Court quashes assessment reopening due to lack of approval & valid reasons

The court ruled in favor of the petitioner, quashing the impugned notice and order due to lack of proper approval and valid reasons for reopening the assessment under Section 147 of the Income Tax Act. The court emphasized the necessity of fresh approval for subsequent reasons and highlighted the failure to apply the mind in granting approval under Section 151. As the petition succeeded on these grounds, the court set aside the notice and order, disposing of the petition accordingly.

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Issues:
Impugning notice and order based on lack of reason to believe income escaped assessment under Section 147 of the Income Tax Act, 1961. Non-application of mind in granting approval under Section 151. Lack of fresh approval for subsequent reasons for reopening assessment.

Analysis:

1. The petitioner challenged a notice and order issued on the grounds that there was no reason to believe that income chargeable to tax had escaped assessment. The petitioner argued that the notice was invalid under Section 147 of the Income Tax Act as the reasons provided pertained to a different assessee. The petitioner contended that subsequent reasons were also not valid as they lacked fresh approval. The court noted the petitioner's submissions and directed the petitioner to annex a legible document during the proceedings.

2. The respondents failed to file a reply despite multiple extensions. The court found the excuse of the COVID-19 pandemic for the delay in filing the reply unacceptable, as sufficient time had passed for the respondents to respond. The court criticized the respondents for issuing unreasonable notices with short response times and for not granting adjournments during the lockdown period.

3. Upon reviewing the documents, the court found that the approval dated 30th March 2019 under Section 151 of the Income Tax Act was based on reasons pertaining to a different assessee. The court highlighted the lack of application of mind in granting the approval and noted that no fresh approval was provided for subsequent reasons given for reopening the assessment.

4. The court emphasized that under Section 151 of the Income Tax Act, a notice cannot be issued after four years from the end of the relevant assessment year without the satisfaction of the Principal Chief Commissioner or Commissioner. Since the only approval on file was based on reasons pertaining to another assessee, the court ruled in favor of the petitioner and quashed the impugned notice and order.

5. The court concluded that due to the lack of proper approval and valid reasons for reopening the assessment, the impugned notice and order were set aside. As the petition succeeded on this ground, the court did not express views on other grounds raised by the petitioner. The petition was disposed of accordingly.

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