Reassessment Proceedings Invalidated Due to Lack of Valid Approval from PCIT; Court Orders Parties to Follow Digital Order.

The HC set aside the notice dated 30.03.2018 and the order dated 06.12.2018 concerning reassessment proceedings under the Income Tax Act, 1961, due to the absence of valid satisfaction and approval from the PCIT. The Court found that the statutory requirements for approval were not met, as the PCIT's approval lacked proper application of mind and was not communicated to the petitioner. Consequently, the reassessment proceedings were deemed invalid, and the writ petition was disposed of, instructing parties to proceed based on the digitally signed order.

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Issues involved:
The issues involved in this case are the validity of the notice dated 30.03.2018 issued under Section 148 of the Income Tax Act, 1961 and the objection to the order dated 06.12.2018 regarding the commencement of reassessment proceedings without the approval of the specified authority.

Validity of Notice under Section 148:
The petitioner challenged the notice and order on the ground that the reassessment proceedings were initiated without the approval of the specified authority. The form required for initiating such proceedings must include reasons for reassessment and approval from the Principal Commissioner of Income Tax (PCIT). While the Additional Commissioner of Income Tax (ACIT) expressed satisfaction, the PCIT did not record any satisfaction or date, only providing a signature. The petitioner contended that there was no application of mind by the PCIT in deciding to commence reassessment proceedings.

Objections and Disposal of Petitioner's Plea:
The objections filed by the petitioner highlighted the mechanical recording of reasons without proper application of mind. The petitioner argued that the PCIT's approval was merely a signature without valid satisfaction, indicating a lack of proper assessment. The impugned order did not address the petitioner's concerns regarding the lack of application of mind by the PCIT in approving the reassessment proceedings. The petitioner emphasized the need for valid satisfaction by the PCIT before commencing such proceedings.

Counter-Affidavit and Missing Communication:
The respondent/revenue claimed that the PCIT had conveyed approval to the AO through a letter dated 30.03.2018. However, this communication was not provided to the petitioner, raising doubts about the validity of the approval process. Despite specific objections raised by the petitioner regarding the PCIT's lack of application of mind, the communication was not submitted with the counter-affidavit. The absence of this crucial communication raised questions about the approval process followed in initiating the reassessment proceedings.

Judgment and Conclusion:
The Court found that the approval granted by the statutory authorities was not furnished to the assessee along with the reasons to believe, as required by the Act. The absence of valid satisfaction from the PCIT and the failure to provide the communication regarding approval cast doubt on the legitimacy of the reassessment proceedings. Consequently, the Court set aside both the notice dated 30.03.2018 and the order dated 06.12.2018, concluding that they could not be sustained due to the lack of proper approval and application of mind. The writ petition was disposed of accordingly, with parties instructed to act based on the digitally signed copy of the order.

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