Mechanical sanction for reopening assessment invalidates jurisdiction when approval shows no real application of mind.

Reassessment under the Income-tax Act requires valid sanction for issue of notice, and a mere formal or mechanical approval under the approval provision does not satisfy the statutory safeguard. The article applies the principle that where conflicting non-jurisdictional High Court views exist, the interpretation favourable to the assessee must be adopted. On the stated facts, the approving authority's brief endorsement showed no real application of mind, so the sanction was treated as mechanical. That defective approval vitiated jurisdiction for reopening, and the reassessment proceedings were held unsustainable and quashed in favour of the assessee.

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Issues: Whether the reassessment proceedings initiated by reopening assessment under Section 147 of the Income-tax Act, 1961, based on notice under Section 148 and approval under Section 151 of the Income-tax Act, 1961, are valid where the approving authority recorded only a mechanical approval.

Analysis: Reopening of assessment requires valid sanction under the statutory scheme governing approval for issuance of notice under Section 148. The approval recorded in the present case consisted of a brief statement of satisfaction without application of mind and is of the same character as approvals held to be mechanical by several high courts. Where non-jurisdictional high courts have given conflicting views on the required degree of reasoning in such approvals, the controlling principle is that the construction favourable to the assessee must be adopted. Applying that principle to the facts, the approval is found to be a mechanical sanction that vitiates the assumption of jurisdiction by the assessing authority, rendering the reassessment proceedings unsustainable.

Conclusion: The approval under Section 151 of the Income-tax Act, 1961 is mechanical and the reassessment proceedings initiated under Section 147 read with Section 148 of the Income-tax Act, 1961 are quashed; appeal allowed in favour of the assessee.

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