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Facts
The assessee's return was processed, and subsequently, the case was reopened under Section 147 read with Section 148 of the Income Tax Act. The primary issue raised by the assessee was the invalidity of the reopening due to a mechanical approval by the Principal Commissioner of Income Tax (PCIT).
Held
The Tribunal held that the approval granted by the PCIT for reopening the assessment was mechanical and lacked the required independent application of mind, rendering the reassessment proceedings and the impugned notice invalid. Consequently, the addition made by the Assessing Officer was set aside.
Key Issues
Validity of reassessment proceedings initiated under Section 147/148 due to the alleged mechanical and non-application of mind by the sanctioning authority (PCIT) while granting approval.
Sections Cited
147, 148, 143(3), 151, 68
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 27.08.2025 for the AY 2012-13.
At the time of hearing, the assessee raised additional ground which is extracted below:
“(a) That the impugned reassessment order dated 17.12.2019 passed u/s. 143(3) read with section 147 of the act that in the case of the assessee for the reassessment year 2012-13 is without jurisdiction, illegal, invalid and bad in law. The reassessment proceedings were wrongly initiated vide notice dated 14.03.2019 u/s. 148 and that the mandatory approval of the sanctioning authority i.e. the principal commissioner of income tax as required to be obtained u/s. 151 of the act is invalid. (b) That the sanctioning authority i.e. the principal commissioner of income tax has not applied his mind while granting an approval and therefore the approval accorded by the
The facts in brief are that the assessee filed the original return of income on 30.09.2012, declaring total income at ₹30,37,680/- after claiming deduction under Chapter VIA of ₹1,85,000/-. The return was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 14.03.2019, by the ld. AO which was complied with by the assessee by filing the return of income on 28.06.2019. Thereafter, the statutory notices were duly issued and served upon the assessee which were partly complied with by the assessee. Finally, the ld. AO made the
In the appellate proceedings, the ld. CIT (A) dismissed the legal issue of invalid reopening of assessment u/s 147 read with section 148 of the Act thereby upholding the re-opening of assessment.
The ld. AR vehemently submitted before us that the reopening of assessment u/s 147 read with section 148 of the Act has been made by the ld. AO without any application of mind and also without there being any valid approval given by the competent authority. The ld. AR submitted that the approval granted u/s 148 of the Income-tax Act, 1961 by the ld. PCIT, Central-2, Kolkata, wherein in para 13 it has been stated in the approval status as ‘yes, I am satisfied, may be reopened’. The ld. Counsel for the assessee submitted that such mechanical approval by the ld. PCIT, Central-2, Kolkata, is invalid as the same is mechanical and is without application of mind and recording of objective satisfaction by the PCIT. In order to buttress his arguments, the ld. AR relied on the decision of Hon'ble Delhi High Court in case of Capital Broadways Pvt. Ltd. Vs. ITO in WP(C) 4303/ 2017 dated 03.10.2024, wherein the Hon'ble court has decided the similar issue by holding that mere mechanical manner of approval is not valid and the reopening made based upon that said approval is bad in law.
The ld. DR on the other hand submitted that this is a system of the department involving the administrative hierarchy where the files are moved for the approval with all details , notings and explanation. The ld. DR argued that it is only after going through the same, the higher ups use to grant the approval/ sanction on the same. Accordingly, in this case also when the file was put up before the ld. PCIT, the said authority granted the approval after perusing the detailed notings and
After hearing the rival contentions and perusing the materials available on record, we find that the sanction by the ld. PCIT is mechanical and without application of mind . For the sake of ready reference we extract the approval granted by the ld. PCIT as under:-
7.2. The case of the assessee is squarely covered by the decision of Hon'ble Apex Court in the case of Income-tax Officer vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC)[30-03-1976], wherein it has been held that where the sanction is required for initiating certain proceeding and after expiry of four years, such sanction must be recorded after independent consideration of materials and reasons. The sanctioning authority cannot merely rubber-stamp the proposal of the ld. Assessing Officer.
7.3. Similarly in case of Commissioner of Income-tax-5, Mumbai vs. Jet Airways (I) Ltd. [2010] 195 Taxman 117 (Bombay)/[2011] 331 ITR 236 (Bombay)/[2011] 239 CTR 183 (Bombay)[12-04-2010], held that sanction accorded by the Commissioner must show independent application of mind.
7.4. Similarly, in case of Principal Commissioner of Income-tax-6 vs. Meenakshi Overseas (P.) Ltd. [2017] 82 taxmann.com 300
7.5. Similarly, the approval has been granted in a mechanical manner, wherein it was only mentioned in the approval status as approved. In our opinion, in the case of the assessee, such an approval is mechanical approval and cannot be considered as valid approval. In our opinion, the PCIT has to record the reasons and the satisfaction for having granted such approval. In our opinion, the reopening of assessment on the basis of said approval is bad in law. Case of the assessee find force from the decision of Capital Broadways Pvt. Ltd. Vs. ITO (supra), wherein Hon'ble HC has held that the approval granted by the ld. PCIT by just using the words like ‘yes, I am satisfied’ will not satisfied the requirement of law and accordingly, the notice was set aside. The operative part of the decision is extracted below:-
“10. Section 151(1) of the Act categorically provides that no notice shall be issued under Section 148 by the Assessing Officer, after expiry of period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Commissioner or Principal Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. In the present case, since reopening was beyond the period of four years, it was for the PCIT to record satisfaction for reopening the assessment. In the case of SBC Minerals Pvt. Ltd. vs. Assistant Commissioner of Income Tax Circle 22(2), Delhi, WP (C) 7885/2023, we had clearly held that prescribed authority referred to in Section 151 must be "satisfied" on the reasons recorded by the Assessing Officer that it is a fit case for the Judicial Forums , quash the notice issued u/s 148 of the Act as well
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17.02.2026.