M/S. SHANKAR GAS & MFG. CO. PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 1834/DEL/2014Status: DisposedITAT Delhi09 May 2025AY 2003-04Bench: SHRI M. BALAGANESH (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the approval for reopening the assessment under Section 151 of the Act was granted mechanically, without proper application of mind by the Additional CIT. Similar approvals were previously held to be mechanical by various High Courts.

What were the facts?

The assessee's appeal arose from an order of the CIT(A) concerning an assessment passed under Section 143(3)/147 of the Income-tax Act for AY 2003-04. A preliminary issue raised was the validity of the assumption of jurisdiction under Section 147.

What were the issues?

Whether the reassessment proceedings were validly initiated due to a mechanical approval for assumption of jurisdiction under Section 151 of the Income-tax Act.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 151

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI

For Appellant: Shri Rishabh Ostwal, Adv, Shri Deepak Ostwal, CA, Shri Vishal Agarwal, Adv
For Respondent: Shri Sahil Kumar Bansal, Sr. DR
Hearing: 05/05/2025Pronounced: 09/05/2025

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2003-04, arises out of the order of the Commissioner of Income Tax (Appeals)-IX, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 171/10-11 dated 23.01.2014 against the order of assessment passed u/s 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 24.12.2010 by the Assessing Officer, ITO, Ward-6(3), New Delhi (hereinafter referred to as „ld. AO‟).

2.

This is a recalled matter. Though the assessee has raised several grounds of appeal, the preliminary issue raised thereon is challenging the validity of assumption of jurisdiction u/s 147 of the Act. We deem it fit to address this preliminary issue first.

3.

We have heard the rival submissions and perused the material available on record. On perusal of the reasons recorded for reopening the assessment, we find that the ld Addl. CIT had granted approval for reopening the assessment in terms of Section 151 of the Act in a mechanical manner. On perusal of the reasons recorded by the ld AO wherein the ld Addl. CIT had granted approval u/s 151 of the Act by merely stating that he is satisfied that this is fit case for reopening. This sort of approval granted u/s 151 of the Act was held to be approval granted without application of mind and construed as mechanical by the Hon‟ble Madhya Pradesh High Court in the case of CIT Vs. S. Goyenka Lime and Chemicals Ltd reported in 56 taxmann.com 390 (MP HC). The Special Leave Petition (SLP) filed by the revenue against this decision was dismissed by the Hon'ble Supreme Court reported in 64 taxmann.com 313. Further, we find that the Hon‟ble Jurisdictional High court in the case of PCIT Vs. NC Cables Ltd reported in 391 ITR 11 (Del) had also held the same, wherein, the approving authority had merely stated “approved” in the proforma while granting approval in terms of section 151 of the Act. This approval was held by the Hon‟ble Jurisdictional High court to be a mechanical approval. The relevant observation of the Hon‟ble Jurisdictional High Court in this regard are reproduced herein:-

11.

Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed.

12.

The substantial questions of law framed are answered in favour of the assessee and against the Revenue. The appeal is dismissed.” 4. Further, we find that identical reasons recorded in the case of sister concern of the assessee i.e. Maverick Electronics Pvt. Ltd case has been decided by this Tribunal in for AY 2003-04 dated 31.03.2017 wherein, the reassessment was quashed for approval being granted by the competent authority u/s 151 of the Act in a mechanical manner. The fact of the ld Addl. CIT having granted approval in a mechanical manner is writ large as some of the entries mentioned thereon pertain to different assessment years. Even this fact has not been noticed by the ld Addl. CIT while granting approval u/s 151 of the Act.

Respectfully following the aforesaid decisions, we hold that the 5. reopening has been made in the instant case by not taking approval u/s 151 of the Act from the competent authority in the manner known to law. Accordingly, the entire reassessment proceedings are hereby quashed. Hence, one of the legal grounds challenging the validity of assumption of jurisdiction u/s 147 of the Act is allowed in the above mentioned terms. Since the reassessment is quashed, the other legal grounds raised by the assessee as well as the grounds raised by the assessee on merits need not be adjudicated and they are left open.

6. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 09/05/2025.

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