Reopening of Income Tax Assessment Approval Not Taken from Competent Authority u/s 151: ITAT Quashes Order [Read Order]

In a recent ruling, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a reassessment order after finding that the approval for reopening the case under Section 151 of the Income Tax Act, 1961, was not obtained from the competent authority.

The appellant Vipul Agrawal had filed his return for Assessment Year 2012–13, declaring an income of ₹21.05 lakh. The Assessing Officer (AO) later received information about cash deposits of ₹51.6 lakh and capital gains of ₹33.5 lakh from property sales, prompting a notice under Section 133(6) seeking clarification. Despite Agrawal’s detailed reply with financial statements and tax records, the AO reopened the case under Section 147, alleging escaped income.

The Tribunal noted that the Principal Commissioner of Income Tax (PCIT) had merely written “approved” while granting sanction under Section 151, without recording any reasoning or satisfaction.

Citing precedents including CIT v. S. Goyenka Lime and Chemicals Ltd (MP High Court) and PCIT v. N.C. Cables Ltd (Delhi High Court), the bench held that such “ritualistic and formal” approvals fail the statutory requirement of independent application of mind.

The bench, Sudhir Kumar (judicial member ), M Balaganesh (technical member), observed that the safeguard of higher-level approval under Section 151 exists to prevent arbitrary reassessment and must be exercised judiciously.

The bench pointed out a jurisdictional lapse—Agrawal’s income exceeded ₹15 lakh, meaning the case should have been handled by an Assistant Commissioner of Income Tax (ACIT) rather than an Income Tax Officer (ITO), as per CBDT instructions. The Tribunal concluded that the reassessment proceedings were invalid in law and quashed the order.

Accordingly, the appeal was allowed in favour of the assessee.

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