Reopening under s.147 invalid; s.148A(d) order quashed where s.151 approval granted without application of mind

Bombay HC held the reopening under s.147 invalid and quashed the order issued under s.148A(d), finding the sanction/approval under s.151 was granted without application of mind. The court found a material discrepancy in the draft s.148A(d) order (attributed as a "typographical error") that would have been detected had the AO, Additional/Joint CIT or PCIT read the approval request and draft; their failure to do so vitiated the approval process. Decision in favour of the assessee.

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Issues involved:
The petition challenges an initial notice, an order, and a subsequent notice issued under different sections of the Income Tax Act, 1961 for the assessment year 2019-20.

Details of the Judgment:
1. The petitioner, a company that amalgamated with another company, filed its income tax return for the relevant year. Despite third parties booking transactions under the former PAN of the amalgamated company, the petitioner accounted for all transactions in its return. The petitioner received a notice under Section 148A(b) regarding certain transactions, to which it responded.

2. Despite the petitioner's explanation, an order was passed rejecting its objections and approving the issuance of a notice under Section 148 of the Act. The approval for the order was granted without proper application of mind, as noted in the petition. The approval mentioned the income that escaped assessment and the reasons for the belief, which were found inadequate upon review.

3. The Court found that the approval process lacked scrutiny, as the officers involved did not pay attention to the discrepancies in the application and draft order. The Court concluded that this lack of diligence warranted interference, leading to the quashing of the order under Section 148A(d) and the subsequent notice under Section 148 issued on the same day.

4. As a result, the petition was disposed of with no order as to costs, highlighting the Court's intervention due to the procedural lapses in the approval process.

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