“approval under section 151”
The decision most relied on for approval under section 151 is CIT v. S. Goyanka Lime & Chemical Ltd. (64 Taxmann.com 313), cited in 340 judgments on BharatTax.
Leading authorities on approval under section 151
A mechanical approval by the prescribed authority under Section 151, made without independent application of mind, vitiates and renders the entire reassessment proceedings invalid. Such approvals, often indicated by brief, unreasoned endorsements, lead to the quashing of the reopening of assessment.
A notice issued under section 148 of the Income Tax Act is invalid if the Income Tax Department fails to follow the prescribed procedures, including obtaining the necessary approvals under section 151 or adhering to the faceless assessment scheme mandates under section 151A.
A sanction for issuing a notice under section 148 is invalid if the sanctioning authority grants approval mechanically, merely recording 'Yes, I am satisfied' without proper application of mind to the reasons for reassessment. The authority must demonstrate proper consideration to fulfill the statutory obligation under section 151.
The approval required from a higher authority under section 153D of the Income Tax Act is an administrative act, not a quasi-judicial one. Consequently, an opportunity of hearing is not required to be given to the assessee at the stage of obtaining such approval, provided the approving authority is competent.
Reassessment proceedings under Section 147 are invalid if the sanction required under Section 151 is obtained mechanically, without independent application of mind by the sanctioning authority, or is based on borrowed satisfaction.
Sanction under Section 151 granted in a mechanical manner, without application of mind, vitiates reassessment proceedings under Sections 147 and 148. The court also laid down guidelines for the Revenue to follow when reopening assessments, emphasizing the need to provide reasons and approval documentation to the assessee.
Approval for assessment orders requires proper and thorough scrutiny and application of mind by the approving authority, involving an enquiry and judicial approach.
To initiate reassessment under Section 147/148, the Income Tax Officer must have an honest and reasonable 'reason to believe' that income has escaped assessment, based on cogent grounds and not mere suspicion. Reassessment is invalid if based only on a lack of analysis during the original assessment without new material.
