ITAT upholds quashing of reassessment proceedings due to invalid Section 151 approval and failure to dispose objections under Section 148

ITAT Delhi dismissed revenue's appeal challenging CIT(A)'s order quashing reassessment proceedings u/s 147. The court held that ACIT's approval u/s 151 was invalid as he merely wrote "approved" without recording satisfaction or applying mind to AO's proposal, violating mandatory requirements per United Electrical Co. precedent. Additionally, AO failed to dispose of assessee's objections to reopening through separate order as mandated by GK Driveshaft SC judgment. The reassessment notice u/s 148 and consequent order were annulled for non-compliance with statutory provisions.

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Issues involved: Appeal filed by revenue against CIT(A)'s order, validity of reassessment proceedings, compliance with provisions of section 151 of the Act, disposal of objections raised by appellant, satisfaction of JCIT, and adherence to Supreme Court's judgment in GKN Driveshaft case.

Validity of reassessment proceedings: The revenue contended that CIT(A) erred in annulling the assessment order, arguing that the AO had obtained approval from the Addl. CIT and recorded detailed reasons for reassessment. However, the appellant argued that the AO did not verify or examine the information before initiating reassessment and that the JCIT's approval under section 151 was not valid as it lacked proper satisfaction. The CIT(A) found in favor of the appellant, noting that the JCIT did not record satisfaction as required by law, rendering the notice u/s 148 invalid.

Compliance with section 151 of the Act: The CIT(A) highlighted that the AO did not follow the mandatory procedure laid down by the Supreme Court in the GKN Driveshaft case. The Addl. CIT's mere approval without proper satisfaction was deemed insufficient, as per statutory provisions. The CIT(A) referenced previous judgments emphasizing the duty of the approving authority to apply their mind and not grant approval casually. The failure to record satisfaction rendered the notice u/s 148 invalid.

Disposal of objections raised by appellant: The appellant raised objections to the reassessment, citing non-compliance with the Supreme Court's directive in the GKN Driveshaft case. The CIT(A) observed that the AO did not dispose of the objections separately but incorporated them into the assessment order. This failure to follow the prescribed procedure led the CIT(A) to conclude that the reassessment order was passed without due consideration of the appellant's objections.

Judgment: The CIT(A) upheld the appellant's contentions, annulling the reassessment proceedings and consequent order due to the invalidity of the notice u/s 148 and the failure to comply with section 151 of the Act and the Supreme Court's directives in the GKN Driveshaft case. The tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to quash the reassessment proceedings. The merits of the revenue's grounds were left unadjudicated, and the appeal was ultimately dismissed on 08/05/2023.

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