Income Tax Commissioner's Order For Reopening Assessment U/S 151 Income Tax Act Can Be In Words "Yes, I Am Convinced": Delhi High Court

Section 151(1) of the Act categorically provides that no notice for reassessment shall be issued under Section 148 by the Assessing Officer (AO), after expiry of four years from the end of the relevant AY, unless the Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of such notice.

In the case at hand, the Petitioner-company was issued reassessment notice in 2016 for AY 2009-10, over alleged accommodation entries.

The issue before the Court was whether usage of the language “Yes, I am convinced it is a fit case for re-opening of the assessment u/s 147 by issuing notice u/s 148” shall meet the requirement for proper approval of the Competent Authority under Section 151.

ITAT had ruled against the Department citing Principal Commissioner of Income-Tax v. N.C. Cables Ltd., (2017) where it was held that the competent authority to authorize reassessment has to apply its mind and merely appending of the expression 'approved' says nothing.

ITAT was of the view that the competent authority had given approval in a mechanical manner.

Disagreeing, the High Court noted that the case of N.C. Cables Ltd (supra) was concerned with the word “approved”. It was in that context that it was held that merely appending the expression “approved” says nothing.

The present case, the Court said, is “clearly distinguishable” from N.C. Cables Ltd (supra).

The assessment order recorded that the assessee was unsuccessful in proving the genuineness of the sum of Rs.25,00,000/- which was found credited in its books of account.

The Court then referred to PCIT v. Meenakshi Overseas Pvt. Ltd. (2016) where it was held that “Yes, I am satisfied” satisfies the mandate of Section 151(1) of the Act.

“So it must be held, that the language “Yes, I am convinced it is a fit case for re-opening the assessment u/s 147 by issuing notice u/s 148” satisfies the mandate of Section 151A of the Act in this case. The Tribunal has clearly erred in not appreciating the above language used by the Competent Authority while granting approval,” 

a division bench of Justices V. Kameswar Rao and Vinod Kumar said and set aside the ITAT order.

Also Read: Commissioner According Sanction U/S 151 Income Tax Act For Issuing Reassessment Notice Must Give Reasons, Merely Saying “I am Satisfied” Not Sufficient: Delhi HC

Appearance: For the Appellant : Mr. Vipul Agrawal, SSC with Ms. Sakshi Shairwal, Mr. Akshat Singh, JSCs and Mr. Gaoraang Ranjan and Ms Harshita Kotru, Advs. For the Respondent : Mr. Arvind Kumar, Adv.

Case title: Pr. Commissioner Of Income Tax – 1 v. M/S Agroha Fincap Ltd.

Citation: 2025 LiveLaw (Del) 1381

Case no.: ITA 60/2024

Click here to read order