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TMI Blog2024 (11) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... al granted u/s 151 - In this case, the approval was granted from the assessment of another person and merely recorded the reason as yes , proceeded to approve the same mechanically. Hence we are inclined to allow the ground raised by the assessee and held to be initiation of proceeding itself is bad in law and accordingly, the assessment made in the case of the assessee is set aside. In the result, appeal filed by the assessee is allowed. - S. Rifaur Rahman, Accountant Member And Shri Sudhir Pareek, Judicial Member For the Assessee : Shri Gautam Jain, Advocate, Shri Lalit Mohan, CA, Shri Parth Singhal, Advocate For the Revenue : Shri Dharm Veer Singh, CIT DR. ORDER PER S.RIFAUR RAHMAN, AM: 1. These cross appeals are filed by the assessee and Revenue against the order of ld. Commissioner of Income-tax Appeals-27, New Delhi (hereinafter referred to Ld. CIT (A) ) dated 19.07.2022 for AY 2016-17. 2. In the Department s appeal, at the time of hearing, ld. DR for the Revenue brought to our notice page 3 of the assessment order and submitted that the assessment was reopened based on the information received from ITO, Ward 47 (4) that Shri Shambhu Dayal Sharma who was indulged in providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les. Accordingly, he directed to sustain the addition of Rs. 22,24,752/-. Ld. AR objected to the above said notional addition made by the ld. CIT (A) when the assessee s result was accepted by the Revenue wherein both purchases and sales were forming part of the return of income declared by the assessee. Accordingly, he supported the observations of the ld. CIT (A) and objected to the addition of notional profit. 4. Coming to the assessee s appeal on jurisdictional issue on approval granted u/s 151 of the Act. In this regard, ld. AR brought to our notice page 27 and 37 of the paper book wherein approval form for granting approval u/s 151 is placed on regard as per which Assessing Officer has forwarded the form on 26.03.2019 and ld. JCIT has approved the same merely recording Yes in the allotted column. Ld. AR submitted that the approval granted u/s 151 is mechanical without applying the mind. In this regard, he relied on the decision of Hon ble Delhi High Court in the case of Vinod Kumar Solanki vs. ACIT in WP (C) 4196/2022 order dated 14.08.2024 which is placed at page 150 of the paper book. He specifically brought to our notice page 155 of the paper book wherein Hon ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Asstt. CIT [2016] 67 taxmann.com 339/238 Taxman 423/383 ITR 597, the mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted under section 151 (2) when the reasons on the basis on the basis of which sanction was sought could not be assailed and even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires. The decision in United Electrical Co. Pvt. Ltd. (supra), as relied upon by the petitioner is distinguishable from the present case, as in the said case, there was no material on record to provide foundation for Assessing Officer's reasons to believe. Therefore, it was held that the recording of the satisfaction by the AO was unjustified and without independent application of mind. However, there is no requirement to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the AO. Similarly, in Virbhadra Singh v. Deputy Commissioner Circle Shimla [2017] 88 taxmann.com 888 (HP) where the competent authority was in agreement with the reasons assigned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval must not be made in a mechanical manner, however, as noted by the Division Bench of the Hon'ble Calcutta High Court in Prem Chand Shaw (Jaiswal) vs. ACIT 383 ITR 597, the mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted under section 151 (2) when the reasons on the basis on the basis of which sanction was sought could not be assailed and even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires. Para 40. Similar view has been expressed by the Hon'ble High Court of Delhi in the case Experion Developers Pvt. Ltd. Vs. ACIT 115 Taxman 338. 4.3 As argued during the course of hearing, it is evident from the page No. 37 of Paper Book filed by the assessee that the satisfaction has been recorded by the Approving Authority i.e. Joint CIT on 26.03.2019 by making following noting/remark in the prescribed pro-forma. Yes, I agree with the reasons recorded by AO. In my considered view it is a fit case for the issue of notice u/s 148 of the Income Tax Act, 1961. (Emphasis supplied) The above noting has been made by the approving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd (supra) and Pioneer Town Planners P Ltd (supra), wherein the issue of reasons recorded by mentioning the words, Yes, I am Satisfied . In which the Hon ble Delhi High Court has decided the issue in favour of the revenue. 8. After considering the submissions of both sides, we observe that the decision relied by the assessee in the case of Vinod Kumar Solanki (supra) is pronounced on 14.08.2024 in which the similar issue of approval was considered and decided in favour of the assessee by considering the earlier decision which are also relied by the ld DR. It is also fact that the decisions relied by the ld DR were decided prior and also considered the similar views by the Hon ble High Court on the issue raised by the assessee before us. Therefore, we are bound to follow the recent decision of the Hon ble Court and accordingly, we are inclined to decide the issue of mechanical approval that too merely recording as yes . For the sake of brevity, the decision of the High Court is reproduced below: 18. We note that dealing with an identical challenge of approval having been accorded mechanically and without due application of mind had arisen for our consideration in the case of Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to approval by the Board leaves much to be desired. It is a case where literally a mere stamp is affixed. It is signed by an Under Secretary underneath a stamped Yes against the column which queried as to whether the approval of the Board had been taken. Rubber stamping of underlying material is hardly a process which can get the imprimatur of this court as it suggests that the decision has been taken in a mechanical manner. Even if the reasoning set out by the Income-tax Officer was to be agreed upon, the least which is expected is that an appropriate endorsement is made in this behalf setting out brief reasons . Reasons are the link between the material placed on record and the conclusion reached by an authority in respect of an issue, since they help in discerning the manner in which conclusion is reached by the concerned authority. Our opinion is fortified by the decision of the apex court in Union of India v. M. L. Capoor, AIR 1974 SC 87, 97 wherein it was observed as under: 27.. .. We find considerable force in the submission made on behalf of the respondents that the 'rubber stamp' reason given mechanically for the supersession of each officer does not amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would only amount to endorsement of language used in Section 151 of the Act and would not reflect any independent application of mind. Thus, the same was considered to be flawed in law. 21. The salient aspect which emerges out of the foregoing discussion is that the satisfaction arrived at by the prescribed authority under Section 151 of the Act must be clearly discernible from the expression used at the time of affixing its signature while according approval for reassessment under Section 148 of the Act. The said approval cannot be granted in a mechanical manner as it acts as a linkage between the facts considered and conclusion reached. In the instant case, merely appending the phrase Yes does not appropriately align with the mandate of Section 151 of the Act as it fails to set out any degree of satisfaction, much less an unassailable satisfaction, for the said purpose. 22. So far as the decision relied upon the Revenue in the case of Meenakshi Overseas Pvt. Ltd. is concerned, the same was a case where the satisfaction was specifically appended in the proforma in Yes, I am satisfied . Moreover, paragraph 16 of-terms of the phrase the said decision distinguishes the approval gran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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