Sanction validity undermined by a factually erroneous foundation, resulting in quashing of the reopening notice and reassessment.

Sanction to reopen was required to reflect an objective application of mind by the sanctioning authority; reliance on a factually erroneous premise (that the assessee was a non filer) meant the recorded satisfaction was vitiated and therefore jurisdictionally defective. The tribunal applied the principle that sanction is a mandatory prerequisite to valid issuance of a reopening notice and must be founded on correct facts; where irrelevant or incorrect facts overbear satisfaction, the sanction and consequent notice and reassessment lose validity. On that basis the reopening notice and reassessment order were quashed and the appeal allowed for the assessee.

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Issues: Whether the approval/sanction under section 151 of the Income-tax Act, 1961 for reopening assessment under section 147/notice under section 148 for AY 2018-19 was valid where the sanctioning authority's recorded satisfaction was based on a factually erroneous premise (that the assessee was a non-filer), and whether the consequent notice and reassessment order are vitiated and liable to be quashed.

Analysis: Section 151 requires an objective satisfaction by the sanctioning authority, based on the reasons recorded by the Assessing Officer, that it is a fit case for issuance of notice under section 148; this sanction is a mandatory jurisdictional prerequisite and must show application of mind rather than mechanical or routine approval. The sanction recorded relied on the assessee being a non-filer despite contemporaneous assessment records and the assessment order itself recording that the return had been filed; such factually erroneous foundation demonstrates non-application of mind. Although Explanation 2 to section 148 and the search at the assessee's premises engage the exception to certain procedural safeguards, the validity of the sanction under section 151 must still be borne out by correct factual satisfaction; where irrelevant or incorrect facts overbear the recorded satisfaction, the sanction cannot stand and the consequential proceedings lose jurisdictional validity.

Conclusion: Approval granted under section 151 of the Income-tax Act, 1961 is vitiated due to being based on a wrong factual premise and non-application of mind; the notice under section 148 dated 28/03/2022 and the reassessment order under section 147 dated 30/03/2023 are quashed. The appeal is allowed in favour of the assessee.

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