2024 (3) TMI 1125 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - validity sanction u/s 151 - as argued approval has been applied for and granted mechanically - HELD THAT - As stated that in the notice the transaction value was taken gross and subsequently it was seen that there were duplicate entries which were corrected while passing the order dated 19th April 2023. The notice issued does not contain any duplicate entries. If there were duplicate entries, the AO was duty bound to issue clarification in the order and also give details of what were those duplicate entries. AO should have come clean on the error made. Therefore, if only the PCCIT or the other officers had bothered to see the records and had really applied their mind to the same, these errors would not have crept in. This displays total non-application of mind by all those persons who have endorsed their approval for issuance of notice u/s 148 of the Act. With great regret, we have to mention that these approvals are being granted mechanically and without application of mind and this is not the only matter. Innumerable orders passed u/s 148A(d) of the Act are being set aside in view of the approval being granted without application of mind. Officer should realize that this is also delaying assessment/ reassessment proceedings and is also affecting the revenue of the nation. We find that the approval has been granted in a most casual manner. The power vested in the Authorities u/s 151 to grant or not to grant approval to the AO to reopen the assessment is coupled with a duty. The Authorities were duty bound to apply their mind to the proposal put up for approval in the light of material relied upon by the AO. That power cannot be exercised casually on a routine perfunctory manner. The important safeguards provided in Section 147 and 151 were treated lightly by the officers. While recommending and granting approval it was obligatory on the part of the officers to verify whether there was any genuine material to suggest escapement of income. It was obligatory on all the Authorities and PCCIT in particular to consider whether or not power to reopen is being invoked properly. We are of the opinion that if only the Authorities had read the record carefully, they would never have come to the conclusion that this is a fit case for issuance of notice u/s 148 of the Act. They would have either told the AO to correct the figures in Column 7 or would have sent the papers back for reconsideration. These officers have substituted the form for substance. We, therefore, quash and set aside the impugned order passed u/s 148A(d) of the Act. The consequent notice issued u/s 148 of the Act also is also quashed and set aside.

Summary

Issues: Impugning a notice under Section 148A(b) of the Income Tax Act, an order under Section 148A(d), and a notice under Section 148 on various grounds. Challenge regarding the sanction granted under Section 151 without proper application of mind by all officers involved.

Summary:

1. The petitioner contested a notice under Section 148A(b) of the Income Tax Act, an order under Section 148A(d), and a notice under Section 148, citing various grounds. One key contention was the lack of proper application of mind in granting sanction under Section 151 by all officers involved.

2. The petitioner argued that the approval for the order under Section 148A(d) was granted mechanically without due consideration. Discrepancies in the amounts mentioned in different documents raised concerns about the approval process. The Court agreed that the approval lacked proper scrutiny and was granted without adequate assessment.

3. The Principal Chief Commissioner of Income Tax stated that the approval was based on a careful consideration of the available material. However, the discrepancy in the amounts indicated a lack of thorough review. The Court highlighted that errors like duplicate entries were not properly addressed, indicating a lack of diligence in the approval process.

4. The Court found that the approval process was flawed, leading to the quashing of the impugned order under Section 148A(d) and the consequent notice issued under Section 148. The judgment emphasized the importance of officers applying their minds diligently to prevent such errors and delays in assessment proceedings.

5. As a result, the impugned order dated 19th April 2023 under Section 148A(d) and the corresponding notice under Section 148 were set aside. The petition was disposed of without any costs imposed.

6. A copy of the order was directed to be sent to the Revenue Secretary for information and necessary action, urging remedial measures to prevent such casual behavior in the future.