TaxTMI 
TaxTMI 
2026 (5) TMI 536
X X X X Extracts X X X X
X X X X Extracts X X X X
....sdiction u/s 147 of the Act. 3. We have heard the rival submissions and perused the material available on record. The assessee has filed its return of income on 26.09.2012 for AY 2012-13 declaring total income of Rs. 21,05,130/-. The assessee is engaged in the business of trading of Air Conditioners. The learned AO received information that there were some cash deposits amounting to 51,60,120/- made with Punjab National Bank. The learned AO issued notice dated 22.2.2019 under section 133(6) of the Act to enquire about the source of cash deposit. The assessee filed reply dated 6.3.2019 explaining the source and filed financial statements together with the copy of ITR acknowledgement before the learned AO. Ignoring the said reply, the Learned AO sought to reopen the case of the assessee under section 147 of the Act on the ground that cash deposit of Rs 51,60,120/- and capital gain on sale of property of Rs 33,51,500/- had escaped assessment. Notice under section 148 of the Act stood issued to the assessee on 30.3.2019. The reasons recorded for reopening the assessment together with the approval granted by the Learned Principal Commissioner of Income Tax, Ghaziabad in terms of sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mechanically and without due application of mind, and therefore, the grant of sanction is liable to be declared as nullity and invalid, and resultantly, the impugned order passed under section 148A(d) and the impugned notice under section 148 issued consequent to the grant of sanction are liable to be quashed. 9. Per contra, learned counsel for the respondent while defending the order granting approval, has submitted that the approval has been granted based upon the material placed before PCCIT. It is further submitted that the order granting approval need not mention the reasons as the same is based on a prima facie finding arrived at from the record. 10. Before considering the merits of the contentions of the parties, it would be apposite to examine the relevant legal framework. 11. Section 151 of the Act, as it stood prior to the substitution by Act of 13 of 2001 is reproduced hereunder:- "151. Sanction for issue of notice.-(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecord elaborate reasons, he has to record satisfaction after application of mind. The approval is a safeguard and has to be meaningful and not merely ritualistic or formal. The 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. Our opinion in this regard is fortified by the decision of the Apex Court in Union of India v. Mohan Lal Capoor AIR 1974 SC 87. The grant of approval by PCCIT in the printed format without any line of reason does not fulfil the requirement of Section 151 of the Act. 16. We note that dealing with an identical challenge of approval having been accorded mechanically and without due application of mind had arisen for our consideration in the case of Pr. CIT v. Pioneer Town Planners (P.) Ltd. [2024] 160 taxmann.com 652/465 ITR 356 (Delhi)/SCC OnLine Del 1685, wherein, we had held as follows:- "13. The primary grievance raised in the instant appeal relates to the manner of recording the approval granted by the prescribed authority under Section 151 of the Act for reopening ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied 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 stamp' reason given mechanically for the supersession of each officer does not amount to 'reasons for the proposed supersession'. The most that could be said for the stock reason is that it is a general description of the process adopted in arriving at a conclusion. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. 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 case where the satisfaction was specifically appended in the proforma in "Yes, I am satisfied". Moreover, paragraph 16 of-terms of the phrase the said decision distinguishes the approval granted using the expression "Yes" by citing Central India Electric Supply, which has already been discussed above. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....istri states this ground could not have been taken in the Petition because the sanction was made available only with the surrejoinder filed by L. A. Janbandhu, Deputy Commissioner of Income Tax-5(2)(1), Mumbai and affirmed on 5th March 2024. We totally agree with Mr. Mistri's submission that the approval has been applied for and granted mechanically. In column 7- the quantum of income which has escaped assessment, the amount is Rs. 42858,47,29,611/-. In the impugned order passed under Section 148A(d) of the Act, the amount mentioned as having escaped assessment is totaling to Rs. 12431,99,24,486/-. A summary of amount reflected in the notice dated 30th March 2023 issued under Section 148A(b) of the Act, visa-vis., an amount in order dated 19th April 2023 reads as under: Summary of Amount reflected in notice dated 30.03.2023 vis-a-vis Amounts in order dated 19.04.2023 Entity Name Information amount as per Notice dtd 30.03.2020 Amounts as per Order 19.04.2023 Differences VCL 88,327,187,135 23796537779 64,530,649,356 VDL 64,194,219,901 16356031168 47,838,188,733 VEL 16,331,855,448 4454592437 11,877,263,011 VSL 154,472,355,36....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so delaying assessment/ reassessment proceedings and is also affecting the revenue of the nation. We find that the approval has been granted in a most casual manner. The power vested in the Authorities under Section 151 to grant or not to grant approval to the AO to reopen the assessment is coupled with a duty. The Authorities were duty bound to apply their mind to the proposal put up for approval in the light of material relied upon by the AO. That power cannot be exercised casually on a routine perfunctory manner. The important safeguards provided in Section 147 and 151 were treated lightly by the officers. While recommending and granting approval it was obligatory on the part of the officers to verify whether there was any genuine material to suggest escapement of income. It was obligatory on all the Authorities and PCCIT in particular to consider whether or not power to reopen is being invoked properly. We are of the opinion that if only the Authorities had read the record carefully, they would never have come to the conclusion that this is a fit case for issuance of notice under Section 148 of the Act. They would have either told the AO to correct the figures in Column 7 or wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ced in the open court on 27/03/2026. ============= Document 1 187 Exhibit. '' EXHIBIT-1 TONIE GOVERNMENT OF INDIA MMETRY OF FRANCE INCOME TAX DEPARTMENT POCIT, MUMILAI Approval u/s 151 of the IT Act, 1961 PAN Assessment Year: AAACB2TBOP 2016-17 19/04/2023 ITBA/AST/8/118/2023-24/1052287827(1) VODAFONE DEA LIMITED Compound, Pandurang Budtkar Mig, Wort, Word Colony S.0,Mumbai,Mumbel / Company CIRCLE (CONT) MUMBAI / RANGE 5. Orân Wiardi Rangel Cif Charge The quantas of income which has escaped Approval needed for Tiewe Smit for aurant proceedings covered under (la 140(1xb) - for more than 5 years but not more 11. contains the delals of the information, as per Whether the show cause noboe ufs 148A (il contains the dotsds of results of anquery omames ul 148400 Dais by which mesessee was required to siteit recty to show cause notice uls 14500! Yes/12-APR-23 Whether any reply neodved from estosen un Whether personel hearing requested by 17. |Wieder the provision of Soo, 150(1) are sopkabis Ressons for the bebet føl income has Heler Order ult 148A(c) for delals Recommendations of the Addison....