Tribunal quashes reassessment for procedural flaws, emphasizes need for valid approval

The tribunal allowed the assessee to admit additional grounds challenging the impugned reopening action under section 148, citing relevant judgments. The tribunal found the initiation of proceedings void ab initio due to the AO's invalid premise and emphasized the necessity of proper approval under section 151. Scrutinizing the approval by the PCIT, the tribunal deemed it lacking proper application of mind. Consequently, the tribunal quashed the reassessment proceedings due to procedural flaws, without delving into the case's merits. The appeal was partly allowed, annulling the reassessment process.

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Issues involved:
1. Admission of additional grounds by the assessee.
2. Validity of impugned reopening action under section 148.
3. Validity of approval under section 151 of the Principal Commissioner of Income Tax (PCIT).
4. Legality of reassessment proceedings initiated by the Assessing Officer (AO).

Admission of additional grounds:
The assessee sought to admit additional grounds challenging the impugned reopening action under section 148. The assessee's counsel argued that these grounds were legal in nature and could be decided based on the existing record, citing relevant judgments. The Senior DR opposed the admission, but the tribunal allowed the additional grounds, following Supreme Court and High Court judgments, noting that they were crucial to the case.

Validity of impugned reopening action under section 148:
The AO initiated reassessment proceedings under section 147/148 based on the absence of PAN and alleged non-filing of the return for A.Y. 2009-10. However, the assessee had indeed filed the return on 30.09.2009, declaring capital gains. The tribunal found the AO's premise invalid, rendering the initiation of proceedings void ab initio. The tribunal emphasized the mandatory nature of the approval under section 151, highlighting that mechanical approval without proper consideration of facts and reasons rendered the reopening action flawed.

Validity of approval under section 151 of the PCIT:
The tribunal scrutinized the approval granted by the PCIT under section 151 and found it lacking proper application of mind. Merely putting a seal as an approving statement was deemed insufficient, as the approving authority must consider all relevant material and reasons before granting approval for reassessment proceedings. The tribunal concluded that the approval was given in a mechanical manner, without due diligence, further undermining the validity of the reassessment proceedings.

Legality of reassessment proceedings initiated by the AO:
Given the flaws in the impugned reopening action and the approval process, the tribunal quashed the entire reassessment proceedings, including the issuance of notice under section 148. Consequently, the tribunal did not delve into the merits of the case, as the grounds became academic after annulling the reassessment process. The appeal of the assessee was partly allowed, with the tribunal pronouncing the order on 06.03.2023.

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