Loading judgment…
Facts
The revenue filed an appeal with a delay of 390 days against the order of the CIT(A) which deleted an addition of Rs 2,50,00,000/-. The assessee challenged the reopening of the assessment, arguing that the approval under Section 151 of the Act was granted mechanically.
Held
The Tribunal held that the approval granted by the JCIT for reopening the assessment under Section 151 of the Act was mechanical and not based on due application of mind, citing precedents from the High Courts and Supreme Court. Consequently, the entire reassessment proceedings were quashed.
Key Issues
Whether the reassessment proceedings are valid when the approval under Section 151 of the Income Tax Act was granted mechanically without due application of mind.
Sections Cited
143(3), 147, 68, 151, 148, 27
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI BENCH “H”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI ANUBHAV SHARMA
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2008-09, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2022-23/1050736052(1) dated 14.03.2023 against the order of assessment passed u/s 143(3) r.w.s 147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.03.2016 by the Assessing Officer, ACIT, 26(2), Deli (hereinafter referred to as „ld. AO‟).
At the outset, there is a delay in filing of appeal by the revenue before us by 390 days. Considering the reasons adduced in the condonation petition supported by an affidavit, we are inclined to condone the delay and admit the appeal of the revenue for adjudication.
The only issue to be decided in this appeal of the revenue is as to whether the ld CIT(A) was justified in deleting the addition made in the sum of Rs 2,50,00,000/- u/s 68 of the Act in the facts and circumstances of the instant case. The assessee had filed a petition under Rule 27 of the ITAT Rules challenging the validity of reopening of assessment on various grounds. One such ground raised is that the approval u/s 151 of the Act was granted by the competent authority in a mechanical manner for reopening the assessment of the assessee for the year under consideration. We find that this issue goes to the root of the matter and accordingly, we deem it fit to take up the same first.
We have heard the rival submissions and perused the materials available on record. The assessee had filed its original return of income for the assessment year 2008-09 on 7-8-2008 declaring total income of Rs. 8,15,360/-. The assessment was sought to be reopened vide issuance of notice under section 148 of the Act on 30-3-2015. This notice was issued after obtaining approval under section 151 of the Act from the ld JCIT, Range 26, New Delhi.
The assessee is engaged in the business of manufacturing and trading of iron and steel i.e. C.R. sheet and H.R strips. The assessee filed a letter dated 24-04-2015 stating that the return originally filed by it on 7-8-2008 may be treated as a return in response to notice under section 148 of the Act. Thereafter, the assessee sought the copy of reasons recorded for reopening the assessment, which were duly furnished to the assessee on 9-11-2015. During the course of hearing, the approval papers under section 151 of the Act granted by the Learned JCIT, Range- 26, New Delhi was placed on record. On perusal of the proforma seeking approval u/s 151 of the Act, we find that the learned JCIT had merely stated that „Yes, it‟s a fit case for issue of notice u/s 148‟ 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. Goenka 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.
The substantial questions of law framed are answered in favour of the assessee and against the Revenue. The appeal is dismissed.”
Respectfully following the aforesaid decisions, we hold that the 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 in the Rule 27 Petition 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 in the Rule
27. Petition as well as the grounds raised by the revenue on merits need not be adjudicated and they are left open.
In the result, the appeal of the revenue is dismissed and Rule 27 Petition of the assessee is allowed.
Order pronounced in the open court on 17/04/2025.