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Facts
The assessee filed its return of income for AY 2006-07, which was later re-opened under Section 147 based on information received regarding accommodation entries. The Assessing Officer made an addition of Rs. 80,80,000/-. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal admitted an additional ground raised by the assessee regarding the mechanical manner in which the re-opening of the assessment was approved by the Addl. CIT. Following precedent from the Supreme Court and coordinate benches, the Tribunal held that the approval was mechanical and thus the reassessment proceedings were bad in law.
Key Issues
Whether the reassessment proceedings initiated are invalid due to mechanical approval for re-opening by the revenue authorities.
Sections Cited
147, 143(3), 148
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SH. S. RIFAUR RAHMAN & SH. SUDHIR KUMAR
06/01/2026 Date of hearing: 09/01/2026 Date of Pronouncement: ORDER
PER SUDHIR KUMAR, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-31 New Delhi, [hereinafter referred to as “CIT(A)”], vide order dated 27.10.2020 pertaining to A.Y. 2006-07 arising out of the assessment order dated 28-03-2014 passed by the Assessing Officer under Section 147/143(3) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’].
The assessee filed the application to admit the additional ground in which he stated that various grounds were raised by the assessee in this appeal but inadvertently ground relating to the approval obtained by the ld. Assessing Officer to re-open the case of the assessee from the learned Addl. CIT Range-8 New Delhi in a manner mechanical manner has not been taken. This is a legal ground which can be taken at any stage. Reliance is placed the case of National Thermal Power Corporation Ltd. vs. CIT 229 ITR 383 (SC). Heard, because the additional ground raised
by assessee is purely legal, therefore, we admit the additional ground for adjudication. The additional grounds raised by the assessee is follow: “That the Hon’ble Commissioner of Income Tax Appeals) while sustaining the addition of Rs.80,80,000/- have failed to appreciate the fact that the reasons have been recorded by the learned Assessing officer only on the basis of information received from Investigation Wing without any independent application of mind and that the approval have also been given by the Addl. CIT range -8 new Delhi in a mechanical manner.”
3. The brief facts of the case are that the assessee filed its return of income at Rs.4,83,598/- on 30-11-2006. The case was re-opened u/s 147 of the Act on the basis of the information received from DIT (Inv) New Delhi that the accommodation entries were received by the assessee, and notice u/s 148 of the Act was served on the assessee on 10-12-2013.After considering the submission submitted by the assessee the Assessing officer completed the assessment after making the addition of Rs.80,80,000/-.
Aggrieved by the order of the AO the assessee filed the appeal before the Ld.CIT(A), who vide his order dated 27-10-2020 dismissed the appeal against which the assessee is in appeal before the Tribunal.
The Ld. AR has submitted that the ld. Assessing officer recorded the reason only on the basis of information received from Investigating wing without any independent application of mind and the approval was also granted by the Addl. CIT,. Range -8 New Delhi in a mechanical manner. Reliance is placed on the following decisions: (i) In the case of ITO vs. Virat Credit & Holdings Pvt. Ltd. the co-ordinate bench in para no 12 held that “ Apparently, 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.”
(ii) In the case of CIT vs. Goyanka Lime & Chemical Ltd. (2015) 64 taxmann.com 313 (SC) the Hon’ble Supreme Court examined the identical issue as to according the sanction for reopening the assessment u/s 148 of the Act by merely recording “Yes. I am satisfied” and held that re-opening on the basis of mechanical sanction is invalid. (iii) Signature Hotels Pvt. Ltd. v. ITO 338 ITR 0051 (Delhi) (iv) Chiranjiv Lal vs. ITO 54 ITR (Trib) -349 (Amritsar) (v) Sh. Kishan Chand Madan v. Income Tax officer ward-68(1) New Delhi 7. Ld. Authorized Representative of the Revenue relied upon the orders of the below authorities. She submitted that the approval was granted in a prescribed manner after perusing the material. She also submitted that there is no prescribed preforma to grant the approval.
We have heard the revival contention of the parties and gone through the material available on record. We find that in the instant case approval was granted in a mechanical manner, therefore following the decision of the Hon’ble Supreme Court and Coordinate Bench, we hold that the approval granted in this case is a mechanical approval and the re-assessment proceedings initiated based on such approval is bad in law. Therefore, we allowed the additional ground raised
by the assessee and quash the reassessment accordingly. Because the legal issue is adjudicated in favour of the assessee, the other issues need not to be adjudicated upon.
9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 09.01.2026.