI 789 - HC - Income Tax

Validity of reopening of assessment u/s 147 - Valid sanction granted under Section 151 or not? - HELD THAT - The sanction granted under Section 151 of the Act was on the basis of incorrect information provided to them. At the same time, if Mr. Ashish Pophare and Ms. Irina Garg had read the reasons submitted alongwith the form, they would have certainly found out the error. We have to also note that in the reasons for reopening, there is no mention about the assessment of petitioner having been completed under Section 153A read with Section 143(3) of the Act. In form 151, the amount mentioned as income originally assessed is ₹ 6,01,66,964/-, whereas income originally assessed was ₹ 11,11,34,621/-. We are also of the opinion that the Additional CIT and Principal CIT, viz., Mr. Ashish V. Pophare and Ms. Irina Garg, have mechanically accorded permission. We are of the opinion that even if only these two officials had read the report carefully alongwith the reasons recorded, this admitted error would not have crept in. The important safeguards provided in Sections 147 and 151 were lightly treated by the Officers This Court in German Remedies Limited V/s. Deputy Commissioner of Income Tax. 2005 (10) TMI 76 - BOMBAY HIGH COURT has held that while granting approval it was obligatory on the part of the Commissioner to verify whether there was any failure on the part of the assessee to disclose full and true relevant facts in the return of income filed for the assessment of income of that assessment year. It was also obligatory on the part of the Commissioner to consider whether or not power to reopen is being invoked properly. In our view, the approval granted suffers from non application of mind. The notice issued under Section 148 of the Act is required to be quashed and set aside - Decided in favour of assessee.

Summary

Issues:
Impugning a notice for Assessment Year 2012-2013 issued under Section 148 of the Income Tax Act, 1961 and an order on objections filed for reopening the assessment.

Analysis:
In the judgment, the High Court of Bombay addressed the issue of errors in the notice dated 31st March 2019 for Assessment Year 2012-2013 issued under Section 148 of the Income Tax Act, 1961 and the order on objections filed by the petitioner for reopening the assessment. The court highlighted that errors were present in the form for reopening, specifically in Column No. 8 and 9, which were considered to be bonafide mistakes by the officers involved. However, the court emphasized that the officers who signed the Form for re-opening should have filed the affidavit instead of a third party not involved at the relevant time. The court directed the concerned officers to explain the basis on which the reopening was approved despite the errors in the form. The officers, Mr. Trilochan Singh Khalsa, Mr. Ashok Pophare, and Ms. Irina Garg, were required to file affidavits within three weeks from the date of the order.

The court further examined the affidavits filed by the officers, where they admitted the mistakes in the form submitted for approval under Section 151 of the Act. The officers sought condonation for the inadvertent errors and emphasized that the approval was granted based on the reasons recorded. The court noted discrepancies in the amount mentioned in the form for income originally assessed and the actual income originally assessed, highlighting lapses in the approval process. The court criticized the Additional CIT and Principal CIT for mechanically according permission without scrutinizing the reasons for reopening, indicating a lack of proper application of mind.

Moreover, the court referred to previous judgments to emphasize the importance of verifying full and true relevant facts before granting approval for reopening assessments. The court concluded that the approval granted in this case suffered from a lack of application of mind, leading to the quashing and setting aside of the notice dated 31st March 2019 issued under Section 148 of the Act. The petitions were disposed of accordingly, with the court allowing similar petitions with almost identical facts based on the decision in the main petition. The court did not make any comments on the possibility of issuing a fresh notice under Section 148 of the Act, leaving it open for the Revenue to take appropriate action within the legal framework.