Vision Diagnostic India Private Ltd. vs ACIT, Central Circle 32, New Delhi

“23.

Heard both the parties at length and perused the materials available on record. From the perusal of the notice issued u/s 148 as available at PB 33 and 34, it is observed that the AO in the said notice has observed as under:

“I have information that a search was initiated under section 132 of the Act in your case or in the case of the person in respect of which you are the assessable under the act on the date 11/05/2024.

I am satisfied, with the approval of Principal Commissioner or Commissioner, that books of accounts or documents, seized or requisitioned under section 132 or section 132A of the Act in case of VINTAGE DISTILLERS LIMITED pertains or pertain to, or any information contained therein, relate to you or the person in respect of which you are assessable under the Act.”

24.

From the perusal of the above observations made in the notice issued u/s 148 of the Act, it is clear that AO while reopening the assessment was not sure whether the assessee is the person searched or the other person whose documents were fund from the person searched. It is undisputed fact that search action u/s 132 of the Act was carried out in the case of Vintage Group on 11.05.2024 and assessee being the member of such group its business premises was also covered under the search u/s 132 of the Act. However, in the notice issued u/s 148, the Assessing Officer was not clear whether the reopening u/s 148 is made in the case of person searched or in case of non-searched person. Thus, the notice u/s 148 of the Act is ambiguous and issued without application of mind and, therefore, the said notice is invalid and be quashed. The Co-ordinate Bench of the Tribunal in the case of Optus Developers Pvt. Ltd. vs. ACIT, CC-32, New Delhi in ITA Nos.4384 & 4385/Del/2025 vide its order dated 17.12.2025 has held as under:

“2.

Hearing both the sides we find that the assessee now questions the notice u/s 148 dated 31.03.2023 alleging same is outcome of non application of mind and for that as a matter of fact we find that in the notice AO mentioned.

“I have information that a search was initiated under section 132 of the Act in your case or in the case of the person in respect of which you are the assessable under the Act on the date 17/09/2021.

This notice is being issued after obtaining the prior approval of the PCCIT, Delhi accorded on date vide Reference No. 100000038640175.

3.

Undisputedly and admittedly present case is of non-searched case (third party case) so when reopening u/s 148 of the Act is made directly on non-searched person same has different nature and has scope is to be strictly. As evident from cursory look to notice u/s 148 it is totally without application of mind as it is stated assessee is searched and non searched person both. As the impugned assessment order passed u/s 147/144 of the Act is considered we find that the assessment is conclude referring to some search action u/s 132 on Deepak Aggarwal and Mukesh Kumar dated 17.12.2021, and there is no mentions to how this search is related to search dated 17/09/2021 referred in the impugned notice. This thus leaves no doubt in the mind of this bench that impugned notice is outcome of utter casualness and not just non-application of mind. Corresponding ground deserves to be sustained.”

25.

As observed above, facts of the case of the assessee are identical to the facts in the case of Optus Developers Pvt. Ltd. vs. ACIT (supra). In the instant case, the AO while reopening the assessment in the notice u/s 148 it has not clarified whether it is issued for the person searched and in the case of other person as could be observed from the notice issued u/s 148 of the Act. In the light of the above discussion and by respectfully following the judgement of Co-ordinate Bench in the case of Optus Developers (supra), we hold that the notice issued u/s 148 in casual manner, without application of mind and thus is bad in law and is in valid and accordingly the grounds of appeal Nos. 1 to 3 of the assessee are allowed.”

“6.

Various grounds has been raised in the petition, but the most important ground is that the sanction/approval under Section 151 of the Act has been obtained and granted without application of mind. We would agree with Petitioner. A copy of the approval and impugned order under Section 148A(d) are annexed to the petition. In column 7 of the approval, the quantum of income which has escaped assessment is mentioned as Rs.63,16,784/-. In column 18, reasons for the belief that income has escaped assessment is answered as, “Refer order under section 148A(d) for details”. The Additional/Joint Commissioner of Income Tax Rameshwar Prasad Meena has recommended the issuance of notice under Section 148 and in Column 22, reasons for according approval/rejection by the specified authority reads as under:

"Remarks: I have carefully gone through the proposal submitted by the Assessing Officer (AO) through the jurisdictional Range Heard. After examining the details, I find that this is a fit case for issue of notice u/s 148 of the Income Tax Act. The proposal submitted by the AO is accordingly approved. Name: Devinder Kumar Gupta Designation: PCIT, Mumbai-5 Date: 31/03/2023."

7.

The draft of the order under Section 148A(d) of the Act in paragraph 7 states that income of Rs.97,06,911/- has escaped assessment within the meaning of provision of Section 147 of the Act and the same is required to be examined. If the AO who had sought the approval, the Additional/Joint CIT, who had recommended grant of approval and the PCIT, who granted the approval had only bothered to read the request for approval along with draft of the order under Section 148A(d) of the Act, they would have certainly noticed the discrepancies. It is, therefore, clear that none of these officers have even bothered to read the request for approval or draft of the order. In the affidavit in reply, it is mentioned as a typographical error. We are not inclined to accept this explanation because a typographical error could have been committed by the AO, who was seeking the approval, but if only the Additional/Joint Commissioner of Income-tax or the Principal Commissioner of Income-tax had read the approval application and the draft of the order to be issued under Section 148A(d) of the Act, they would have certainly noticed the discrepancy and they should have either refused approval or sent the application back to the AO for filing correct form for approval.

8.

In the circumstances, in our view, this is a fit case for us to interfere. We hereby quash and set aside the order dated 31^st March 2023 under Clause (d) of Section 148A of the Act. The consequent notice issued under Section 148 of the Act also dated 31 st March 2023 is also quashed and set aside.”