2024 (3) TMI 1082 - HC - Income Tax

Validity of reopening of assessment u/s 147 - Default in sanction/approval u/s 151 as obtained and granted without application of mind - Petitioner claimed that despite certain transactions being booked under the PAN of erstwhile company (amalgamated company) due to an error they had correctly considered all transactions in their return. - HELD THAT - The draft of the order u/s 148A(d) states that income has escaped assessment within the meaning of provision of Section 147 of the Act and the same is required to be examined. If the AO who had sought the approval the Additional/Joint CIT who had recommended grant of approval and the PCIT who granted the approval had only bothered to read the request for approval along with draft of the order under Section 148A(d) of the Act they would have certainly noticed the discrepancies. It is therefore clear that none of these officers have even bothered to read the request for approval or draft of the order. In the affidavit in reply it is mentioned as a typographical error. We are not inclined to accept this explanation because a typographical error could have been committed by the AO who was seeking the approval but if only the Additional/Joint CIT or the PCIT had read the approval application and the draft of the order to be issued under Section 148A(d) of the Act they would have certainly noticed the discrepancy and they should have either refused approval or sent the application back to the AO for filing correct form for approval. We hereby quash and set aside the order under Clause (d) of Section 148A - Decided in favour of assessee.

Summary

Issues involved:
The petition challenges an initial notice, an order, and a subsequent notice issued under different sections of the Income Tax Act, 1961 for the assessment year 2019-20.

Details of the Judgment:
1. The petitioner, a company that amalgamated with another company, filed its income tax return for the relevant year. Despite third parties booking transactions under the former PAN of the amalgamated company, the petitioner accounted for all transactions in its return. The petitioner received a notice under Section 148A(b) regarding certain transactions, to which it responded.

2. Despite the petitioner's explanation, an order was passed rejecting its objections and approving the issuance of a notice under Section 148 of the Act. The approval for the order was granted without proper application of mind, as noted in the petition. The approval mentioned the income that escaped assessment and the reasons for the belief, which were found inadequate upon review.

3. The Court found that the approval process lacked scrutiny, as the officers involved did not pay attention to the discrepancies in the application and draft order. The Court concluded that this lack of diligence warranted interference, leading to the quashing of the order under Section 148A(d) and the subsequent notice under Section 148 issued on the same day.

4. As a result, the petition was disposed of with no order as to costs, highlighting the Court's intervention due to the procedural lapses in the approval process.