Guljar Vs ITO (TDS) (ITAT Delhi)
Approval First, Reasons Later? ITAT Delhi Strikes Down Entire 147 Proceedings-148 Notice Void for Pre-Dated Sanction
In this appeal, Guljar challenged the reassessment framed u/s 147/148 on the ground that the AO recorded reasons for reopening after obtaining sanction u/s 151, rendering the approval invalid in the eyes of law. The AO recorded reasons on 30.03.2016, stating that cash deposits of ₹55,12,000 had escaped assessment. However, the sanction from PCIT was granted two days earlier, on 28.03.2016– prior to the formation of the reasons themselves.
The Assessee argued that such pre-dated approval showed complete non-application of mind & violated the mandatory scheme of s.151, relying on Kelvinator of India Ltd., Orient Craft Ltd., Meenakshi Overseas & G&G Pharma decisions which mandate independent satisfaction supported by tangible material with a live nexus to escapement of income.
The Tribunal examined the dates & found that the PCIT’s approval was indeed granted before the AO recorded the reasons. Since reasons must precede approval, the sanction was held to be legally defective. As this jurisdictional defect went to the root of validity of the proceedings, the notice u/s 148 was declared void ab initio. Consequently, the entire reassessment was quashed. The Tribunal did not examine other jurisdictional or merits-based grounds, as they became academic.
