ASHOKBHAI MANSUKHBHAI BHORANIYA,MORBI vs. ITO WARD 2(4), PORBANDAR, PORBANDAR

Ld. AO erred in law as well as on facts in not supplying all the material, statement, documents, satisfaction note and also copy of approval from the competent authority he relied upon for the purpose of reopening of the assessment. 3. Ld. AO erred in law as well as on facts in passing assessment order u/s. 147 of the Act, which is bad in law and without appropriate jurisdiction. 4. Ld. AO erred in law as well as on facts in assessing total income at ₹. 33,49,900/- as against total income of ₹. 17,92,420/- declared in the return of income. 5. Ld. AO erred in law as well as on facts in making addition of ₹ 15,57,480/- u/s. 69 r. w. s. 115BBE of the Act on account of alleged cash on-money payment for purchase of the properties in the project The Spire. 6. Ld. AO erred in law as well as on facts in making the addition without allowing an opportunity of cross-examination in respect of the addition made on the basis of the statement and material found from the third party. 7. Ld. AO erred in law as well as on facts in not conducting any inquiry and call for confirmation from the builder inspite of the fact that on similar facts in the case of other assessee the builder has furnished such confirmation to the department. 8. Ld. AO erred in law as well as on facts in ignoring the registered conveyance deed, which carries signature of buyer, seller as well as in accordance with the fair market value determined by the government. 9. Ld. AO erred in law as well as on facts in relying upon the information without conducting any independent inquiry.” 3. When the appeal was called out for hearing, Learned Counsel for the assessee, invited my attention towards the approval under section 151 of the Act, which is placed at page no. 109 of the paper-book and stated that approval u/s 151 of the Act was neither signed digitally nor manually by the Prescribed Income Tax Authority. Therefore, re-assessment proceedings initiated against the assessee should be quashed.

From the above approval document, under section 151 of the Income Tax Act 1961, it is vivid that there is no signature of the concerned authority, therefore, in the absence of signature by the concerned Authority, the above approval document, cannot be enforced in the eye of law. In order to create a legal document, the first and primary condition is that it should be signed by the concerned authority. We note that section 151 of the Act, mandates prior approval of the “specified authority” before issuing a notice under Section 148 for income escaping assessment. If the document granting approval lacks a manual or digital signature, it calls into question the authority's satisfaction. Physical signature is the traditional evidence of approval. In ITBA (Income Tax Business Application), digital approvals (like authenticated login-based approvals) may suffice legally if appropriately recorded. In the above approval note we find that there is neither physical signature nor digital signature of any Income tax authority. However, where no authentication or evidence of the approving authority's satisfaction is found (either digitally or physically), the approval may be deemed invalid. Absence of evidence showing application of mind or digital signature led to reassessment quashing, and consequently, the reassessment order framed by the assessing officer, based on the above approval should be quashed”. 10. Therefore, we note that an assessment order based on an unsigned approval under Section 151 may be quashed if, there is no evidence of digital or physical approval and there is no application of mind by the approving authority. Whenever a statute requires a particular act to be done in a particular manner and also lays down that failure to comply will have consequence. In the assessee`s case under consideration, it would be difficult to accept the argument ld.CIT-DR for the revenue that approval under section 151 of the Act is in accordance with law. That is, in our view, approval under section 151 of the Act, is not in accordance with law, as there is non-application of mind by the assessing officer, as well as, there is no physical or digital signature, on the said approval by the concerned authority, under section 151 of the Act. Article 265 of the Constitution of India lays down that, “No tax shall be levied or collected except by authority of law”. The Hon’ble Supreme Court of India has held that the this provision under Article 265 of the Constitution of India is applicable not only for levy but also for the collection of taxes and the expression “assessment” within its compass covers both the aspects carried out by the executive functionary. Chottabhai Vs. Union of India 1962 SCR Supl.2 1006. Therefore, it is required that whole of the process of taxation must follow the procedures which are valid under the law and must adhere to law i.e. substantive one as well as procedural one too. Therefore, in other words it is provided in the Constitution of India that every step should be taken to ensure that levy and collection of the taxes is strictly in accordance with law – not only substantive one but the procedural law, as well 11. We find that the order u/s 148A(d) of the Act and the notice u/s 148 of the Act are issued on 22/03/2023. It is stated in the order that the approval of specified authority has been obtained. However the same is silent as to which specified authority has given the approval. Also the notice u/s 148 of the Act is silent, as to from, which authority the approval was obtained by the assessing officer. However, the copy of approval u/s 151 of the Act, was provided to the assessee, dated 22/03/2023, which states that the approval of learned PCIT Ahmedabad-1, is obtained. With regards to the same it is stated by ld Counsel that the approval, so obtained is without application of mind and mechanical in nature also. The assessee`s case had been reopened by non-jurisdictional assessing officer not having international charge. Also the reopening is merely made on the basis of transaction value without quantifying the amount of income escapement. Further it is stated that the specified authority has merely stated that he is satisfied with the reasons and is convinced that the case is fit for the reopening without having tangible material on hand and merely by relying on third party information. The snap shot of para 22 from the approval is enclosed hereunder:

Our view is further fortified by the judgement of Co-ordinate Bench of ITAT Agra in the case of Shri Ghanshyam v. ITO (ITA No. 238/Agra/2018) (Agra ITAT), wherein it was held that section 151 of the Act provides a safeguard that the sword of section 147 of the Act may not be used unless the competent statutory officer is satisfied that the assessing officer has good and adequate reasons to invoke the reopening provisions. As per the mandate of section 151(2) of the Act, the Competent Authority has to examine the reasons, material or grounds on which the reopening is sought to be based and to judge as to whether they are sufficient and adequate to the formation of the necessary belief of escapement of income from taxation on the part of the assessing officer. It is, if and only if, the Competent Authority, after applying his mind, is of the opinion that the AO's belief is well reasoned and bona-fide, that he will accord his sanction thereon. Similarly, the Co-ordinate Bench of ITAT Delhi in the case of M/s. Virat Credit & Holdings Pvt. Ltd. (ITA No.89/Del./2012) (Delhi ITAT), held that from the approval recorded and words used that "Yes, I am satisfied.", it has proved on record that the sanction is merely mechanical and Addl.CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s 148 of the Act. 16. Therefore, we note that the sanction granted is mechanical and contrary to section 151 of the Act. Therefore, in the light of the aforesaid facts and circumstances of the case as discussed , we find that the approval under section 151 of the Act, is not in accordance with Law, therefore, the very assumption of jurisdiction to reassess the assessee`s income fails. Since the approval under section 151 of the Act, is bad in the law , as discussed above, therefore the assumption of jurisdiction by assessing officer to reopen assessee`s case is itself corum non judice and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed by assessing officer. Accordingly, we quash the reassessment order, under section 147 r.w.s.144C (13) of the Act, dated 25.12.2024. 17. As the reassessment itself is quashed, all other issues on technical grounds and on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous. 18.In the result, the appeal of the assessee is allowed.” 8. As the issue is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench of ITAT, Rajkot in the case of Dhanji Hirani v. ITO (Int. Taxn.) (supra), and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). I find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding decision of the Coordinate Bench (supra), I quash the reassessment proceedings.