Writing Yes, I am convinced, it is a fit case for re-opening held a valid approval

Writing “Yes, I am convinced it is a fit case for re-opening the assessment u/s 147 by issuing notice u/s 148” is a valid approval under section 151A

In a recent judgment, Delhi High Court has held that the language “Yes, I am convinced it is a fit case for re-opening the assessment u/s 147 by issuing notice u/s 148” satisfies the mandate of Section 151A of the Income Tax Act, 1961 (the Act).

ABCAUS Case Law Citation:
4776 (2025) (10) abcaus.in HC

In the instant case, the PCIT had challenged the order passed by the ITAT in holding that merely writing “Yes, I am convinced it is a fit case for re-opening the assessment u/s 147 by issuing notice u/s 148” was not a valid approval under section 151A of the Act.

The case of the Revenue was that the assessee had obtained accommodation entries in the form of share capital. The chain for providing accommodation entries was completed by layering transactions through three to four companies.

The case was reopened by issuance of notice under section 148 and re-assessment was completed making addition towards unexplained credit under Section 68 of the Act.

Before the ITAT, the assessee challenged that the initiation of proceedings under Section 147/148 of the Act was without jurisdiction along with the fact that the AO failed to consider the directions of the Supreme Court in the case of GKN Drive Shafts (India) Ltd.

The ITAT stated that the authorities merely mentioning in one line that they are satisfied if a certain case is fit for reopening assessment does not constitute a valid approval which is granted in a mechanical manner without independent application of mind. Therefore, the ITAT held that the case of the assessee followed a similar pattern wherein the Revenue had merely stated that the case of the assessee was a fit case for reopening assessment without providing adequate reasons. The ITAT relying on the judgment of the Delhi High Court on this ground alone quashed the entire proceedings in favour of the assessee.

The Hon’ble High Court observed that in the judgment relied upon by the Tribunal, the Court had only considered the expression “approved”. It was in that context, this Court had stated that merely appending the expression “approved” says nothing. It was said that the satisfaction has to be recorded, which can be reflected in the briefest possible manner. So, the judgment relied upon by the ITAT was clearly distinguishable. 

The Hon’ble High Court further observed that in another judgment, the Court had had considered “Yes, I am satisfied” to mean that it satisfies the mandate of Section 151(1) of the Act. In the said case, it was held that for the purpose of Section 151(1) of the Act, what the Court should be satisfied about is that the Additional CIT has recorded his satisfaction “on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice”.

In view of the above, in the instant case, the Hon’ble High Court held that hat the language “Yes, I am convinced it is a fit case for re-opening the assessment u/s 147 by issuing notice u/s 148” satisfies the mandate of Section 151A of the Act.  The Tribunal had clearly erred in not appreciating the above language used by the Competent Authority while granting approval.

Accordingly, the impugned order of the ITAT was set aside and the substantial question of law was decided in favour of the Revenue and against the assessee.

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