· Assessee, in its return of income for the year under consideration claimed that a sum of Rs.1,00,00,000/- was received towards share application and further a sum of Rs.35,00,000/- was credited as an advance towards loan.
· Thereafter, the case was reopened and the AO added back Rs.1,35,00,000/- to the income of assessee. The CIT(A) held against the assessee on the question of legality of the reassessment notice, but allowed assessee’s appeal on merits.
· Revenue appealed against the order of the CIT(A) on merits before ITAT and the assessee filed cross appeal on the question of reopening of assessment. ITAT upheld assessee’s cross objection and dismissed revenue’s appeal holding that there was no proper application of mind by the concerned sanctioning authority u/s 151 as a precondition for issuing notice u/s 148 of the Act.
· After going through the relevant noting of the CIT, the Hon’ble Court held that the CIT, who is the competent authority to authorize the assessment notice, has to apply his mind and form an opinion. The Court further held that the mere appending of the expression ‘approved’ says nothing.
· The Court concluded that the satisfaction to be recorded by the CIT has to be recorded in the briefest possible manner. The Court, after considering the facts of assessee’s case held that in the present case, the recording of satisfaction appeared to have been ritualistic and formal, rather than meaningful, and for these reasons, the Court was satisfied that the findings of the ITAT were not to be disturbed.
For further reading, refer the attachment.
Further Reading