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2022 (3) TMI 1230 - AT - Income TaxReopening of assessment u/s 147 - absence of proper sanction u/s 151 - HELD THAT - It should be kept in mind that approval u/s. 151 of the Act is a power given to the higher officer (Addl. CIT/Joint CIT) in certain cases like that of the assessee in this cases is for granting approval to re-open the assessment of the assessee which is a valuable safeguard to check against any arbitrary exercise of power by ITO/AO. This safeguard given by the Parliament to the higher officer cannot be granted mechanically or in a ritualistic manner. Merely by scribbling approved or for argument sake even if the Ld. Addl. CIT has written I am satisfied with the reason so approval given . This standard of approval cannot satisfy the test as to whether the Addl. CIT has applied his mind or not before approval was granted. It is noted that even this kind of approvals given by the higher authorities as contended by the Ld. DR has been found not to satisfy the test as to whether the approving authority has applied its mind to the information received by the AO and to the reason recorded by the AO justifying the re-opening as held in UNITED ELECTRICAL CO. P. LTD. 2002 (10) TMI 86 - DELHI HIGH COURT and M/S S. GOYANKA LIME AND CHEMICALS LTD. 2015 (5) TMI 217 - MADHYA PRADESH HIGH COURT Therefore, in my opinion, approval granted by the Addl. CIT, Shillong Range has been done in a ritualistic manner mechanically without application of mind - the approval granted by the Addl. CIT is bad in law for non-application of mind. Therefore, the issuance of notice u/s. 148 by the AO without getting proper approval from the Addl. CIT as per section 151 being invalid, the action of the AO issuing notice u/s. 148 of the Act is without jurisdiction and, therefore, consequently framing of assessment order is bad in law and accordingly quashed. - Decided in favour of assessee.
Issues:
Challenge to reopening of assessment without proper sanction under section 151 of the Income Tax Act, 1961. Analysis: The appeals were filed against a common order of the Ld. CIT(A)-Shillong for the assessment years 2014-15 & 2015-16. The legal issue raised by the assessee was that the reopening of the assessment under section 147 of the Income Tax Act was invalid due to the absence of proper sanction under section 151 of the Act. The Ld. AR argued that the Addl. CIT's approval for reopening lacked proper application of mind, citing case laws to support the contention. The Ld. DR opposed this, stating that digital approval was given by the Addl. CIT, but the Ld. AR argued that such approval did not meet the required standard of application of mind. The AO had sought approval for reopening on 28.11.2017, which was granted the same day, and a notice was issued on the same date. The Tribunal noted that the approval process lacked proper scrutiny and application of mind, emphasizing that the approval under section 151 is a safeguard against arbitrary exercise of power by the AO. The Tribunal concluded that the approval granted was done mechanically, without proper consideration, rendering the notice issued without jurisdiction. Consequently, the assessment order was quashed, and both appeals of the assessee were allowed. The Tribunal emphasized that the approval under section 151 of the Act is a crucial safeguard against arbitrary exercise of power by the Assessing Officer. It noted that the approval process should involve a careful consideration of the reasons for reopening provided by the AO. The Tribunal highlighted that the approval granted in a ritualistic or mechanical manner, without proper application of mind, cannot be deemed valid. It referred to case laws to support the requirement for the approving authority to objectively assess the reasons for reopening before granting approval. The Tribunal found that the approval granted in this case did not meet the necessary standard of scrutiny and application of mind, leading to the conclusion that the reopening of the assessment was invalid due to the lack of proper approval. The Tribunal's decision was based on the principle that the approval under section 151 of the Income Tax Act should not be granted mechanically or in a ritualistic manner. It stressed the importance of the approving authority applying their mind to the reasons provided for reopening the assessment. The Tribunal found that the approval granted by the Addl. CIT in this case was devoid of proper scrutiny and lacked the required application of mind. Therefore, the Tribunal held that the approval was invalid, rendering the notice issued for reopening the assessment without jurisdiction. As a result, the Tribunal allowed the appeals of the assessee and quashed the assessment order dated 07.08.2018, emphasizing the necessity of a valid approval process under section 151 of the Act for reopening assessments.
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