Mechanical Section 151 Approval Invalidates Reassessment Proceedings: ITAT Agra

Gautam Kumar Singh Vs ITO (ITAT Agra)

Reopening Needs Application of Mind—Not Just an Approval Stamp

The dispute: Property purchased, additions followed

The assessee filed his return for AY 2020-21, declaring income of ₹5,46,990, which was processed under section 143(1). Subsequently, the Department received information that he had purchased an immovable property for ₹1,62,000, whereas its stamp duty value was ₹20,08,000. Reassessment proceedings were initiated, culminating in an assessment order dated 20 March 2025.

The Assessing Officer made two additions. The purchase consideration of ₹1,62,000 was added under section 69, holding that the source of investment remained unexplained. The difference of ₹18,46,000 between the stamp duty value and the purchase consideration was added under section 56(2)(x)(b). The CIT(A), NFAC, confirmed both additions, leading to the appeal before the Tribunal.

A short delay, sufficiently explained

The appeal before the Tribunal was delayed by approximately 24 days. The assessee explained that he was not technologically proficient and became aware of the appellate order only when his consultant accessed the income-tax portal on 4 March 2026.

The explanation was supported by an affidavit and remained uncontroverted. The Tribunal accepted it as sufficient cause, condoned the delay and admitted the appeal. The matter was thus examined on its legal merits rather than being shut out at the threshold.

The decisive challenge: Was the sanction valid?

The assessee raised several additional legal grounds challenging the reassessment. These included the contention that the recorded reasons incorrectly referred to a sale of property and undisclosed capital gains, although he had actually purchased the property. He also questioned the statutory procedure, the sanction and the initiation of proceedings by the jurisdictional Assessing Officer.

However, the Tribunal first considered the challenge to the approval under section 151, since it went to the root of the Assessing Officer’s jurisdiction.

The assessee argued that the sanctioning authority had merely endorsed the proposal without independently applying its mind. The approval referred generally to the proposal, recommendations and material available, and concluded that the case was fit for issuing notice under section 148. According to the assessee, a routine endorsement could not satisfy a statutory safeguard.

Revenue’s defence: Approval need not be elaborate

The Revenue contended that granting sanction was an administrative exercise and did not require a detailed discussion. It relied on the Delhi High Court decision in PCIT v. Agroha Fincap Ltd., which, as recorded in the Tribunal’s order, supported the sufficiency of a brief satisfaction endorsement.

The assessee, on the other hand, relied on CIT v. S. Goyanka Lime & Chemical Ltd., where the Madhya Pradesh High Court had disapproved mechanical recording of satisfaction. He also cited earlier Agra Tribunal decisions dealing with similar sanctions.

The Tribunal therefore had to address conflicting views of two non-jurisdictional High Courts.

Dismissal of an SLP does not settle the conflict

The Tribunal noted that the special leave petitions against both High Court decisions had been summarily dismissed by the Supreme Court.

It explained that summary dismissal of an SLP does not attract the doctrine of merger or declare law under Article 141. Consequently, neither High Court decision acquired the status of a binding Supreme Court ruling merely because the corresponding SLP was dismissed.

In resolving the competing views, the Tribunal invoked CIT v. Vegetable Products Ltd., 88 ITR 192 (SC), applying the principle that where two reasonable constructions of a taxing provision are possible, the construction favourable to the assessee should be adopted.

A statutory safeguard cannot become a ritual

The Tribunal emphasised that even an administrative order should be supported by reasons. Drawing upon judicial authorities concerning reasoned decision-making, it observed that reasons demonstrate application of mind, accountability and transparency. Missing reasons cannot subsequently be supplied through explanations or affidavits.

In its concluding examination, the Tribunal referred to the sanction endorsement stating that, in view of the reasons recorded by the Assessing Officer, the authority was satisfied that it was a fit case for issuing notice under section 148.

It held that the approval was granted mechanically, without application of mind, and was therefore invalid. Following the favourable High Court view and coordinate Bench decisions, the Tribunal quashed the consequential reassessment and allowed the assessee’s appeal.

Author’s comments: Examine the sanction before debating the addition

This decision reinforces the practical importance of examining the reopening proposal, recorded reasons and actual sanction, rather than confining an appeal to the additions alone. Approval by a superior authority is intended to operate as a meaningful check on reassessment proceedings.

However, brevity alone is not the defect. The real issue is whether the record demonstrates independent consideration of the facts and statutory requirements.

Equally, this order does not decide whether acquisition from a cooperative society is protected by mutuality, whether section 56(2)(x) applies, whether valuation reference was necessary, or whether the section 69 addition was justified. Those grounds were expressly left open after the reassessment was quashed. The assessee succeeded on jurisdiction, not on the merits of the property additions.

Cases Discussed

• CIT Jabalpur v. S. Goyanka Lime & Chemical Ltd., (2015) 56 taxmann.com 390 (Madhya Pradesh High Court) — relied upon by the assessee and ultimately followed by the Tribunal for the principle that mechanical recording of satisfaction by the sanctioning authority does not constitute valid approval for reassessment.
• Govind Sharma v. ITO, ITA No. 428/Agr/2025, order dated 17.04.2026 (ITAT Agra) — coordinate Bench decision relied upon by the assessee and referred to by the Tribunal on invalid mechanical approval under section 151.
• Shashi Sogani v. DCIT, ITA No. 554/Agr/2025, order dated 22.06.2026 (ITAT Agra) — coordinate Bench decision referred to for quashing reassessment founded on mechanical statutory approval.
• Pawan Agrawal v. ITO, ITA No. 386/Agr/2025, order dated 26.11.2025 (ITAT Agra) — coordinate Bench authority referred to on invalid approval for reopening.
• Banarsi Lal v. ITO, ITA No. 317/Agr/2025, order dated 20.03.2026 (ITAT Agra) — extensively reproduced and followed; held that mechanical section 151 approval vitiated reassessment where conflicting non-jurisdictional High Court decisions existed.
• PCIT v. Agroha Fincap Ltd., ITA 60/2024, judgment dated 06.10.2025 (Delhi High Court) — relied upon by Revenue for the contrary proposition that a brief satisfaction recorded by the competent authority could satisfy the statutory requirement.
• CIT v. Vegetable Products Ltd., [1973] 88 ITR 192 (Supreme Court) — followed for adopting the construction favourable to the assessee where conflicting reasonable views of non-jurisdictional High Courts existed.
• PCIT v. N.C. Cables Ltd., 391 ITR 11 (Delhi High Court) — reproduced in the coordinate Bench decision; held that section 151 satisfaction cannot be ritualistic and formal, though elaborate reasons are unnecessary.
• SBC Minerals P. Ltd. v. ACIT, 475 ITR 360 (Delhi High Court) — referred to in the reproduced coordinate Bench decision for the proposition that mechanical approval vitiates assumption of reassessment jurisdiction.
• Vodafone India Ltd. v. DCIT, 464 ITR 385 (Bombay High Court) — referred to in support of the requirement of proper application of mind in reassessment proceedings.
• Experion Developers P. Ltd. v. ACIT, 422 ITR 355 (Delhi High Court) — cited on Revenue’s side in the reproduced Banarsi Lal decision for the proposition that the sanctioning authority need not provide elaborate reasoning where satisfied with the reasons recorded by the Assessing Officer.
• Virbhadra Singh v. DCIT, 88 taxmann.com 88 (Himachal Pradesh High Court) — cited on behalf of Revenue regarding the nature and sufficiency of sanction under section 151.
• Sonia Gandhi v. ACIT, 407 ITR 594 (Delhi High Court) — cited on behalf of Revenue concerning sanction for issuance of reassessment notice.
• Anil Kumar Jain v. DCIT, ITA No. 475/Del/2025, order dated 16.01.2026 (ITAT Delhi) — extensively reproduced concerning mechanical approval, reopening safeguards and judicial authorities requiring application of mind.
• SABH Infrastructure Ltd. v. ACIT, W.P.(C) 1357/2016, order dated 25.09.2017 (Delhi High Court) — reproduced through Anil Kumar Jain for guidelines governing communication of reasons, approval forms, supporting material and disposal of objections in reassessment proceedings.
• Saraswat Co-operative Bank Ltd. v. ACIT & Others, [2025] 473 ITR 205 (Bombay High Court) — extensively reproduced for holding that section 151 sanction is an inherent statutory check and must reflect application of mind to facts and law.
• Hindustan Lever Ltd. v. R.B. Wadkar, 268 ITR 332 (Bombay High Court) — reproduced for the principle that recorded reasons must disclose the Assessing Officer’s mind and cannot later be supplemented by affidavit or oral submissions.
• State of H.P. v. Mustaque Ahmad, 2007 (58) ACC 382 (Supreme Court) — relied upon for the desirability of reasons even in administrative orders.
• State of Rajasthan v. Rohitas and Ors., 2008 (61) ACC 678 (Supreme Court) — relied upon for the importance of reasoned orders and the proposition that failure to give reasons amounts to denial of justice.
• Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851 — relied upon for the rule that an administrative order must stand on the reasons contained in it and cannot subsequently be supplemented.
• U Manjunath v. U Chandrasekhar, 2017 (6) Supreme 19 (Supreme Court) — relied upon for the importance of reasons and analysis as evidence of application of mind.
• M/s Kranti Associates Pvt. Ltd. & Anr. v. Masood Ahmed Khan & Ors., (2010) 9 SCC 496 (Supreme Court) — relied upon for the requirement of reasons as an element of judicial accountability and transparency.

FULL TEXT OF THE ORDER OF ITAT AGRA

This appeal is directed against the impugned order dated 26.12.2025 passed in appeal No NFAC/2019-20/10481234by the ld. Commissioner of Income Tax(Appeal)/ NFAC(Delhi)[(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2020-21,wherein ld CIT(A) has dismissed assessee’s appeal, confirming the impugned additions made by ld assessing officer.

2. At the very outset, according to registry’s report, the assessee filed this second appeal on 25.03.2026 against the impugned order dated 26.12.2025 by a delay of about 24 days. The reasons mentioned in assessee’s application for condonation of delay are that, the assessee is not a techno-savy person. He came to know in respect of the impugned order only on 04.03.2026 at the time of log in to IT portal by assessee’s consultant. The application is supported with uncontroverted affidavit of assessee. We treat the aforesaid cause as sufficient and condone the said delay caused in filing the appeal. The appeal is admitted for hearing.

3. The brief facts of the case are that the assessee filed return of income for A.Y. 2020-21 within time, declaring income at Rs. 5,46,990/. The return was processed u/s 143(1) of the Act. Department had the information that assessee purchased immovable property for the consideration of Rs. 1,62,000/- whereas, the stamp duty value of property was Rs. 20,08,000/-. The case was reopened u/s 147 of the Act by issuance of notice u/s 148 of the Act after recording reasons. Assessee filed return in response to notice u/s 148 of the Act. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee, seeking details of the aforesaid transaction. Assessee furnished form 16 and replied that the assessee had not sold the property but purchased the property. However, despite repeated notices issued by the department, assessee failed to satisfy the assessing officer in respect of the nature and source of purchase transaction. The assessing officer, thus added purchase amount of Rs. 1,62,000/- for want of source of investment u/s 69 of the Act and the differential amount between stamp duty value and sale consideration amounting to Rs. 18,46,000/-(20,08,000-1,62,000) u/s 56(2)(x)(b) of the Act, as unexplained investment in the total income of the assessee, vide assessment order dated 20.03.2025 passed u/s 147 of the Act.

4. Aggrieved assessee, preferred an appeal before ld CIT(A), who dismissed assessee’s appeal and confirmed the impugned additions made by the assessing officer.

5. Aggrieved, assessee has raised the following grounds under this second appeal:

“1. Because the Ld. CIT (Appeal) had ignored that statutory procedures required to be followed before issuing notice of reassessment u/s 148 was violated by the Assessing Officer, vitiating the subsequent proceeding, hence the reassessment order was liable to be quashed.

2. Because the Ld. CIT (Appeal) has not considered that addition of Rs.1,62,000.00 in respect of purchase consideration was not justified in the facts of the case.

3. Because the Ld. CIT (Appeal) had not considered that levy of tax u/s 115BBE on purchase amount of Rs.1,62,000.00 was not justified

4. Because the Ld. CIT (Appeal) had not considered that provisions of section 56(2)(x) were not applicable in the facts of the case as the immovable property was acquired from the cooperative society of which he was a participating and beneficiary member.

5. Because the Ld. CIT (A) had not considered referring the property for valuation in the above discussed facts of the case for substantial justice to the appellant.”

Additional Grounds

Assessee raised five additional legal grounds vide, application dated 08.05.2026 as under:

“1. BECAUSE, upon the facts and in overall circumstances of the case the appellant denies its liability in terms of Notice dated 26.03.2024 issued under section 148 of the Income Tax Act as there was no any such income chargeable to tax, had escaped assessment for the relevant Assessment year to attract provisions of section 147 of the Act. As per “reasons” recorded by the ld. JAO, it has been alleged that ‘capital gain’ generated on sale of immovable property of Rs. 20,08,000.00 is undisclosed income which has escaped assessment. The information is totally incorrect, as the Appellant has not sold any such immovable property to attract capital gain tax during the year under consideration.

2. BECAUSE, upon the facts and in overall circumstances of the case, the reassessment proceedings initiated by the Assessing officer is bad in law as the ld. Assessing officer had conducted enquiry with respect to the alleged information without any prior approval of specified Authority. The action of the ld. AO of making enquiry without prior approval of specified Authority is in gross violation of provisions of section 148A(a) of the Act.

3. BECAUSE, upon the facts and in overall circumstances of the case, the approval granted, if any under section 151 of the Act for passing the order under section 148A(d) of the Act and issuance of notice under section 148 is bad in law, as the same has been accorded on incorrect. Moreover, no reference number of approval has been mentioned in order passed under section 148A(d) and notice issued under section 148 of the Act.

4. BECAUSE, upon the facts and in overall circumstances of the case the impugned order passed is bad in law and not sustainable. The initiation of reassessment proceedings by issue of Notice under section 148A and 148 by the Jurisdictional Assessing officer and subsequently passing of order by the Faceless Assessing officer is in grave violation of provisions of section 151A of the Act.

5. BECAUSE upon the facts and in overall circumstances of the case the provisions of section 56(2)(x) are not applicable on Appellant for the reason that the immovable property was acquired by the Appellant from Friends Co-operative Society, as its member. As per doctrine of mutuality, there is no sale/ transfer as one cannot sell something to oneself.”

The above noted additional legal grounds are admitted as the relevant facts required to adjudicate the same are available on record.

6. Perused the records. Heard ld AR for the appellant assessee and ld Sr DR for the respondent revenue.

7. At the threshold of the hearing, ld representative for the assessee has pressed additional ground no. 3 in respect of the approval granted u/s 151 of the Act, being bad in law. The additional ground no. 3 raised by the appellant assessee, challenging the validity of the entire assessment proceedings, being based on invalid approval u/s 151 of the Act, goes to the root of the matter, hence, the same is being adjudicated as under.

8. Ld AR for the appellant assessee has submitted that the approval granted by the ld PCIT-I Agra, is part of assessee’s paper book at page no. 11-12, wherein the competent authority has recorded his satisfaction against the column no. 22 as under:

“Remarks: On the basis of proposals submitted by the Assessing Officer on the recommendations of the Rangee Head and perusal of ther material available on record and information available with the JAO within the meaning of Clause (i) of Explanation 1 to section 148 of the Act in the case of the assessee ( GAUTAM KUMAR SINGH PAN/DPBPS5537H) for A.Y. 2020-21. I, qua Specified Authority within the provisions of section 148/148A/151 of the Income Tax Act, 1961, am of the considered opinion that it is a fit case to issue notice u/s 148 of the Act. Hence, approval is hereby accorded to pass order u/s 149A(d) and to issue notice u/s 148 of the Actaccordingly in this case.

Name: S NAIYER ALI NAJMI
Designation: PCIT, Agra-1
Dated 23/03/2024”

Further submitting that for initiating action u/s 147 of the Act by issuance of notice u/s 148 dated 26.03.2024, the above referred mechanical approval without application of mind, is no approval in the eye of law, rendering the consequent assessment order dated 20.03.2025 as illegal and void ab initio.

9. Ld AR has referred – (i) CIT Jabalpur v. S. Goyanka Lime & Chemical Ltd., (2015) 56 taxmann.com 390 (MP- H.C.), r/w SC order dated 08.07.2025 against the referred MP High Court order in SLP(C) No. 11916/2025, reported in (2015) 64 taxmann.com 313 (SC). The Madhya Pradesh High Court in its order dated 14.10.2014 held that the mechanical way of recording satisfaction by the Joint Commissioner, who accords sanction for issuing notice u/s 148 of the Act, is clearly unsustainable. The aforesaid SLP filed against the order of MP High Court was dismissed by the Apex Court. (ii) ITA No. 428/Agr/2025 (A.Y. 2015-16), Govind Sharma v. ITO, order dated 17.04.2026 (Agra-Trib), (iii) ITA No. 554/Agr/2025 (A.Y. 2013-14), Shashi Sogani v. DCIT, order dated 22.06.2026 (Agra-Trib), (iv) ITA No. 386/Agr/2025 (A.Y. 2020-21), Pawan Agarwal v. ITO, order dated 26.11.2025 (Agra-Trib) and (v) ITA No. 317/Agr/2025 (A.Y. 2014-15), Banarsi Lal v. ITO, order dated 20.03.2026 (Agra-Trib), in support of his arguments.

10. Ld Sr DR has submitted that the approval granted u/s 151 is merely an exercise of administrative power, which requires no detailed discussion and has submitted that the Hon’ble Delhi High Court, vide judgement dated 06.10.2025 passed in ITA 60/2024 PCIT v. M/s Agroha Fincap Ltd., has held that the satisfaction recorded by the competent authority that “yes, I am convinced it is a fit case for reopening the assessment u/s 147 by issuing notice u/s 148” satisfies the mandate of section 151A of the Act. Ld Sr DR has further submitted that the SLP(Civil) No. 20867/2026 filed against the Delhi High Court order dated 06.10.2025 was dismissed summarily by the Supreme Court, vide order dated 05.05.2026. Ld Sr DR, thus, prayed to dismiss the additional legal ground raised by the appellant assessee.

11. We notice that the conflicting decisions given by the M.P. High Court in S. Goyanka Lime & Chemical Ltd. (supra) relied by assessee and Delhi High Court in M/s Agroha Fincap Ltd. (supra), relied by the revenue are both “pertaining to the non jurisdictional High Courts”. The SLPs against both the conflicting decisions have also been summarily dismissed by the Supreme Court. It is settled legal principle that the summary dismissal of SLP by the Supreme Court of India means the Court refuses to interfere with the impugned order under appeal. The doctrine of merger does not apply in such a situation. A summary dismissal does not declare any law under Article 141 of the Constitution. The effect of summary dismissal of SLPs against the conflicting decisions of the non-jurisdictional High Courts order will be that the orders of both the non-jurisdictional High Courts remain entirely independent. In such a fact situation, we take guidance from the decision of the Supreme Court in CIT vs. Vegetable Products Ltd., [1973] 88 ITR 192 (SC), wherein the Apex Court held that if two reasonable constructions of the taxing provision is possible, that construction which favours the assessee must be adopted.

12. We take further guidance from the decision of the co-ordinate bench of the tribunal in Banarsi Lal (supra) which has held as under:

“2. The assessee had raised additional grounds before us challenging the validity of assumption of jurisdiction u/s 147 of the Act. These additional grounds go to the root of the matter and the facts relevant for its adjudication are placed on record. Hence, we admit the additional grounds and take up the same first for adjudication.

3. We have heard the rival submissions and perused the material available on record. The assessee has filed its return of income on 7.6.2016 for AY 2014-15 declaring total income of Rs. 1,85,440/-. This return was treated as non-est by the Id AO. The Ld. AO noted that he had received information that assessee had sold agricultural lands and had derived income from agricultural activities. On the basis of information received, the Ld. AO sought to reopen the assessment of the assessee u/s 147 of the Act vide issuance of notice u/s 148 of the Act on 2.2.2017. The assessee filed return of income on 27.3.2017 in response to notice issued u/s 148 of the Act. The reasons recorded for reopening the assessment together with the approval granted by the Additional CIT, Range 2(2), Firozabad in terms of section 151 of the Act. The approval granted by the Additional CIT, Range 2(2), Firozabad is enclosed in Page 18 of the Paper Book. On perusal of the proforma seeking approval u/s 151 of the Act, we find that the Ld. Addl CIT had merely stated that he is satisfied that this is fit case for reopening. This sort of approval granted u/s 151 of the Act was held to be approval granted without application of mind and construed as mechanical by the Hon’ble Madhya Pradesh High Court in the case of CIT Vs. S. Goyenka Lime and Chemicals Ltd reported in 56 taxmann.com 390 (MP HC). The Special Leave Petition (SLP) filed by the revenue against this decision was dismissed by the Hon’ble Supreme Court reported in 64 taxmann.com 313. Further, we find that the Hon’ble Delhi High court in the case of PCIT Vs. NC Cables Ltd reported in 391 ITR 11 (Del) had also held the same, wherein, the approving authority had merely stated “approved” in the proforma while granting approval in terms of section 151 of the Act. This approval was held by the Hon’ble Delhi High court to be a mechanical approval. The Hon’ble Delhi High Court in the recent decision in the case of SBC Minerals P Ltd. vs ACIT reported in 475 ITR 360 (Del) had also held that similar kind of approval granted in a mechanical manner would vitiate the basic assumption of jurisdiction of the Ld. AO resulting in quashing of reassessment proceedings. Similar view was also taken by the Hon’ble Bombay High Court in the case of Vodafone India Ltd. vs DCIT reported in 464 ITR 385 (Bom).

4. Per Contra, the Ld. DR vehemently relied on the following decisions of Hon’ble High Courts to drive home the point where necessary sanction to issue notice under section 148 of the Act was obtained from Principal Commissioner of Income Tax as per provisions of section 151 of the Act, the Principal Commissioner was not required to provide elaborate reasoning to arrive at a finding of approval when he was satisfied with reasons recorded by Assessing Officer :-

a) Experion Developers P Ltd. vs ACIT reported in 422 ITR 355 (Del HC)

b) Virbhadra Singh vs DCIT reported in 88 taxmann.com 88 (HP HC)

c) Sonia Gandhi vs ACIT reported in 407 ITR 594 (Del HC)

5. We find that the various decisions quoted by both the Ld. AR as well as the Ld. DR are non-jurisdictional high courts giving conflicting decisions. We find that the Hon’ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that when there are conflicting decisions of non-jurisdictional high courts on the same issue, then the construction that is favourable to the assessee need to be adopted. Respectfully following the same, we hold that the reopening has been made in the instant case by not taking approval u/s 151 of the Act from the competent authority in the manner known to law. Accordingly, the entire reassessment proceedings are hereby quashed. Hence, one of the additional grounds challenging the validity of assumption of jurisdiction u/s 147 of the Act is allowed in the above mentioned terms. Since the reassessment is quashed, the other legal grounds raised by the assessee as well as the grounds raised by the assessee on merits need not be adjudicated and they are left open.”

13. The Agra Bench of this tribunal in Govind Sharma v. ITO Mathura (supra), in Shashi Sogani v. DCIT (supra) and Pawan Agrawal v. ITO Mathura (supra) have also held that the approvals accorded on behalf of the competent authority in a manner referred hereinabove for reopening u/s 147 of the Act, cannot be treated as an approval in a manner known to law, the consequent assessment proceedings on such mechanical approvals were quashed.

14. The order dated 16.01.2026 passed by the ‘B’ bench of ITAT Delhi in Anil Kumar Jain v DCIT, in ITA No. 475/Del/2025 (A.Y 2013-14) read as under:

“7. From the perusal of Performa for granting approval of reopening the assessment, it is observed that there was no mention in Column No. 9 regarding assessment completed passed u/s 143(3) of the Act prior to reopening of assessment. It is further seen that in Column No.17, ld. PCIT has recorded the satisfaction in mechanical manner where it is observed that “on perusal of the reasons recorded satisfied that it is a fit case for notice u/s 148”, however, Ld. PCIT has not referred any material/records before reaching to such satisfaction proceedings u/s 147 of the Act should be initiated though the order u/s 143(3) has already been passed. Further the assessment order u/s 143(3) was passed at a date much later than the date when the survey was carried out at the business premises of the assessee thus it cannot be said that the material found during the survey was fresh material. From the perusal of first para of the reasons recorded we find that AO stated that return of income filed was processed and there is no reference of assessment order passed u/s 143(3) of the Act in the case of the assessee. These facts, clearly suggests that reopening was made without any application of mind.

8. The Hon’ble High Court of Delhi in case cited as SABH Infrastructure Ltd. vs. ACIT in WP (C) 1357/2016 order dated 25.09.2017 has issued guidelines to the Revenue authorities while deciding the issue of reopening u/s 147/148 of the Act. Operative part of which is reproduced as under:-

“19. Before parting with the case, the Court would like to observe that on a routine basis, a large number of writ petitions are filed challenging the reopening of assessments by the Revenue under Sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the Court would like the Revenue to adhere to the following guidelines in matters of reopening of assessments:

(i) while communicating the reasons for reopening the assessment, the copy of the standard form used by the AO for obtaining the approval of the Superior Officer should itself be provided to the Assessee. This would contain the comment or endorsement of the Superior Officer with his name, designation and date. In other words, merely stating the reasons in a letter addressed by the AO to the Assessee is to be avoided;

(ii) the reasons to believe ought to spell out all the reasons and grounds available with the AO for reopening the assessment – especially in those cases where the first proviso to Section 147 is attracted. The reasons to believe ought to also paraphrase any investigation report which may form the basis of the reasons and any enquiry conducted by the AO on the same and if so, the conclusions thereof;

(iii) where the reasons make a reference to another document, whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons;

(iv) the exercise of considering the Assessee’s objections to the reopening of assessment is not a mechanical ritual. It is a quasi-judicial function. The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for reopening of the assessment beyond what has already been disclosed.”

9. The Hon’ble Delhi High Court in the case of CIT vs N.C. Cables Ltd. (supra) has observed as under:-

“Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for A Y 2001-02 claimed that sum of Rs. 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan-Original assessment was completed u/s 143(3)- However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments were taken up afresh-After considering submissions of assessee and documents produced in reassessment proceedings, AO added back a sum of Rs.1,35,00,000/- – CIT(A) held against assessee an legality of reassessment notice but allowed assessee’s appeal on merits holding that AO did not conduct appropriate enquiry to conclude that share inclusion and advance received were from bogus entities-Tribunal allowed assessee’s appeal on merits-Revenue appealed against appellate order on merits- Assessee’s cross appeal was on correctness of reopening of assessment- Tribunal upheld, assessee’s cross-objections and dismissed Revenue’s appeal holding that there was no proper application of mind by concerned sanctioning authority u/s Section 151 as a pre-condition for issuing notice u/s 147/148-Held, Section 151 stipulates that CIT (A), who was competent authority to authorize reassessment notice, had to apply his mind and form opinion-Mere appending of expression ‘approved’ says nothing-It was not as if CIT (A) had to record elaborate reasons for agreeing with noting put up-At same time, satisfaction had to be recorded of given case which could be reflected in briefest possible manner-In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer-Revenue’s appeal dismissed.”

10. Further, reliance placed in the judgement of Hon’ble Bombay High Court in the case of Saraswat CO-operative Bank Ltd. vs ACIT & Others [2025] 473 ITR 205 (Bom.) wherein Hon’ble Bombay High Court has held as under:-

Sanction mechanism under section 151

21. Evidently, the reassessment was first proposed internally on March 24, 2021 by the jurisdictional Assessing Officer, and was recommended by a Range Officer on March 25, 2021, and approved by the Principal Commissioner of Income-tax on the same day all under section 151 of the Act. Therefore, the reassessment has been contemplated and initiated one year after the expiry of four years from the end of the relevant assessment year d (2015-16). Therefore, failure by the petitioner to disclose material facts was a jurisdictional imperative, which was simply incapable of being discerned from the material on record. Therefore, we have no hesitation in holding that the Revenue’s bid to initiate reassessment is unfounded and in direct conflict with section 147 of the Act. Therefore, the sanction for reassessment under section 151 could simply not have been given.

22. The requirement for sanction by a high-ranking official under section 151, is an inherent check and balance in the statutory scheme of the Act. Such officers are expected to apply their mind to the facts and the applicable law and then accord sanction. In the instant case, the proposed reassessment was sanctioned by the Principal Commissioner of Income-tax, with the following remarks:

“Yes, I am satisfied with the reasons recorded by the Assessing Officer for issuance of notice under section 148 of the Income-tax Act, 1961.”
(emphasis¹ supplied)

23. The power to sanction reassessment under section 151, is coupled with a duty to exercise such power reasonably, and not arbitrarily. It is trite law that absence of valid reasons constitutes arbitrariness. In the instant case, the entire process of according sanction demonstrates non-application of mind to the ingredients of section 147, rendering the sanction to be h arbitrary, calling for intervention by a writ court. Evidently, the proposal, the recommendation and the approval in the instant case was mechanical, without either application of mind to the law and the facts or even a modicum of how the ingredients of the law had been met. In short, the machinery under section 151 completely failed.

24. The imperative requirement of compliance with the ingredients of section 147 and section 148 is underlined in innumerable judgments. However, we note with respect and approval, a judgment of a Division Bench of this court cited on behalf of the petitioner, in the case of Hindustan Lever Ltd. v. R. B. Wadkar (per V. C. Daga and J. P. Devadhar JJ.), and profitably extract the following (page 337 of 268 ITR):

“Reading of the proviso to section 147 makes it clear that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceeding under section 147, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the concerned assessment year. However, where an assessment under sub-section (3) of section 143 has been made for the relevant assessment year, no action can be taken under section 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reasons of the failure on the part of the assessee to disclose all material facts necessary for his assessment for that assessment year.

In the case in hand it is not in dispute that the assessment year involved is 1996-97. The last date of the said assessment year was March 31, 1997 and from that date if four years are counted, the period of four years expired on March 31, 2001. The notice issued is dated November 5, 2002 and received by the assessee on November 7, 2002. Under these circumstances, the notice is clearly beyond the period of four years.

The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be selfexplanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the court, on the strength of the affidavit or oral submissions advanced.

Having recorded our finding that the impugned notice itself is beyond the period of four years from the end of the assessment year 1996-97 and does not comply with the requirements of the proviso to section 147 of the Act, the Assessing Officer had no jurisdiction to reopen the assessment proceedings which were concluded on the basis of assessment under section 143(3) of the Act. On this short count alone the impugned notice is liable to be quashed and set aside.”
(emphasis¹ supplied)

25. Having regard to the foregoing and in view of the findings returned by us, the writ petition deserves to be allowed in the following terms:

“(A) The order dated March 25, 2021 sanctioning the reassessment under section 151 of the Act; the impugned notice dated March 30, 2021 issued under section 148 of the Act; the impugned order dated February 25, 2022 rejecting the objections raised by the petitioner are declared to be arbitrary and devoid of valid reasons and, therefore, illegal;

(B) Consequently, the order dated March 25, 2021 sanctioning the reassessment under section 151 of the Act; the impugned notice dated March 30, 2021 issued under section 148 of the Act; the impugned order dated February 25, 2022 and all consequential proceedings in respect of the reassessment are hereby quashed and set aside.”

26. Rule is made absolute in the aforesaid terms, and the writ petition is disposed of accordingly. There shall be no order as to costs.”

15. As regards the arguments of ld Sr DR for the revenue, that the approval granted u/s 151 is merely an exercise of administrative power and requires no detailed discussion, it is well settled that even the administrative orders, are required to be supported with reasons. Hon’ble Supreme Court in State of H.P. V. Mustaque Ahmad, 2007 (58) ACC 382 (SC), has held that it is desirable that even administrative orders should be supported by reasons. Hon’ble Apex Court in State of Rajasthan v. Rohitas and Ors., 2008 (61) ACC 678(SC), has held that orders being supported with reasons is a sign to good governance. Failure to give reasons amount to denial of justice. In Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851, Hon’ble Supreme Court held that where validity of an administrative order is challenged, all reasons for passing such an order should be contained in the order itself. If all reasons are not given in the order, they cannot be subsequently supplemented at an after thought by way of an affidavit. Justice Krishna Iyer observed “orders are not like old wine, becoming better as they grow older”. Hon’ble Apex Court, in U Manjunath v. U Chandrasekhar 2017(6) Supreme 19, has held that it is well settled in law that reason is the life of law, it is that filament that injects soul to the judgment, absence of analysis not only evinces non application of mind but mummifies the core spirit of judgement. The absence of reasons in the process of adjudication makes the ultimate decision pregnable. In M/s Kranti Associates Pvt Ltd & Anr v. Masood Ahmed Khan & Ors, (2010) 9 SCC 496, the Supreme Court, while dealing with the requirement of passing a reasoned order by an authority, whether administrative, quasi judicial or judicial, has observed that insistence on reason is a requirement for both judicial accountability and transparency.

16. In the instant case, even if the approval order is treated as purely an administrative order, it is to be supported with reason, which are missing in the approval granted by the ld PCIT for issuance of notice u/s 148 of the Act. The approval u/s 151 of the Act, accorded on a proforma for initiating proceedings u/s 147 of the Act, is part of assessee’s paper book at page no. 10, which clearly shows that ld PCIT (competent authority) has endorsed as “in view of the reasons recorded by the AO, I am satisfied that this is a fit case for issue of notice u/s 148”. This sort of sanction accorded u/s 151 is almost in the similar fashion as has been referred hereinabove. Respectfully following the reasoning given by Hon’ble M.P. High Court in S. Goyanka Lime (supra) and by the coordinate bench of the tribunal in Banarsi Lal (supra) on the basis of Hon’ble Supreme Court’s decision in Vegetable Products Ltd. (supra), we hold that the sanction accorded u/s 151 of the Act, in the present case is accorded in a mechanical manner without application of mind, hence the same is invalid. The consequential reassessment is hereby quashed. Since we have quashed the reassessment order, the other grounds of appeal are rendered academic, hence, not being adjudicated and are left open.

17. In the result, assessee’s appeal is allowed.

Order pronounced in the Open Court on- 30.09.2026