PCIT approval for re-opening only by putting signing was non application of mind

PCIT approval for re-opening only by putting signing was without application of mind -SC dismissed SLP 

PCIT approval for re-opening only by signing was without application of mind –Supreme Court dismisses SLP of the Income Tax Department  

In a recent judgment, Hon’ble Supreme Court has dismissed the Special Leave Petition (SLP) of the Income Tax Department against the judgment of the Hon’ble Delhi High Court holding that the approval of the PCIT for re-opening only by putting signing was without application of mind.

ABCAUS Case Law Citation:
4252 (2024) (09) abcaus.in SC

In the instant case, the respondent assessee was served notice u/s 148 of of the Income Tax Act, 1961 (the Act) which was challenged before the Hon’ble High Court on one singular ground which is that the reassessment proceedings were commenced without the approval of the specified authority.

The Hon’ble High Court observed that Assessing Officer (AO) is not only required to record reasons for the commencement of reassessment proceedings but must also obtain approval from the concerned Principal Commissioner of Income Tax (PCIT). Further, the approval has a two-stage process. The satisfaction with regard to commencement of reassessment proceedings is required to be recorded by the Additional Commissioner of Income Tax (ACIT) and by PCIT.

The Hon’ble High Court further observed that the ACIT had noted that “In view of reasons cited by AO, I am satisfied that it is a fit case for issue of notice u/s 148.” However, insofar as PCIT was concerned, nothing was recorded, not even the date. It only borne the signature of the PCIT.

The Hon’ble High Court further observed that on perusal of the impugned order whereby the objections filed by the petitioner were disposed of, there was nothing contained therein which would answer the objections raised which was that there was no application of mind whatsoever by the PCIT as to whether or not it was a fit case for triggering reassessment proceedings.

The Hon’ble High Court opined that the approval granted by statutory authorities, as required under the provisions of the Act, has to be furnished to an assessee along with the reasons to believe. The statutory scheme encapsulated in the Act provides that reassessment proceedings cannot be triggered till the AO has reasons to believe that income, which is otherwise chargeable to tax, has escaped assessment and, reasons recorded by him are placed before the specified authority for grant of approval to commence the process of reassessment.

The Hon’ble High Court held that the second condition requiring AO to obtain prior approval of the specified authority was not fulfilled, as otherwise, there was no good reason not to furnish the same to the petitioner along with the document which contained the AO’s reasons for holding the belief that income otherwise chargeable to tax had escaped assessment.

Accordingly, the Hon’ble High Court set aside the notice u/s 148 of the Act holding neither the impugned notice nor the impugned order disposing the objections can be sustained.

Not satisfied with the order of the Hon’ble High Court, the Income Tax Department challenged it before the Hon’ble Supreme Court by filing a Special Leave Petition. However, after hearing the Department, the Hon’ble High Court stated that in view of the categorical finding recorded by the Hon’ble High Court and in the facts of the case, no case for interference was made out in exercise of our jurisdiction under Article 136 of the Constitution of India.

Accordingly, the Special Leave Petition was dismissed.

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