TaxTMI 
TaxTMI 
2026 (2) TMI 1125
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..../s. 151 of the act is invalid. (b) That the sanctioning authority i.e. the principal commissioner of income tax has not applied his mind while granting an approval and therefore the approval accorded by the sanctioning authority is invalid and so the proceedings-initiated u/s. 148 of the act has no legs to stand." 2.1. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional ground of appeal challenging the validity of reopening of assessment u/s 147 read with section 148 of the Act without any application of mind and without there being a proper approval of the competent authority. In our opinion the issue raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts is required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corpora....
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.... the administrative hierarchy where the files are moved for the approval with all details, notings and explanation. The ld. DR argued that it is only after going through the same, the higher ups use to grant the approval/ sanction on the same. Accordingly, in this case also when the file was put up before the ld. PCIT, the said authority granted the approval after perusing the detailed notings and mentioned as satisfied as a token of having granted approval for reopening. Therefore, the ground raised by the assessee may be dismissed. 7. After hearing the rival contentions and perusing the materials available on record, we find that the sanction by the ld. PCIT is mechanical and without application of mind. For the sake of ready reference we extract the approval granted by the ld. PCIT as under:- 7.1. A perusal of the above sanction accorded by the PCIT reveals that approval granted u/s 148 of the Income-tax Act, 1961 by the ld. PCIT, Central-2, Kolkata-2, wherein in para 13, it has been stated in the approval status as 'yes, I am satisfied, may be reopened', which is a mechanical approval in our considered view. We note that the ld. PCIT has not recorded his own satisfaction ....
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....e reopening of assessment on the basis of said approval is bad in law. Case of the assessee find force from the decision of Capital Broadways Pvt. Ltd. Vs. ITO (supra), wherein Hon'ble HC has held that the approval granted by the ld. PCIT by just using the words like 'yes, I am satisfied' will not satisfied the requirement of law and accordingly, the notice was set aside. The operative part of the decision is extracted below:- "10. Section 151(1) of the Act categorically provides that no notice shall be issued under Section 148 by the Assessing Officer, after expiry of period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Commissioner or Principal Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. In the present case, since reopening was beyond the period of four years, it was for the PCIT to record satisfaction for reopening the assessment. In the case of SBC Minerals Pvt. Ltd. vs. Assistant Commissioner of Income Tax Circle 22(2), Delhi, WP (C) 7885/2023, we had clearly held that prescribed authority referred to in Sectio....
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....n arrived at by the concerned Officer should be discernible from the sanction order passed under Section 151 of the Act. However, as may be seen, the approval order is bereft of any reason. There is no whisper of any material that may have weighed for the grant of approval. 14. Even the bare minimum requirement of the approving authority having to indicate what the thought process was, is missing in the afore- mentioned approval order. While elaborate reasons may not have been given, at least there has to be some indication that the approving authority has examined the material prior to granting approval. Mere appending the expression "Yes I am satisfied" says nothing. The entire exercise appears to have been ritualistic and formal rather than meaningful, which should be the rationale for the safeguard of an approval by a high ranking official. Reasons are the link between material placed on record and the conclusion reached by the authority in respect of an issue, since they help in discerning the manner in which the conclusion is reached by the concerned authority. 15. This Court in the case of The Principal Commissioner of Income Tax-7 vs. Pioneer Town Planners....
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....en. However, in the instant case, the manner in which the proforma was stamped amounting to approval by the Board leaves much to be desired. It is a case where literally a mere stamp is affixed. It is signed by an Under Secretary underneath a stamped Yes against the column which queried as to whether the approval of the Board had been taken. Rubber stamping of underlying material is hardly a process which can get the imprimatur of this court as it suggests that the decision has been taken in a mechanical manner. Even if the reasoning set out by the Income-tax Officer was to be agreed upon, the least which is expected is that an appropriate endorsement is made in this behalf setting out brief reasons. Reasons are the link between the material placed on record and the conclusion reached by an authority in respect of an issue, since they help in discerning the manner in which conclusion is reached by the concerned authority. Our opinion is fortified by the decision of the apex court in Union of India v. M. L. Capoor, AIR 1974 SC 87, 97 wherein it was observed as under: "27.. .. We find considerable force in the submission made on behalf of the respondents that the 'rubber....
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.... the approval, the ACIT "This is fit case for issue of notice under section 148 of−has written the Income- tax Act, 1961. Approved", had held that the said approval would only amount to endorsement of language used in Section 151 of the Act and would not reflect any independent application of mind. Thus, the same was considered to be flawed in law. 21. The salient aspect which emerges out of the foregoing discussion is that the satisfaction arrived at by the prescribed authority under Section 151 of the Act must be clearly discernible from the expression used at the time of affixing its signature while according approval for reassessment under Section 148 of the Act. The said approval cannot be granted in a mechanical manner as it acts as a linkage between the facts considered and conclusion reached. In the instant case, merely appending the phrase "Yes" does not appropriately align with the mandate of Section 151 of the Act as it fails to set out any degree of satisfaction, much less an unassailable satisfaction, for the said purpose. 22. So far as the decision relied upon the Revenue in the case of Meenakshi Overseas Pvt. Ltd. is concerned, the same was a ....
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....am satisfied", the Madhya Pradesh High Court in the case of CIT Jabalpur vs. S. Goyanka Lime & Chemicals Ltd. ITA 82/2012, held as under:- "7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- "The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material. 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing not....