2023 (12) TMI 872 - AT - Income Tax

Tax officer's mechanical approval without proper examination invalidates assessment reopening under section 147

ITAT Kolkata quashed the reopening of assessment u/s 147, ruling that approval u/s 151 was granted mechanically without application of mind by Addl. CIT. ... Validity of Reopening of assessment u/s 147 - as argued approval u/s 151 was mechanically accorded and that too without application of mind - addition u/s 68 on the ground that the assessee has received the said sum from two parties which remained unexplained - HELD THAT:- Approval has been granted in a mechanical manner without application of mind and is therefore, against the spirit of the Act in which this mechanism has been provided that approval has to be taken u/s 151 of the Act by the competent authority so that a settled assessment is not unsettled in a casual manner. The competent authority after going through the proposal of the AO if finds the proposal cogent and plausible, only then the approval is to be granted but in the present case, Addl. CIT, Range-4, Kolkata has just signed the proforma placed before him without any application of mind. The said re-opening of assessment on the basis of the approval granted by Addl. CIT, Range-4, Kolkata vide approval dated 30.03.2015 is therefore, not as per the provisions of the Act and cannot be sustained. The case of the assessee finds support from the decision of Ajay Trading Company [2023 (2) TMI 263 - ITAT KOLKATA] Thus approval granted without application of mind and in a mechanical manner would render the reopening of assessment as void and invalid. Accordingly, we quash the reopening of assessment. Decided in favour of assessee. Issues Involved:1. Legality of reopening the assessment under Section 147 of the Income Tax Act.2. Validity of the approval granted under Section 151 of the Income Tax Act.Summary:Issue 1: Legality of Reopening the Assessment under Section 147 of the Income Tax ActThe assessee filed the return of income on 30.09.2008 declaring a loss of Rs. 6,207/-, which was processed under Section 143(1) of the Act on 27.08.2009. The case was reopened under Section 147 by issuing a notice under Section 148 on 31.03.2015. The assessment was made after adding Rs. 7 Lakh under Section 68 of the Act, which remained unexplained. The appeal of the assessee was dismissed by the Ld. CIT(A) ex-parte. The Tribunal noted that the reopening of the assessment was based on approval granted by the Addl. CIT, Range-4, Kolkata, which was done mechanically without application of mind. The Tribunal held that such mechanical approval is against the spirit of the Act, and the reassessment proceedings were quashed.Issue 2: Validity of the Approval Granted under Section 151 of the Income Tax ActThe Tribunal observed that the approval under Section 151 was granted by merely signing the proforma without any remarks or application of mind. The Tribunal cited the case of Ajay Trading Company vs. ACIT, where similar mechanical approval was deemed invalid. The Tribunal also referred to various judicial pronouncements, including the Hon'ble Calcutta High Court in Harish Gangji Dedhiya and the Hon'ble Delhi High Court in N.C. Cables Ltd., which held that approval granted without application of mind renders the reopening of assessment void. The Tribunal concluded that the reassessment proceedings and the consequent assessment order were invalid due to the lack of proper approval under Section 151.Conclusion:The Tribunal quashed the reopening of the assessment and the consequent assessment order due to the invalid approval granted under Section 151. The appeal filed by the assessee was allowed.