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of <h1>Reopening of assessment under section 147 invalidated where approval under section 151 was mechanical; reassessment quashed.</h1> Reopening of assessment under section 147 was challenged on the ground that approval under section 151 was granted mechanically without independent ... Reopening of assessment u/s 147 - validity of approval u/s 151 as granted mechanically - non independent application of mind - reliance on shared information related to the Assessee in accordance to the CBDT OM dated 12-1-24 issued by Directorate (Investigation)-III /264 as an outcome of a search action u/s 132 which were conducted at various office and residential premises of third party - HELD THAT:- On perusal of the proforma seeking approval u/s 151 find that the Learned PCIT had merely stated that considering the reasons recorded by the Learned JAO and recommendations of the Range Head, it is a fit case for reopening. This sort of approval granted u/s 151 of the Act was held to be approval granted without application of mind and construed as mechanical in the case of CIT Vs. S. Goyenka Lime and Chemicals Ltd [2015 (5) TMI 217 - MADHYA PRADESH HIGH COURT]. The Special Leave Petition (SLP) filed by the revenue against this decision was dismissed by the Hon'ble Supreme Court [2015 (12) TMI 1334 - SC ORDER] Also in the case of PCIT Vs. NC Cables Ltd [2017 (1) TMI 1036 - DELHI HIGH COURT] had also held the same, wherein, the approving authority had merely stated “approved” in the proforma while granting approval in terms of section 151 of the Act. This approval was held by the Hon’ble Delhi High court to be a mechanical approval. Thus, Reopening has been made in the instant case by not taking approval u/s 151 of the Act from the competent authority in the manner known to law. Accordingly, the entire reassessment proceedings are hereby quashed. Hence, one of the legal grounds challenging the validity of assumption of jurisdiction u/s 147 of the Act is allowed in favor of assessee. Issues: Whether the reassessment proceedings under section 147 of the Income-tax Act, 1961 are vitiated because the approval under section 151 was granted mechanically without independent application of mind, and whether the reassessment should be quashed.Analysis: The statutory scheme requires that the prescribed authority record satisfaction on the reasons placed before it before granting approval under section 151; mere expressions such as 'approved' or equivalent rubber-stamping do not disclose application of mind. Authorities and precedents establish that the approval must reflect discernible satisfaction and linkage between material considered and the conclusion reached. On the facts, the approval proforma contained only a conclusory endorsement without any reasons or reference to material that might have weighed in granting concurrence. Reliance on authorities addressing mechanical or ritualistic approvals supports the view that such concurrence is invalid and cannot sustain reassessment initiated under section 148/147; consequently, orders and notices founded on such flawed approval are liable to be set aside.Conclusion: The approval under section 151 is invalid as granted mechanically without application of mind; the reassessment proceedings under section 147 (including consequential order and notice) are quashed and the appeal is allowed in favour of the assessee.
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