2020 (2) TMI 715 - AT - Income Tax

Reassessment proceedings quashed for lack of proper approval and recording reasons

The Tribunal quashed the reassessment proceedings due to a mechanical approval under Section 151 and the notice under Section 148 being issued without ... Reopening of assessment u/s 147 - default approval granted by the Addl. CIT - approval u/s. 151 of the Act before issuing the notice u/s. 148 - HELD THAT:- Reopening in the case of the assessee for the asstt. Year in dispute is bad in law and therefore the same is quashed. Aforesaid view is fortified by the following decisions including in the case of Dharmender Kumar vs. ITO 2019 (10) TMI 736 - ITAT DELHI] as held CIT is required to apply his mind to the proposal put up to him for approval in the light to eh material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. CIT before granting the approval Aapproval granted by the Addl. CIT, Range-45, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 of the I.T. Act, 1961 and is not in accordance with section 151 of the I.T. Act, 1961, thus, the notice issued u/s. 148 of the Act is invalid and accordingly the reopening in this case is bad in law and therefore, the same is hereby quashed. Accordingly, this legal ground raised by the assessee’s is allowed. Issues Involved:1. Validity of approval under Section 151 of the Income Tax Act before issuing notice under Section 148.2. Sufficiency of material for initiation of proceedings under Section 147.3. Whether the assessment should have been made under Section 153C instead of Section 148.4. Mechanical approval for reopening of assessment.Detailed Analysis:1. Validity of Approval under Section 151:The assessee contended that the approval under Section 151 was obtained after the issuance of the notice under Section 148, making the notice invalid. The Assessing Officer (AO) claimed that the approval was obtained on the same day as the notice issuance, and the date discrepancy was a typographical error. However, the Tribunal found that the reasons for reopening were recorded on 30.03.2015, after the notice was issued on 27.03.2015, making the notice illegal and bad in law. The Tribunal noted that the approval was given mechanically without proper application of mind, rendering the reassessment proceedings invalid.2. Sufficiency of Material for Initiation of Proceedings under Section 147:The assessee argued that there was no material on record for the AO to initiate proceedings under Section 147. The AO had relied on seized documents and statements from a search conducted at Santosh Medical College, which indicated unaccounted payments by the assessee. The Tribunal upheld that the AO had sufficient material and reason to believe that income had escaped assessment, citing judgments that sufficiency of reasons is not justiciable, only the existence of belief can be challenged.3. Assessment under Section 153C vs. Section 148:The assessee argued that the assessment should have been made under Section 153C, not Section 148. The Tribunal noted that the provisions of Section 153C apply when seized documents belong to a person other than the one searched. Since the documents in question did not belong to the assessee but to Santosh Medical College, the Tribunal found no merit in this argument. The Tribunal concluded that the AO correctly initiated proceedings under Section 148.4. Mechanical Approval for Reopening of Assessment:The Tribunal highlighted that the approval for issuing notice under Section 148 was given in a mechanical manner without proper application of mind. Citing precedents, the Tribunal emphasized that such mechanical approvals are not sustainable in law. The Tribunal quashed the reassessment order on this ground, noting that the approval was not in accordance with Section 151.Conclusion:The Tribunal quashed the reassessment proceedings on the grounds that the approval under Section 151 was mechanical and without application of mind, and the notice under Section 148 was issued without proper recording of reasons. Consequently, the appeal filed by the assessee was allowed, and other grounds were deemed academic and not adjudicated. The order was pronounced on 13-02-2020.