2023 (9) TMI 1547 - HC - Income Tax

Validity of reassessment proceedings - invalid/mechanical grant of approval from the Competent Authority - HELD THAT - Having perused the approval Form, it is quite obvious that the person seeking the approval has not applied his mind and the PCIT granting approval also has not applied her mind. This is because the time limit for current proceedings should be covered u/s 149(1)(a) that is for less than three years because the assessment year is 2019-2020 and the notice u/s 148A(b) is dated 29th March 2023. But in the Form, in row 9, it is mentioned as u/s. 149(1)(b) for more than 3 years but not more than 10 years . If that had been even noticed by the PCIT or the officer seeking the approval, certainly the notice could not have been issued because the quantum, which has escaped assessment, is only Rs.4 lakhs. U/s 149(1)(b) of the Act no notice can be issued if the amount is less than Rs.50 lakhs. Further, if Section 149(1)(b) of the Act is applicable, then the approval could be granted only by the Principal Chief Commissioner and not Principal Commissioner as in this case. Therefore, in our view, the application for approval and the grant of approval have all been made by the officers mechanically and without application of mind. There is not even an attempt to explain in the affidavit in reply as to how this error has been committed. We are of the opinion that if only the PCIT had read the Form for approval carefully, she would not have come to the conclusion that there is any material to treat it as a fit case to issue notice under Section 148 or pass order under Section 148A(d) of the Act. Decided in favour of assesse.

Summary

The Bombay High Court quashed an order and notice issued under the Income Tax Act due to mechanical approval without proper consideration, as the amount involved did not meet the threshold for issuing the notice. The court found that the approval was granted without applying the mind, and therefore set aside the order and notice. The court did not address other grounds raised by the petitioner.