ITAT Delhi Quashes Reassessment for Mechanical Section 151 Sanction

Researchco Reprints Vs DCIT (ITAT Delhi)

Summary: The appeal was preferred by Researchco Reprints against the order dated 30.12.2024 passed by the Commissioner of Income Tax (Appeals), New Delhi under Section 250 of the Income-tax Act, 1961 for AY 2013-14. The CIT(A) had dismissed the assessee’s appeal. The original return was filed on 23.09.2013 declaring total income of Rs. 3,09,830/-. It was processed under Section 143(1) on 13.03.2015, and assessment under Section 143(3) was completed on 08.02.2016 at assessed income of Rs. 31,19,850/-.

A search, seizure and survey operation under Sections 132/133A was conducted on 17.12.2015 in the group of Mr. Anand Jain and Mr. Naresh Jain. During the operation, documents including ledgers and invoices were found and seized. The assessee was alleged to have taken accommodation entries for bogus purchases of Rs. 1,04,33,780/- from M/s Cream Sales Pvt. Ltd. and M/s Sunshine Inn Pvt. Ltd., described as paper/shell concerns of Shri Anand Kumar Jain and Shri Naresh Kumar Jain. The assessment was reopened under Section 147 by notice under Section 148 dated 14.03.2019 after prior approval/sanction under Section 151(1) from the Pr. CIT (Central)-03, New Delhi.

The Assessing Officer subsequently added Rs. 1,04,33,780/- as bogus purchases/accommodation entries and Rs. 2,08,675/- as commission allegedly paid in cash at 2% of the accommodation entries. The CIT(A) confirmed the additions. The assessee raised twelve concise grounds, principally challenging the jurisdiction for reopening, the validity of the sanction under Section 151, the alleged absence of failure to disclose material facts, the manual assessment order without DIN, the additions on account of bogus purchases and commission, and the enhancement of Rs. 64,00,706/- under Section 251.

Before the Tribunal, the learned AR pressed the legal grounds and contended that the sanction under Section 151 was undated and mechanical and had been granted without application of mind, rendering the notice under Section 148 and consequential reassessment proceedings void ab initio. The assessee also relied on an order dated 16.01.2026 passed by the ‘B’ Bench of ITAT Delhi in the case of Anil Kumar Jain v DCIT, ITA No. 475/Del/2025, AY 2013-14, concerning the same search and survey action. The Departmental Representative contended that the sanction was merely an administrative order and could not invalidate the reassessment.

The Tribunal examined the approval proforma under Section 151. It found that the proforma did not mention the earlier assessment order dated 08.02.2016 passed under Section 143(3), while the satisfaction recorded by the PCIT merely stated: “perused reasons recorded. Satisfied that it is a fit case for notice u/s 148”. The PCIT had not referred to any material record before arriving at the satisfaction, and the reasons recorded also did not mention the earlier scrutiny assessment. The approval was signed but undated. The Tribunal considered these facts sufficient to suggest that the sanction had been granted mechanically without application of mind.

The Tribunal then considered the principle that administrative orders should be supported by reasons. It discussed State of H.P. V. Mustaque Ahmad, State of Rajasthan v. Rohitas and Ors., Mohinder Singh Gill v. Chief Election Commissioner, U Manjunath v. U Chandrasekhar and M/s Kranti Associates Pvt Ltd & Anr v. Masood Ahmed Khan. These authorities were considered in the context of the requirement that an authority exercise its statutory power with reasons and that the reasons supporting an administrative or quasi-judicial decision should be available in the order itself.

The Tribunal also followed its earlier decision in Anil Kumar Jain v DCIT, which concerned the same search action and a similar sanction under Section 151. The Tribunal reproduced the earlier decision’s discussion of the mechanical approval, including the Delhi High Court’s guidelines in SABH Infrastructure Ltd. vs. ACIT, W.P.(C) 1357/2016, order dated 25.09.2017, concerning reasons for reopening, disclosure of the approval form, supporting documents, and proper disposal of objections. The reproduced material also referred to the Delhi High Court decision in CIT vs N.C. Cables Ltd., where the Court held that merely appending the expression “approved” does not demonstrate the required satisfaction and application of mind under Section 151.

The Tribunal further reproduced the discussion concerning Saraswat CO-operative Bank Ltd. vs ACIT & Others [2025] 473 ITR 205 (Bom.), including the Bombay High Court’s observations on the statutory requirement of sanction under Section 151 and the need for the sanctioning authority to apply its mind to the facts and applicable law. The Tribunal also reproduced the discussion concerning Hindustan Lever Ltd. v. R. B. Wadkar, particularly the requirement that reasons for reopening must disclose the Assessing Officer’s mind, be clear and unambiguous, disclose the vital link between reasons and evidence, and not be supplemented later by affidavit or oral submissions.

Having regard to the similarity between the earlier ITAT decision and the present case, the Tribunal respectfully followed Anil Kumar Jain and held that the assumption of jurisdiction for reassessment under Section 147 by issuance of notice under Section 148 had no leg to stand because the sanctioning order under Section 151 was invalid. Consequently, the reassessment was quashed. Since the reassessment order itself was quashed, the other grounds of appeal became academic and were not adjudicated, and were left open. The assessee’s appeal was accordingly allowed.

Cases Discussed

• Anil Kumar Jain v DCIT, ITA No. 475/Del/2025 (A.Y. 2013-14), ITAT Delhi
• State of H.P. V. Mustaque Ahmad, 2007 (58) ACC 382 (SC)
• State of Rajasthan v. Rohitas and Ors., 2008 (61) ACC 678 (SC)
• Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851
• U Manjunath v. U Chandrasekhar, 2017(6) Supreme 19
• M/s Kranti Associates Pvt Ltd & Anr v. Masood Ahmed Khan, (2010) 9 SCC 496
• SABH Infrastructure Ltd. vs. ACIT, W.P.(C) 1357/2016, Delhi High Court, order dated 25.09.2017
• Pr. Commissioner of Income Tax Vs M/S N.C cables LTD. (Delhi High Court)
• Saraswat CO-operative Bank Ltd. vs ACIT & Others, [2025] 473 ITR 205 (Bom.)
• Hindustan Lever Ltd. v. R. B. Wadkar, 268 ITR 332 (Bom.)

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT DELHI 

This appeal has been preferred against the impugned order dated 30.12.2024 passed in Appeal No CIT(A), Delhi-29, 10203/2019-20 by the ld Commissioner of Income Tax (Appeals), New 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. 2013-14, wherein ld CIT(A) has dismissed assessee’s appeal.

2(i). The brief facts of the case are that the assessee filed original return of income on 23.09.2013 for A.Y. 2013-14, declaring total income of Rs. 3,09,830/-. The return of income was processed u/s 143(1) of the Act on 13.03.2015 at returned income. Further the assessment was also completed u/s 143(3) of the Act on 08.02.2016 and assessed total income of the assessee at Rs. 31,19,850/-. A search, seizure and survey operation u/s 132/133A of the Act was conducted by the investigation wing of the department on 17.12.2015 of Mr. Anand Jain and Mr. Naresh Jain group of cases. During the course of survey, some incriminating documents such as ledgers and invoices were found and seized by the department.

(ii) It was found that assessee had taken accommodation entries of bogus purchases of Rs. 1,04,33,780/- from M/s Cream Sales Pvt. Ltd. and M/s Sunshine Inn Pvt. Ltd. paper/ shell concerns of Shri Anand Kumar Jain and Shri Naresh Kumar Jain (entry operators) during the year under consideration. Assessee’s case was reopened u/s 147 by issuance of notice u/s 148 of the Act on 14.03.2019 after taking prior approval/ sanction u/s 151(1) of the Act from the Pr. CIT (Central)-03, New Delhi. Assessee filed return in response thereof.

(iii) Statutory notices u/s 143(2) and 142(1) of the Act were issued, seeking assessee to furnish details regarding accommodation entries for bogus purchases in lieu of cash of Rs. 1,04,33,780/- from aforesaid two entities along with the confirmations and bank statements. Assessee filed reply in response thereof, however, the assessing officer was not satisfied and added Rs. 1,04,33,780/- as bogus purchases/ accommodation entries in lieu of cash from M/s Cream Sales Pvt. Ltd. and M/s Sunshine Inn. Pvt. Ltd. Further an addition of Rs. 2,08,675/- was also made as commission paid in cash (to the accommodation entry providers Shri Anand Kumar Jain and Shri Naresh Kumar Jain, @ 2% of Rs. 1,04,33,780/-).

3. Assessee preferred an appeal before ld CIT(A), who confirmed the action of the assessing officer and dismissed assessee’s appeal.

4. Aggrieved, assessee is under appeal before this tribunal and raised various grounds. The 12 concise grounds raised by the assessee are as under.

“1. On the facts and circumstances of the case, the CIT(A) has erred in confirming the action of the AO in issuing notice u/s 148 and assumption of jurisdiction u/s 147 in absence of condition precedent for assumption of jurisdiction, the order passed by the AO is bad in law, void ab initio and liable to be set aside.

2. That the notice issued u/s 148 of the Act and the consequent reassessment proceedings are, illegal, bad in law and without jurisdiction since the reasons to believe purportedly recorded in this case were generic, vague, factually incorrect, ill-founded, and far-fetched and did not meet the requirements for reopening of assessment u/s 147 r.w.s 148 of the Act.

3. On the facts and circumstances of the case, the CIT(A) erred in confirming the initiation of reassessment u/s 148 in absence of valid sanction under Section 151 of the Income Tax Act, 1961.

4. On the facts and circumstances of the case, the AO erred in initiating reassessment without alleging any failure on the part of appellant in disclosing fully and truly all primary relevant facts during the original assessment under Section 143(3) of the Income Tax Act, 1961.

5. On the facts and circumstances of the case, disposal of objection and the impugned order dated 08th December 2019 passed by the AO under Section 147 read with Section 143(3) manually without mentioning the Document Identification Number (DIN) is non-est.

6. On the facts and circumstances of the case, Ld, CIT (A) has erred both on facts and in law, in upholding the order of the AO, thereby sustaining the assessed income of Rs. 1,37,62,300/- as against income of Rs.31,19,850/- declared by the appellant.

7. On the facts and circumstances of the case, the CIT(A) erred in upholding the addition of Rs. 1,04,33,780/- made by the AO on account of alleged bogus purchases made during the relevant AY, without rejecting the books of accounts in terms of Section 145(3) of the Act and without doubting the corresponding sales for the relevant AY.

7.1 On the facts and circumstances of the case, the CIT(A) erred in upholding the addition of Rs 1,04,33,780/- on account of bogus purchases without considering that the Appellant has made purchase of Rs 34,50,150 only and no purchase from M/s Sunshine Inn Pvt Ltd while there is sale of Rs 57,70,688/-. Appellant discharge its primary onus by placing all necessary documents evidencing the genuineness of the said purchases.

8. On the facts and circumstances of the case, the CIT(A) erred in invoking the provisions of Section 251 and making enhancement of Rs.64,00,706/-(Rs 45,12,248, and Rs 18,88,458) as bogus purchase without alleging any failure on the part of Appellarit in disclosing full and truly all primary relevant facts during the remand proceedings under Section 251(1)(a) of the Income Tax Act, 1961. Even the amount of enhancement in the show cause-notice dated 21.01.2021 was only Rs 18,88,458/-

9. On the facts and circumstances of the case, the CIT(A) erred in upholding the addition made by the AO in conjecture and surmises without there being any direct adverse material against the assessee, based only on suspicion.

10. On the facts and circumstances of the case and in law, the AO erred in passing the assessment order dated 08th December, 2019 u/s 147 w.r.s, 143(3) by relying on various statements recorded during the course of survey/search which has been recorded under threat, pressure and was was not out of free will, is not reliable and the facts mentioned in the statements so recorded are contradictory, far from reality and is not true.

11. That the Id. CIT(A) has erred on facts as well as in law in confirming the addition of Rs. 2,08,675/- being 2% on Rs 1,04,33,780/- made by the Ld. AO alleging as commission paid against accommodation entries.

………….”

5. Perused the records and heard ld representative for the appellant assessee and ld Sr DR for the respondent revenue.

6. At the very outset, ld AR has pressed for the disposal of the legal grounds and submitted that the sanction obtained u/s 151 of the Act, being undated and mechanical without application of mind, is bad in the eye of law and renders notice u/s 148 of the Act, and consequent reassessment proceedings as void ab initio.

7. Ld AR further submits that the ‘B’ Bench of ITAT Delhi, order dated 16.01.2026, relates to the same search and survey action dated 17.12.2015, conducted on Mr. Anil Kumar Jain and Mr. Naresh Jain group of cases. The tribunal in this case, allowed assessee’s appeal holding the assumption of jurisdiction for initiating reassessment u/s 148 of the Act, as invalid. Prayed to allow assessee’s appeal being covered by the above referred order.

8. Ld Sr DR has submitted that the grant of sanction u/s 151 is merely an administrative order passed by the sanctioning authority. It cannot have any adverse effect on the reopening of assessee’s case by issuance of notice u/s 148 of the Act and the consequential reassessment order passed thereon. Prayed to dismiss assessee’s appeal.

9. The assessee has much emphasized that there is non application of mind in respect of grant of sanction u/s 151 of the Act. The approval granted by ld PCIT on a proforma is reproduced as under.

10. The perusal of proforma over which the approval for reopening the case was accorded u/s 151 of the Act shows that there is no mention of earlier assessment order dated 08.02.2016 passed u/s 143(3) of the Act against the appropriate column no. 9. The satisfaction note of the sanctioning authority recorded by ld PCIT against column no. 17 of the proforma, reads as under: “perused reasons recorded. Satisfied that it is a fit case for notice u/s 148”. Ld PCIT has not referred any material record before arriving at the said satisfaction. In the reasons recorded, also there is no mention of earlier assessment order dated 08.02.2016 passed u/s 143(3) of the Act. It speaks only of intimation dated 13.03.2015 passed u/s 143(1) of the Act only. The said approval is signed but undated. The aforesaid facts are sufficient to suggest that the sanction u/s 151 of the Act was granted by the sanctioning authority in a mechanical manner without application of mind.

11. The law 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.

12. 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.

13. 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), being related to the same search and seizure action 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 be 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 him 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 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.”

14. The aforesaid order passed by this tribunal in Anil Kumar Jain (supra), relates to the same search action in which the present assessee is said to be the accommodation entry provider. The sanction u/s 151 is also in the similar fashion as granted in the instant case. In such identical situation, we respectfully follow the above referred decision and hold that the assumption of jurisdiction for reassessment u/s 147 of the Act by issuance of notice u/s 148, has no leg to stand as the sanctioning order passed u/s 151 of the Act, is held to be 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.

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

Order pronounced on  24.08.2026