Singhal Fasteners Company Private Limited Vs ITO (ITAT Delhi)
Mechanical Sanction Invalidates Reopening – ITAT Delhi Quashes Reassessment
The Delhi Bench of the ITAT allowed the assessee’s appeal for AY 2006-07 and quashed the reassessment proceedings on the ground of mechanical approval for reopening. The Tribunal admitted an additional legal ground, holding that it went to the root of jurisdiction and could be raised at any stage.
On facts, the Assessing Officer had reopened the assessment solely on information from the Investigation Wing alleging accommodation entries, without independent application of mind. The sanction granted by the Addl. CIT was found to be mechanical, reflected by a bald endorsement akin to “Yes, I am satisfied,” without indicating any examination of material or reasons.
Relying on binding precedents, including the Supreme Court decision in Goyanka Lime & Chemical Ltd. and coordinate bench rulings, the ITAT held that such mechanical sanction vitiates the assumption of jurisdiction under section 147. Consequently, the notice under section 148 and the resultant reassessment were held to be bad in law and quashed. As the legal issue succeeded, other grounds were rendered academic and not adjudicated.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-31 New Delhi, [hereinafter referred to as “CIT(A)”], vide order dated 27.10.2020 pertaining to A.Y. 2006-07 arising out of the assessment order dated 28-03-2014 passed by the Assessing Officer under Section 147/143(3) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’].
