Validity of Section 148 reassessment notice where Section 151 approval postdated the notice; notice and sanction quashed

Questioning the validity of a reassessment notice where statutory approval was recorded after notice issuance, the article finds that a notice issued before prior approval is invalid; the notice dated 31.03.2018 was held bad in law because approval was given on 30.09.2018. It further finds that an approval recorded as a bare entry without reasons is mechanical and shows non application of mind; the approval dated 30.09.2018 was therefore vitiated. Consequence: the reassessment and assessment framed thereunder are void ab initio and the appeal is partly allowed on those grounds.

---

---

Issues: (i) Whether the notice issued under Section 148 of the Income-tax Act, 1961 dated 31.03.2018 is valid where the approval under Section 151 was granted on 30.09.2018 after issuance of the notice; (ii) Whether the sanction/approval granted under Section 151 of the Income-tax Act, 1961 on 30.09.2018 is vitiated for being mechanical and without application of mind, thereby invalidating the reassessment.

Issue (i): Whether the notice under Section 148 dated 31.03.2018 is valid when approval under Section 151 was obtained on 30.09.2018 after issuance of the notice.

Analysis: The statutory scheme requires prior sanction/approval under Section 151 before issuance of notice under Section 148. Precedents relied upon by the parties consider temporal sequence and require that approval precede the notice; where approval is recorded after issuance, the notice has been held invalid. The Tribunal examined the record showing the notice dated 31.03.2018 and the approval dated 30.09.2018 and applied the cited authorities addressing the requirement of prior approval.

Conclusion: The notice under Section 148 dated 31.03.2018 is invalid as approval under Section 151 was granted only on 30.09.2018, after issuance of the notice; the notice is therefore bad in law.

Issue (ii): Whether the sanction/approval under Section 151 dated 30.09.2018 is vitiated as mechanical and without application of mind.

Analysis: Approval that is purely perfunctory or recorded without reasons (for example, a bare entry of approval without indication of satisfaction) amounts to non-application of mind. The Tribunal compared the recorded approval entry which merely stated approval without reasons with authorities holding that mechanical approvals are invalid and concluded that the recorded sanction lacked application of mind.

Conclusion: The approval under Section 151 dated 30.09.2018 is vitiated for being mechanical and without application of mind; such defective sanction renders the reassessment proceedings void ab initio.

Final Conclusion: The reassessment proceedings and the assessment order passed under Section 143(3) read with Section 147 of the Income-tax Act, 1961 are quashed on the grounds that the notice under Section 148 was issued prior to valid approval under Section 151 and because the recorded approval was mechanical; consequently, the appeal is partly allowed.

Ratio Decidendi: Where statutory prior approval under Section 151 of the Income-tax Act, 1961 is not obtained before issuance of a notice under Section 148, or where the recorded approval is mechanical and shows non-application of mind, the consequent reassessment and assessment framed thereunder are void ab initio.

---