Order u/s 148A(d) set aside as sanction wrongly recorded non response to notice u/s 148A(b)

Order u/s 148A(d) set aside as sanctioning authority wrongly recorded that no response was filed in response to the notice issued u/s 148A(b).

In a recent judgment, Hon’ble Calcutta High Court held that the order u/s 148A(d) was vitiated as the sanction granting authority had wrongly recorded that no response was filed in response to the notice issued u/s 148A(b) showing non application of mind.

ABCAUS Case Law Citation:
4738 (2025) (09) abcaus.in HC

In the instant case, the assessee by way of a writ petition challenged the order issued under Section 148A(d) of the Income Tax Act, 1961 (the Act) and the notice under Section 148 of the Act.

The main question raised was whether the approval granted under Section 151 of the said Act, by the sanction granting authority, in this case being CIT can be said to be valid. 

Relying on the approval granted under Section 151 of the said Act, the petitioner claimed that the approval granting authority while granting the approval obviously did not consider the reply filed by the petitioner though, the petitioner had responded to the notice issued under Section 148A(b) of the said Act. 

It was submitted that column No. 15 of the aforesaid sanction order specifically recorded that the assessee did not file any response to the notice under Section 148A(b) of the said Act, though, the petitioner had in fact filed a response.

According to Petitioner, the order passed by the assessing officer which was based on an approval issued by the sanction granting authority stood vitiated inasmuch as the sanction granting authority had granted the sanction without due application of mind. The above order cannot be sustained and should be set aside.

The Revenue filed a short affidavit before the Hon’ble High Court to justify the recording made in the column No. 15 of the sanction order issued under Section 151 of the said Act.  According to which, ordinarily when a response to a notice under Section 148A(b) of the said Act is filed online, the same is reflected in the sanction order automatically without any human interference. However, in the event, if the response is filed manually, there is no such reflection in the order of the sanction granting authority.

Thus, the Revenue stated that it was an unintentional error from an administrative oversight in the documentation process.  The mistake was not deliberate.  The same cannot have the effect of vitiating the above order inasmuch as the sanction granting authority had duly considered the response. 

The Hon’ble High Court opined that it was very difficult to accept the explanation offered by the Commissioner of Income Tax who was the deponent of the above affidavit. At the same time, the affidavit was not affirmed by the sanction granting authority, in fact, the deponent to the affidavit was DCIT who was not authorized by the sanction granting authority to affirm the said affidavit. 

The Hon’ble High Court held that the defence set up by the Revenue as regards auto population of acknowledgement of online response in the sanction granting order, was incorrect. 

The Hon’ble High Court pointed out that it is well settled that an order passed by an authority cannot be improved by way of an affidavit.

The Hon’ble High Court observed that while recommending the case, as a fit case for issuance of notice under Section 148, the sanction granting authority had only gone through the proposal of the AO and the materials on record, there was no reflection that the sanction granting authority had considered the response filed by the assessee. Therefore, the sanctioning order was mechanical.

The Hon’ble High Court held that since, the order under Section 148A(d) of the Act was passed with the approval of the sanctioning authority, by reasons of the sanction being issued in a mechanical manner, the above order under Section 148A(d) of the said Act, also stood vitiated. The same cannot be sustained.

Accordingly, the Hon’ble High Court set aside the order passed u/s 148A(d) and notice u/s 148 of the Act. However, Revenue was given liberty to initiate proceedings afresh by notice from the stage of receipt of the response filed by the petitioner.

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