Banarsi Lal Vs ITO (ITAT Agra)
Summary: ITAT Agra quashed the reassessment proceedings for Assessment Year 2014-15 after holding that the approval obtained under Section 151 of the Income-tax Act for reopening the assessment was mechanical and did not demonstrate application of mind by the sanctioning authority. The assessee had filed his return on 07.06.2016 declaring total income of Rs.1,85,440, which the Assessing Officer treated as non-est. Based on information that the assessee had sold agricultural lands and derived agricultural income, the AO initiated reassessment proceedings under Section 147 and issued notice under Section 148 on 02.02.2017.
The assessee filed a return in response on 27.03.2017. The crucial jurisdictional issue arose from the approval granted by the Additional CIT, Range 2(2), Firozabad under Section 151. The sanctioning authority had merely recorded that he was satisfied that it was a fit case for reopening. The Tribunal held that such approval was mechanical and without proper application of mind. It relied on CIT v. S. Goyenka Lime and Chemicals Ltd., 56 taxmann.com 390 (MP), where mechanical satisfaction for reopening was disapproved and the Revenue’s SLP was subsequently dismissed by the Supreme Court.
The Tribunal also relied upon PCIT v. N.C. Cables Ltd., 391 ITR 11 (Delhi), SBC Minerals P. Ltd. v. ACIT, 475 ITR 360 (Delhi) and Vodafone India Ltd. v. DCIT, 464 ITR 385 (Bombay), which supported the requirement that the statutory sanction reflect meaningful application of mind. Revenue relied on Experion Developers P. Ltd. v. ACIT, 422 ITR 355 (Delhi), Virbhadra Singh v. DCIT, 88 taxmann.com 88 (HP) and Sonia Gandhi v. ACIT, 407 ITR 594 (Delhi) to contend that the sanctioning authority was not required to record elaborate reasons. Noting conflicting decisions of non-jurisdictional High Courts, the Tribunal applied CIT v. Vegetable Products Ltd., 88 ITR 192 (SC) and adopted the construction favourable to the assessee. It consequently held that valid approval under Section 151 had not been obtained in the manner known to law, quashed the entire reassessment proceedings and left the remaining legal and merits grounds open. The assessee’s appeal was allowed.
Cases Discussed
- SBC Minerals P. Ltd. Vs ACIT, 475 ITR 360 (Delhi High Court) — Relied upon. The Tribunal referred to the Delhi High Court ruling for the proposition that mechanical approval without proper application of mind can vitiate the basic assumption of reassessment jurisdiction and result in quashing of the proceedings.
- Vodafone India Ltd. Vs DCIT, 464 ITR 385 (Bombay High Court) — Relied upon. Referred to as taking a similar view that the statutory sanction in reassessment proceedings must involve proper application of mind and cannot be a mechanical exercise.
- Experion Developers P. Ltd. Vs ACIT, 422 ITR 355 (Delhi High Court) — Relied upon by Revenue. Cited for the contention that once the competent authority is satisfied with the reasons recorded by the Assessing Officer, it is not required to provide elaborate reasoning while granting sanction under Section 151.
- Sonia Gandhi Vs ACIT, 407 ITR 594 (Delhi High Court) — Relied upon by Revenue. Cited in support of the Revenue’s contention regarding the nature and sufficiency of approval required under Section 151 for issuance of notice under Section 148.
- Virbhadra Singh Vs DCIT, 88 taxmann.com 88 (Himachal Pradesh High Court) — Relied upon by Revenue. Cited to support the proposition that the sanctioning authority need not give elaborate reasons where it is satisfied with the reasons recorded by the Assessing Officer.
- PCIT Vs N.C. Cables Ltd., 391 ITR 11 (Delhi High Court) — Relied upon. The Delhi High Court had held that merely recording “approved” in the sanction proforma did not demonstrate the application of mind contemplated by Section 151. Elaborate reasons are not required, but the statutory satisfaction must be meaningful rather than ritualistic or formal.
- CIT Vs S. Goyenka Lime and Chemicals Ltd., 56 taxmann.com 390 (Madhya Pradesh High Court); Revenue SLP dismissed, 64 taxmann.com 313 (Supreme Court) — Relied upon. The High Court treated a bare statement that the case was fit for reopening as mechanical approval granted without application of mind. The Revenue’s SLP against the decision was dismissed by the Supreme Court.
- CIT Vs Vegetable Products Ltd., 88 ITR 192 (Supreme Court) — Followed. Applied for the settled principle that where conflicting views of non-jurisdictional High Courts exist on a taxing provision, the construction favourable to the assessee should be adopted.
FULL TEXT OF THE ORDER OF ITAT AGRA
This appeal has been filed by the assessee against the order dated 15.05.2025 passed by the Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (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 assessment year 2014-15.
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 ld 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.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 20.03.2026
