Rakesh Divedi Vs ITO (ITAT Delhi)
“Yes, I Am Satisfied’ Is Not Sanction: ITAT Quashes Reassessment for Mechanical Approval under Section 151
The Delhi Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal for AY 2009-10 and quashed the entire reassessment proceedings, holding that the sanction granted under section 151 was mechanical and without application of mind.
In this case, the assessment was reopened under section 147 on the basis of alleged unexplained cash deposits of ₹5.20 crore, and additions were ultimately sustained on a peak credit basis by the CIT(A). The assessee challenged the reopening itself, contending that the approval of the Principal CIT merely stated “Yes, I am satisfied”, without recording any reasons or demonstrating independent scrutiny of the material.
The Tribunal examined the approval proforma and found that the sanctioning authority had not referred to any material, reasons, or facts, but had simply accorded approval in a ritualistic manner. Relying on authoritative precedents including CIT v. S. Goyanka Lime & Chemical Ltd. (SC), N.C. Cables Ltd. (Delhi HC), Sabh Infrastructure Ltd. (Delhi HC) and SBC Minerals Pvt. Ltd. (Delhi HC), the Tribunal reiterated that sanction under section 151 is a substantive safeguard and cannot be reduced to a rubber-stamp exercise.
Holding that valid sanction is a jurisdictional pre-condition, the Tribunal declared the notice under section 148 and the consequent reassessment order under section 147 as void ab initio. Once the reopening itself was quashed, the Tribunal found it unnecessary to adjudicate the issues relating to additions on merits.
Accordingly, the assessee’s appeal was allowed in full, and the reassessment proceedings were set aside in toto
FULL TEXT OF THE ORDER OF ITAT DELHI
