2025 (9) TMI 1732 - AT - Income Tax

Reopening of assessment challenged where sanction referenced an omitted provision, resulting in quashing of reassessment for mechanical sanction

Challenge to validity of reopening where sanction for issuing notice referenced an omitted statutory provision resulted in finding that the sanction was ... Revision u/s 263 - Validity of reopening of assessment for want of sanction granted under section 151 - Counsel has submitted that sanction has been granted in mechanical manner and for that it is submitted that while granting sanction u/s 151 of the Act, reference has been made to deleted/omitted section 147(b) of the Act, which is no more in statute. HELD THAT:- We find that the assessee had sought for copy of documents in regard to the assessment and the assessee was provided the copy of the approval obtained u/s 151 of the Act for issuance of notice u/s 148 of the Act dated 29.03.2019 from ITO, Ward-2(2), Meerut and the relevant copy of the order sheet for the same. Considering the same, we find that it is a Performa, wherein, at Sr. No.7, under the column “whether the provisions of section 147(a) or 147(b) are applicable or both,” the Assessing Officer has mentioned that the provisions of section 147(b) are applicable and on that basis, the JCIT, Range-II and the competent authority PCIT, Meerut have granted sanction. As decided in Naveen Kumar Gupta [2025 (7) TMI 1094 - ITAT DELHI] held it could be seen that question No.7 specifically mandate the ld. AO to mention whether the provisions of Section 147(a) or 147 (b) or both the sections are applicable. In response thereto, the ld. AO had mentioned only 147(b). We find that the provisions of Section 147(b) has been omitted from the statute book long back and was certainly not in force for A.Y. 2010-11. We find that the ld. CIT(A) without looking into these facts had accorded a mechanical approval without due application of mind. Consequently, the appeal is allowed, the impugned assessment order and consequential order u/s 263 of the Act, are both quashed. Issues: (i) Whether in an appeal against an order passed under section 263 of the Income-tax Act, 1961 the assessee can challenge the validity and jurisdictional soundness of the original assessment/re-assessment order under sections 143(3)/147; (ii) Whether the sanction granted under section 151 of the Income-tax Act, 1961 was mechanically or defectively granted (including reference to omitted section 147(b)) and whether such defect vitiates the re-opening and consequent revision under section 263.Issue (i): Whether the validity of the original assessment/re-assessment order under sections 143(3)/147 can be examined in appellate proceedings challenging an order under section 263 of the Income-tax Act, 1961.Analysis: The Tribunal reviewed precedent holding that jurisdictional defects in a primary assessment order may be examined in collateral proceedings to determine whether subsequent proceedings (including revision under section 263) stand on a valid legal foundation. Authority was considered that a decree or order without jurisdiction is null and may be challenged whenever it is relied upon; analogous principles apply to revenue proceedings including reassessment. The Tribunal followed coordinate-bench decisions permitting examination of jurisdictional validity of the assessment/reassessment while deciding a challenge to the section 263 order.Conclusion: The Tribunal held that the assessee is entitled to challenge the validity of the order passed under sections 143(3)/147 in appellate proceedings against the order passed under section 263; such validity can be examined for determining the maintainability of the section 263 revision.Issue (ii): Whether the sanction under section 151 was mechanical/defective (reference to omitted section 147(b) and absence of date) and whether that vitiates the reopening and consequent order under section 263.Analysis: The Tribunal examined the sanction form and related material showing that the sanction referred to a deleted provision (section 147(b)) and that the approval proforma contained defects including absence of date. The Tribunal relied on coordinate-bench precedents which held that an assessment which is void or where sanction is found to be mechanical/cryptic cannot form a valid basis for revision under section 263. The Tribunal accepted that defects in sanction and the non-est status of the reassessment/order rendered the subsequent section 263 proceedings unsustainable.Conclusion: The Tribunal concluded that the sanction under section 151 was defective and that the impugned assessment/reassessment order and the consequential order under section 263 were vitiated; both orders are to be quashed in favour of the assessee.Final Conclusion: The appellate relief granted results in quashing of the impugned assessment/reassessment order and the consequent revision under section 263, thereby upholding the assessee's challenge to the jurisdictional validity and defective sanction; the appeal is allowed.Ratio Decidendi: Where an original assessment or reassessment order is void for want of jurisdiction or the sanction authorising reopening is mechanically granted or otherwise defective, such order cannot sustain collateral revision under section 263 and may be quashed on challenge in appellate proceedings.