2023 (8) TMI 1084 - HC - Income Tax

Reopening of assessment u/s 147 - mandation of approval obtained u/s 151 - HELD THAT - The mandatory sanction required u/s 151 issuing notice u/s 148 of the Act by A.O. is absent for a reason as in the approval copy u/s 151 made available to petitioner states Reasons to Believe - As per Annexure. But in the annexure it is only blank page. Therefore, there is no denial of the fact that the annexure did not contain any reasons. On this ground alone in our view the impugned notice and the order on objections have to be quashed and set aside. Reasons for re-opening is not there on the Website/Income Tax Portal. There is no reference to these reasons for re-opening in the affidavit in reply. Moreover, the Form for recording the reasons and obtaining approval indicates that the approval was given on 30th March 2021. It would only mean that either the Form was filled up on 30th March 2021 or earlier. But in the approval which is available on the Website/Income Tax Portal, an extract/copy whereof is annexed at Exhibit V to the petition shows approval is dated 31st March 2021 and date of proposal is also shown as 31st March 2021. We are not inclined to accept the submissions that there was proper reasons recorded based on which approval was obtained u/s 151 and that there was application of mind by the Additional Commissioner of Income Tax while according the approval. Decided in favour of assessee.

Summary

Issues:
The issues involved in the judgment are the validity of a notice issued under Section 148 of the Income Tax Act, 1961 and the rejection of objections to re-open the assessment.

Validity of Notice under Section 148:
The petitioner, an asset reconstruction company, had filed a return of income for Assessment Year 2017-18. The case was selected for scrutiny, and assessment was completed under Section 143(3) of the Act. Subsequently, the petitioner received a notice dated 31st March 2021 stating that the Assessing Officer had reasons to believe that income had escaped assessment for the said year. The petitioner raised concerns regarding the blank annexure in the approval copy provided, which led to doubts about the proper sanction required under Section 151 of the Act. The petitioner contended that the notice and subsequent proceedings were without jurisdiction and invalid in law due to the blank approval copy.

Validity of Approval and Application of Mind:
In response to the petitioner's claims, an affidavit stated that the annexure containing the reasons was not blank and that the reasons were provided to the petitioner later. However, during the hearing, it was revealed that the reasons for re-opening were not available on the Income Tax Portal, raising doubts about the approval process. Discrepancies were noted between the dates on the Form for recording reasons and the approval date available online. The court concluded that there was a lack of proper reasons recorded and application of mind by the Additional Commissioner of Income Tax in granting approval under Section 151 of the Act.

Judgment:
The court found that the absence of reasons in the annexure was a crucial factor leading to the quashing of the notice and the order on objections. Additionally, the court rejected the submissions regarding the proper recording of reasons and application of mind by the Additional Commissioner of Income Tax. Consequently, the petition was allowed, and the impugned notice dated 31st March 2021 and the order dated 11th March 2022 were quashed as being without jurisdiction, illegal, and bad in law. The petition was disposed of accordingly.