9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (5) TMI 207 - AT - Income TaxValidity of assumption of jurisdiction u/s 147 - approval granted u/s 151 was held to be approval granted without application of mind and construed as mechanical - HELD THAT - A consolidated approval has been granted by the competent authority u/s 151 for reopening the assessment. It can been seen from the approval issued by ACIT a consolidated approval for multiple Assessees was issued for several Assessment Years in total 15 Assessment Years. The said consolidated approval states duly approved after recording satisfaction u/s 151 r.w.148 of the Act . There is not even mentioning of satisfied . Such approval granted u/s 151 was held to be approval granted without application of mind and construed as mechanical in the case of CIT Vs. S. Goyenka Lime and Chemicals Ltd 2015 (5) TMI 217 - MADHYA PRADESH HIGH COURT Special Leave Petition (SLP) filed by the revenue against the order in the case of S. Goyenka Lime and Chemicals Ltd has been dismissed by the Hon ble Supreme Court 2015 (12) TMI 1334 - SC ORDER . Further we find that in the case of PCIT Vs. NC Cables Ltd 2017 (1) TMI 1036 - DELHI HIGH COURT had also laid down the similar law wherein the approving authority had merely stated approved in the proforma while granting approval in terms of section 151 of the Act. Thus approval was held by the Hon ble Jurisdictional High court to be a mechanical approval. Thus 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 - Decided in favour of assessee.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Validity of Reopening under Section 147 read with Section 151 of the Income Tax Act Relevant legal framework and precedents: Section 147 of the Income Tax Act authorizes reopening of assessment if the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. However, for reopening assessments beyond four years, prior approval of the competent authority is mandated under Section 151 of the Act. The approval must be based on recorded satisfaction after application of mind, not a mere mechanical or formal endorsement. Precedents relied upon include the Madhya Pradesh High Court ruling in CIT Vs. S. Goyenka Lime and Chemicals Ltd (56 taxmann.com 390), where a consolidated approval without individual application of mind was held to be mechanical and invalid. The Supreme Court dismissed the Revenue's Special Leave Petition against this decision (64 taxmann.com 313), thereby affirming the principle. Additionally, the Delhi High Court in PCIT Vs. NC Cables Ltd (391 ITR 11) held that mere notation of "approved" without recording satisfaction or reasons amounted to a mechanical approval and was insufficient to validate reopening. Court's interpretation and reasoning: The Tribunal examined the approval dated 25-26/03/2021 issued by the Additional Commissioner of Income Tax under Section 151, which was a consolidated approval covering multiple assessees and assessment years. The approval stated only "duly approved after recording satisfaction u/s 151 r.w.148 of the Act" but did not specifically record satisfaction or reasons in the case of the present assessee. The Tribunal noted that such generalized and consolidated approval without case-specific satisfaction is akin to the mechanical approvals condemned by the High Courts and Supreme Court in the cited precedents. Key evidence and findings: The approval document itself was a crucial piece of evidence. The absence of any detailed or case-specific satisfaction recorded by the competent authority was determinative. The Tribunal also noted that the Assessing Officer passed the reassessment order under Section 144 read with Section 147 on 28/03/2022, relying on this approval. Application of law to facts: Applying the legal principles requiring genuine application of mind and recording of satisfaction under Section 151, the Tribunal found the approval to be deficient and invalid. Consequently, the reopening of assessment under Section 147 was held to be invalid as it was predicated on an improper approval. Treatment of competing arguments: The Revenue's contention that a consolidated approval sufficed was rejected in light of binding judicial precedents emphasizing the need for case-specific satisfaction. The Tribunal did not find any merit in the Revenue's arguments to uphold the reopening. Conclusions: The reopening of assessment was invalid due to absence of valid approval under Section 151. The reassessment proceedings were quashed on this ground. Merits of the Addition and Other Grounds Raised by the Assessee The Assessee had challenged the merits of the addition of Rs. 58,00,000/- made on account of unexplained investment in a plot of land. However, since the Tribunal quashed the reassessment proceedings on the threshold issue of invalid reopening, it did not adjudicate on these merits. The Tribunal left these grounds open for future consideration if necessary. 3. SIGNIFICANT HOLDINGS The Tribunal succinctly held:
It reaffirmed the principle that:
The Tribunal concluded that the approval in the present case was "ritualistic and formal rather than meaningful," rendering the reopening invalid. Final determination on the primary issue was that the reopening of assessment under Section 147 was invalid due to defective approval under Section 151, and therefore, the reassessment order was quashed. Consequently, the appeal filed by the Assessee was allowed.
|
