2018 (2) TMI 1962 - HC - Income Tax

Reopening of assessment u/s 147 - Petitioners grievance is that the sanction granted by the Jt. Commissioner of Income Tax u/s 151(2) was a mechanical sanction without due application of mind - HELD THAT - Issue of proper sanction goes to the root of the issue of jurisdiction. Therefore it can be raised at any time. So far as the second objection of the Revenue that the statement that the proviso to Section 147of the Act is applicable is an inadvertent error and it does not affect the merits of the case cannot be accepted. This in view of the fact that whether or not the Jt. CIT had applied his mind to the reasons recorded by the Assessing Officer while granting sanction or just mechanically granted it can only be inferred from surrounding circumstances. This is more particularly in cases like this where sanction is accorded by the sanctioning authority without giving separate reasons. Therefore whether there was due application of mind or mechanical grant of sanction is evident from the surrounding circumstances such as overlooking the reliance upon the proviso when it is clearly inapplicable to in the facts of the case. In the above view prima facie the sanction appears to be without due application of mind on the part of the sanctioning authority. Therefore in the above view the impugned notice prima facie is without jurisdiction.

Summary

Issues:
Challenge to notice seeking to reopen assessment for Assessment Year 2013-14 under Section 148 of the Income Tax Act, 1961 based on mechanical sanction without due application of mind.

Analysis:
The petition challenges a notice issued under Section 148 of the Income Tax Act, 1961 seeking to reopen assessment for Assessment Year 2013-14, contending that the sanction granted by the Joint Commissioner of Income Tax under Section 151(2) was mechanical without due application of mind. The petitioners argue that the proforma used for seeking approval specifically mentioned the inapplicable proviso to Section 147 of the Act, indicating a lack of proper consideration. The petitioner relies on a previous court decision to support their claim of non-application of mind by the sanctioning authority.

The Revenue's counsel acknowledges the applicability of the previous court decision but raises objections to granting interim relief. The Revenue argues that the petitioner did not raise the objection regarding the sanction during the initial objections filed with the Assessing Officer. Additionally, the Revenue claims that the mention of the proviso to Section 147 in the sanction application was an inadvertent error and does not impact the case's merits. However, the court rejects these objections, stating that the issue of proper sanction is fundamental to jurisdiction and can be raised at any time. The court emphasizes that the lack of due application of mind by the sanctioning authority can be inferred from surrounding circumstances, such as overlooking the inapplicable proviso, especially when no separate reasons were provided for the sanction.

The court concludes that the sanction appears to be without due application of mind, rendering the impugned notice prima facie without jurisdiction. Consequently, an interim stay is granted, and the case is scheduled for further hearing along with another related matter. The decision highlights the importance of proper consideration and application of mind by the sanctioning authority in granting approvals for reopening assessments under the Income Tax Act to ensure jurisdictional validity.