Kailash Bansal Vs ITO (ITAT Delhi)
Delhi ITAT Quashes Reassessment for Mechanical Approval Under Section 151
The Delhi ITAT quashed the reassessment proceedings initiated under sections 147/148, holding that the mandatory approval under section 151 was granted in a mechanical manner without independent application of mind. The Tribunal noted that the Principal CIT merely affixed a rubber stamp stating “Yes, I am satisfied”, despite a glaring mismatch between the alleged escaped income mentioned in the approval (₹81.34 lakh) and that recorded in the reasons for reopening (₹1.03 crore).
Relying on the Delhi High Court’s decisions in Capital Broadways (P.) Ltd. and Vinod Kumar Solanki, as well as the coordinate bench ruling in Sandhya Sharma v. ACIT, the Tribunal held that a mere endorsement such as “Yes, I am satisfied” does not satisfy the statutory requirement of approval under section 151, as it fails to demonstrate independent consideration of the material by the sanctioning authority.
Holding that the sanction under section 151 was invalid, the Tribunal declared the notice issued under section 148 and the consequent reassessment proceedings to be void in law. Since the reassessment itself was quashed on the jurisdictional issue, the Tribunal did not examine the additions on merits. The assessee’s appeal was allowed
Cases Discussed
- Capital Broadways (P) Ltd. v. ITO (Delhi HC), 301 Taxman 506 (Del) dated 3.10.2024
- Sandhya Sharma v. ACIT, ITA No. 2019/D/2022
- Vinod Kumar Solanki vs. ACIT (Delhi HC), WP (C) 4196/2022, order dated 14.08.2024
- PCIT vs. Kamal Kapoor (Delhi HC), ITA 14/2024 dated 06.03.2024
- DCIT v. CDS Infra Projects Ltd., ITA No. 1445/D/2023
- Central India Electric Supply Co. Ltd. vs. ITO (Delhi HC), 333 ITR 237
- Meenakshi Overseas Pvt Ltd (citation not provided)
- Experion Developers (P) Ltd. (citation not provided)
- Pioneer Town Planners P Ltd (citation not provided)
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The assessee has filed appeal against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 19.11.2026 for the Assessment Year 2009-10.
2. At the outset, ld. AR of the assessee brought to our notice relevant facts of the case and submitted his submission as under. He submitted that Grounds No.1 to 1.5 are regarding theassumption of jurisdiction undersection 147 read with section 148 of the Income-tax Act, 1961 (for short ‘the Act’) and completion of assessment u/s 147 read with section 144B of the Act which in the respectful submission are not in conformity with law and therefore, deserve to be quashed as such.
3. Ld. AR mainly relied on ground no.1.3 which is a legal ground that notice dated 26.3.2016 u/s 148 of the Act issued by the ITO, Ward-2, Hisar, placed at page 5 of Paper Book,in absence of approval and in any case a valid approval under section 151 of the Act, assumption of jurisdiction is invalid. He further submitted that copy of the approval dated 9.5.2024 u/s 151 of the Act is placed at page 181 of Paper Book, for the sake of brevity, the same is reproduced below :-
4. It is submitted that it is evident from aforesaid approval that the said approval is for alleged escapement of income of Rs.81,34,341/- as against alleged escapement of Rs.1,03,89,341/- as stated in reasons recorded u/s 148(2) of the Act. He thus submitted that without making any query from Assessing Officer that what is the actual figure of income alleged to escape assessment has granted the mechanical approval, that too by marking the STAMP — ‘Yes’ I am Satisfied.Accordingly, he submitted that such approval is not a valid approval u/s 151 of the Act. He placed reliance on various judicial pronouncements and some of which are reproduced below :-
- 301 Taxman 506 (Del) dated 3.10.2024 Capital Broadways (P) Ltd. ITO (pages 4-10 of JPB)
- ITA No. 2019/D/2022 (Assessee) Sandhya Sharma v. ACIT (pages 48-64of Paper Book
- ITA 14/2024 (Delhi) PCIT vs. Kamal Kapoor dated 06.03.2024 (pages 11-16 of JPB)
- 333 ITR 237 (Del) Central India Electric Supply Co. Ltd. vs. ITO (pages 17-24 of JPB)
- ITA No. 1445/D/2023 DCIT v. CDS Infra Projects Ltd. (pages 2547 of JPB)
5. In view of the above, he pleaded that proceedings-initiated u/s 147 of the Act is bad in law and liable to be quashed as such and allow the appeal of the assessee
6. On the other hand, ld. DR of the Revenue relied upon the orders of the lower authorities.
7. Considered the rival submissions and material placed on record. We find that in the instant case approval for issue of notice u/s. 148 was granted in a mechanical manner by the PCIT, Hisar by only mentioning the word “Yes, I am satisfied” (rubber stamped) which is bad in law and resultantly the re-assessment proceedings initiated based on such approval is bad in law. Further, we also observed that the said approval is for alleged escapement of income of Rs.81,34,341/- as against alleged escapement of Rs.1,03,89,341/- as stated in reasons recorded u/s 148(2) of the Act. We find that ld. AR relied on various judicial pronouncements which fortifies his case. We observed Hon’ble Delhi High Court in the case of Capital Broadways (P) Ltd. (supra) and the decision of the coordinate Bench in the case of Sandhya Sharma v. ACIT(supra) (wherein Accountant Member is the Author), fortified our view that approval is bad in law wherein it is held as under :-
- 301 Taxman 506 (Del) dated 3.10.2024 Capital Broadways (P) Ltd. v. ITO
“20. As explained in the above cases, mere repeating of the words of the statute, mere rubber stamping of the letter seeking sanction or using similar words like “Yes, I am satisfied” will not satisfy the requirement of law. Hence, we are of the firm view that PCIT has failed to satisfactorily record his concurrence. The mere use of expression “Yes, I am satisfied” cannot be considered to be a valid approval as the same does not reflect an independent application of mind. The grant of approval in such manner is thus flawed in law. 21. Hence, for the aforesaid reasons, we are of the view that the approval granted by the PCIT for issuance of notice under Section 148 of the Act is not valid and therefore the impugned notice under Section 148 dated 24.03.2017 cannot be sustained. Accordingly, the impugned notice is set aside.”
- ITA No. 2019/D/2022 (Assessee) Sandhya Sharma v. ACIT
“4. Coming to the assessee’s appeal on jurisdictional issue on approval granted u/s 151 of the Act. In this regard, ld. AR brought to our notice page 27 and 37 of the paper book wherein approval form for granting approval u/s 151 is placed on regard as per which Assessing Officer has forwarded the form on 26.03.2019 and ld. JCIT has approved the same merely recording ‘Yes’ in the allotted column. Ld. AR submitted that the approval granted u/s 151 is mechanical without applying the mind. In this regard, he relied on the decision of Hon’ble Delhi High Court in the case of Vinod Kumar Solanki vs. ACIT in WP (C) 4196/2022 order dated 14.08.2024 which is placed at page 150 of the paper book. He specifically brought to our notice page 155 of the paper book wherein Hon’ble High Court has considered similar issue and quashed the reassessment.
5. On the other hand, ld. DR for the Revenue vehemently opposed the above said submissions made by the ld. AR for the assessee. He referred to the approval granted by the JCIT which is placed at page 37 of the paper book. He submitted that it is not the case that ‘Yes’ alone is recorded whereas records were maintained by his office and reviewed continuously. He relied on the following cases and tried to distinguish the submissions made by the ld. AR for the assessee as under:-
……
7. Coming to the issue of approval granted u/s 151 of the Act raised by the assessee, we observed that the assessee has brought to our notice the approval form wherein the JCIT has given approval by merely recording ‘yes’ in the allotted form and the same was also approved on the same day without discussing anything further. The ld AR submitted before us that the approval is mechanical by relying on the decision of Hon’ble Delhi High Court in the case of Vinod Kumar Solanki (supra). At the same time, ld DR heavily relied on the decisions of Meenakshi Overseas Pvt Ltd (supra), Experion Developers (P) Ltd (supra) and Pioneer Town Planners P Ltd (supra), wherein the issue of reasons recorded by mentioning the words, ‘Yes, I am Satisfied’. In which the Hon’ble Delhi High Court has decided the issue in favour of the revenue.
8. After considering the submissions of both sides, we observe that the decision relied by the assessee in the case of Vinod Kumar Solanki (supra) is pronounced on 14.08.2024 in which the similar issue of approval was considered and decided in favour of the assessee by considering the earlier decision which are also relied by the ld DR. It is also fact that the decisions relied by the ld DR were decided prior and also considered the similar views by the Hon’ble High Court on the issue raised by the assessee before us. Therefore, we are bound to follow the recent decision of the Hon’ble Court and accordingly, we are inclined to decide the issue of mechanical approval that too merely recording as ‘yes’. For the sake of brevity, the decision of the High Court is reproduced below:
………
9. Even in this case, the approval was granted from the assessment of another person and merely recorded the reason as `yes’, proceeded to approve the same mechanically. Hence we are inclined to allow the ground raised by the assessee and held to be initiation of proceeding itself is bad in law and accordingly, the assessment made in the case of the assessee is set aside. In the result, appeal filed by the assessee is allowed.”
8. In view of the aforesaid precedents, we hold that the approval granted by the PCIT, Hisar for issuance of notice u/s. 148 of the Act is not valid.
Therefore, respectfully following the aforesaid binding precedents, we allow the legal ground raised by the assessee and quash the reassessment proceedings accordingly.
9. Since the ground on jurisdictional issues is allowed, the issues on merit become academic, therefore, not deliberated upon.
10. In the result, the appeal of the assessee is allowed in the above terms.
Order pronounced in the open court on this 31st day of July, 2026
