2025 (7) TMI 1117 - AT - Income Tax

PCIT's mechanical approval under Section 151 without proper examination renders Section 148 reopening invalid and quashed

The ITAT Delhi quashed the reopening of assessment under Section 148 of the Income Tax Act. The tribunal found that the PCIT's approval under Section 151 ... Reopening of assessment - Validity of approval granted by the PCIT u/s 151 for reopening of assessment - HELD THAT:- Upon perusal of the proforma under Section 151 of the Act dated 28.03.2019 particularly the last page of the said proforma wherein the noting made by the PCIT to this effect “Yes I am satisfied on the reasons recorded by the AO that it is a fit case for issue notice under Section 148 of the Act”; admittedly appears to be mechanical. It does not reveal as to which material, information, documents and other aspects has been gone through and examined by the said authority for reach to the satisfaction for granting approval u/s151 of the Act giving license to the AO to reopen the assessment u/s 148. In that view of the matter in our considered opinion the reopening in the case of the assessee before us in dispute is palpably bad in law and, therefore, liable to be quashed. Assessee appeal allowed. ISSUES: Whether the notice issued under Section 148 of the Income Tax Act, 1961 is valid or bad in law, without jurisdiction and barred by limitation.Whether the reassessment proceedings initiated under Sections 147 to 151 of the Income Tax Act, 1961 comply with statutory requirements or are contrary to the provisions of the Act.Whether the assessment order is liable to be quashed for non-issuance of statutory notice under Section 143(2) of the Income Tax Act, 1961.Whether the approval granted under Section 151 of the Income Tax Act, 1961 for reopening the assessment is valid or a mechanical approval without application of mind. RULINGS / HOLDINGS: The notice under Section 148 was found to be invalid as the approval under Section 151 was 'evidently mechanical in nature' and 'without application of mind,' rendering the reassessment proceedings void-ab-initio.The reassessment proceedings initiated under Sections 147 to 151 of the Act are quashed because the statutory approval required under Section 151 was not validly granted, and thus the entire reopening is 'palpably bad in law.'The assessment order is liable to be quashed due to non-issuance of statutory notice under Section 143(2) of the Act after the return was filed in response to the Section 148 notice.The approval under Section 151 must be based on proper examination of 'material, information, documents and other aspects,' and a mere mechanical approval without such examination is invalid. RATIONALE: The Court applied the statutory framework of Sections 143(2), 147, 148, and 151 of the Income Tax Act, 1961, emphasizing that reopening of assessment requires valid approval under Section 151 based on application of mind and satisfaction on recorded reasons.The Court relied on precedents establishing that legal grounds challenging jurisdiction and validity of notices can be raised at any stage, including judgments affirming that mechanical or non-application of mind approvals under Section 151 are invalid.The Court noted that the approval under Section 151 must reflect a considered satisfaction by the Principal Commissioner of Income Tax, supported by examination of relevant material, which was absent in the present case.The Court referenced multiple coordinate bench decisions and High Court rulings reinforcing the principle that mechanical approvals without application of mind render reassessment proceedings void.