Raghav Technology P. Ltd. Vs ITO (ITAT Delhi)
Notice u/s 148 Invalid Without Independent Satisfaction of PCIT, Rules ITAT- Ritualistic & Mechanical Approval Fatal
Assessee filed its return for AY 2011-12. Based on Investigation Wing’s report alleging accommodation entries from Surendra Kumar Jain group, the AO reopened assessment u/s 147 after obtaining sanction of the PCIT. The approval recorded by PCIT was merely: “Yes, it is a fit case for issue of notice u/s 148/147”. AO thereafter passed reassessment order making additions. CIT(A) confirmed the reassessment.
Assessee’s Arguments:
- Approval by PCIT was mechanical & without independent application of mind, which is fatal to reopening.
- In earlier years (AYs 2009-10 & 2010-11), Tribunal had already quashed similar reassessment in Assessee’s own case on identical grounds.
- Relied on United Electrical Co. Pvt. Ltd. (Delhi HC), Pr. CIT Vs. N.C. Cables Ltd. (Delhi HC) & Chhugamal Rajpal Vs. S.P. Chaliha (SC), where courts held that mere ritualistic endorsement like “approved” or “yes, satisfied” is not valid approval u/s 151.
Tribunal’s Findings:
- Approval given by PCIT was a mere formality with the remark “Yes, it is a fit case”, showing no independent satisfaction.
- Following its own earlier order in Assessee’s case for AY 2009-10 (ITA No. 1144/Del/2018 dated 29.04.2019), Tribunal reiterated that mechanical approval vitiates the very foundation of reassessment.
- Once the notice u/s 148 itself is invalid, the consequential reassessment order collapses.
- Since the Assessee succeeded on this legal ground, issues on merits of additions were rendered academic.
- The reassessment notice & consequent order were quashed. Assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
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