Shri Akhil Bansal vs ITO, Ward 1(4), Shamli

PER VIKAS AWASTHY, JUDICIAL MEMBER:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short ‘the CIT(A)’], dated 20.03.2026, for Assessment Year 2012-13.

Sh. Y. K. Gupta, CA, appearing on behalf of the assessee at the outset submits, that at this stage he would be pressing only ground no. 3 of appeal challenging validity of approval under section 147(b) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

The assessee’s solitary ground for adjudication in appeal is reproduced herein under:

The learned counsel appearing for the assessee submits that the assessee (proprietor of M/s. Raj Enterprises) is an individual having income from salary, rent from house property, business income and income from other sources. During the period relevant to the assessment year under challenge, the assessee had paid credit card bills of Rs.13,73,640/-. The AO in order to examine credit card payments recorded reasons to reopen assessment for AY 2012-13. The approval for initiating proceedings under section 148 is at page 8 of the paper-book. A perusal of the Approval Form would show that the Assessing Officer has sought approval under section 147(b) of the Act. Clause (b) to section 147 was omitted w.e.f. 07.04.1989. The approving authority i.e. PCIT in a mechanical manner without looking at the reasons and the section under which the Assessing Officer sought approval, accorded approval for issuance of notice under section 148 of the Act. This clearly shows that the approval has been granted by the PCIT in a mechanical manner without application of mind.

Per contra, Sh. Manoj Kumar, Sr. DR, representing the department vehemently defended the impugned order and the approval granted by the PCIT. The learned Sr. DR submits that in the approval note apparently it has been inadvertently mentioned “under section 147(b) of the I.T. Act, 1961”. In fact, it is clause (b) of the explanation 2 to section 147. He thus prayed for upholding the approval and the assessment order.

Both sides heard, documents referred during the course of submissions considered. The assessee has raised the solitary legal issue in appeal challenging approval under section 151 of the Act. The short contention of the assessee is that the approval granted for initiating proceedings under section 148 is mechanical. The assessee has drawn our attention to the approval at page 6 and 7 of the paper-book, which reads as under:

A bare reading of approval shows that there is specific mention to the provisions of section 147(b) of the Act and not clause (b) to explanation 2 to section 147 as argued by learned Departmental Representative. Clause (b) to section 147 ceased to be in the statute from 01.04.1989. Hence, not applicable to the period relevant when the notice was issued. Neither the Range Head nor the PCIT has bothered to examine the contents of approval received from the Assessing Officer. This clearly shows complete non-application of mind by the approving authority. The approval for initiating proceedings under section 148 of the Act is mechanical and perfunctory, hence, unsustainable. The reopening of assessment fails to pass the test of judicial scrutiny since the mandatory approval is without application of mind. Thus, the consequent proceedings arising therefrom are vitiated and are liable to be quashed. I hold and direct accordingly.

In the result, appeal of the assessee is allowed.