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Issues: Whether the order under Section 148A(d) of the Income-tax Act, 1961 and the notice under Section 148 of the Income-tax Act, 1961 were liable to be quashed for mechanical approval under Section 151 of the Income-tax Act, 1961 without application of mind.
Analysis: The approval form recorded that the escapement amount was Rs. 4 lakhs and the proceedings were wrongly shown as falling under Section 149(1)(b) of the Income-tax Act, 1961, although the notice under Section 148A(b) was issued within three years and the matter, on its own showing, fell within Section 149(1)(a) of the Income-tax Act, 1961. The Court found that neither the officer seeking approval nor the Principal Commissioner granting approval had applied their mind to this obvious inconsistency. Since the alleged escapement was below the threshold for proceedings under Section 149(1)(b), and the approval was granted on an incorrect basis, the sanction process was held to be mechanical and invalid.
Conclusion: The order under Section 148A(d) of the Income-tax Act, 1961 and the notice under Section 148 of the Income-tax Act, 1961 were quashed and set aside in favour of the petitioner.
Ratio Decidendi: Approval for reassessment proceedings must be granted on a proper application of mind to the statutory preconditions and the record; a mechanical or erroneous sanction vitiates the consequential reassessment action.
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