HC Slams PCCIT for Granting Approval to Reassessment Without Considering That There Was No Escapement of Income

Case Details: Vodafone India Ltd Versus Deputy Commissioner of Income Tax, Circle 5(2)(1), Mumbai & Ors [2024] 161 taxmann.com 609

Judiciary and Counsel Details

• • K. R. Shriram & Dr Neela Gokhale, JJ.
  • J.D. Mistri, Sr. Adv., Madhur Agrawal & Jitendra Singh for the Petitioner.
  • Devvrat Singh for the Respondent.

Facts of the Case

The petitioner, Vodafone India Ltd. filed the petition against the order passed by the Principal Chief Commissioner of Income Tax (PCCIT) granting approval for issuing a notice under section 148 of the Income Tax Act, 1961.

The petitioner contended that the PCCIT granted approval without applying his mind mechanically. The amount mentioned in the order passed under section 148A(d) was less than that mentioned in the notice. The PCCIT had not even explained how the amount had changed or gone down.

High Court Held

The High Court held that the approval had been granted in a most casual manner. The power vested in the Authorities u/s 151 to grant or not to grant approval to the AO to reopen the assessment is coupled with a duty. The Authorities were duty-bound to apply their mind to the proposal put up for approval in the light of material relied upon by the AO.

That power cannot be exercised casually in a routine, perfunctory manner. The important safeguards provided in Sections 147 and 151 were treated lightly by the officers. While recommending and granting approval, it was obligatory on the part of the officers to verify whether there was any genuine material to suggest escapement of income.

It was obligatory for all the authorities and PCCIT to consider whether the power to reopen was being invoked properly. The High Court held that if only the Authorities had read the record carefully, they would never have come to the conclusion that this is a fit case for issuance of notice u/s 148 of the Act. They would have either told the AO to correct the figures or would have sent the papers back for reconsideration. These officers have substituted the form for substance.

Thus, the High Court quashed and set aside the order passed u/s 148A(d) of the Act. The consequent notice issued u/s 148 of the Act was also quashed and set aside.