In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, quashed the reassessment order against an assessee noting that the assessment was reopened by the Revenue without mandatory application of mind.
The assessee/ appellant is Sh. Birpal, a resident of Gautam Buddha Nagar, Uttar Pradesh.
The case which began in the assessment year 2010-11, centered on the validity of reopening an income tax assessment without the required application of mind by the sanctioning authority.
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The dispute arose from an order issued by the Commissioner of Income Tax (Appeals), Ghaziabad, which upheld the reopening of assessment s assessment under Sections 147 and 148 of the Income-tax Act 1961 (ITA). These sections empower the tax authorities to reassess income if they believe income has escaped assessment. However, such reopening requires prior approval from a competent authority, with due application of mind, as per Section 151 of the tax legislature. Income tax Act 1961
At the ITAT hearing on November 14, 2024, the appellant was not represented, despite repeated calls. Consequently, the tribunal proceeded ex parte and relied on the submissions and records provided. Senior Departmental Representative Ms. Kanchan Garg defended the reopening, arguing that proper approval had been obtained from the Principal Commissioner of Income Tax (PCIT), Ghaziabad.
The pivotal issue revolved around the approval granted by the PCIT, which was recorded as, “Yes, I am satisfied. This is a fit case for issue of notice under Section 148.” The appellant argued that this approval lacked independent application of mind and was a mere mechanical formality.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The counsel for appellant heavily relied on the precedent set in CIT vs. S. Goyanka Lime & Chemicals Ltd., a Supreme Court judgment that held such mechanical approvals invalidate the reopening of assessments.
The tribunal, comprising Judicial Member Shri Satbeer Singh Godara and Accountant Member Shri M. Balaganesh, scrutinized the evidence. It observed that the PCIT’s approval did not reflect an independent evaluation of the facts, as required under law. Despite being given ample opportunity, the Department failed to rebut this contention with substantive evidence or legal arguments.
The tribunal concluded that the lack of due application of mind by the PCIT rendered the reassessment proceedings invalid. Citing the S. Goyanka Lime judgment and other precedents submitted by the appellant, the ITAT stressed that approval under Section 151 of the tax statute is not a mere formality but an important safeguard to prevent arbitrary reassessments.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
In result, in its decision, pronounced on November 20, 2024, the ITAT quashed the reassessment proceedings against appellant and allowed the appeal in his favor.
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