Approval To Reopen Assessment Against Vodafone Granted By The Dept. In A Most Casual Manner: Bombay High Court

The Bombay High Court has held that the approval has been granted in a most casual manner. The power vested in the authorities under Section 151 to grant or not grant approval to the AO to reopen the assessment is coupled with a duty. The authorities were duty-bound to apply their minds to the proposal put up for approval in light of material relied upon by the AO.

The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that it was obligatory on all the authorities and PCCIT in particular to consider whether or not power to reopen is being invoked properly.

“We are of the opinion 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 under Section 148 of the Act. They would have either told the AO to correct the figures in Column 7 or would have sent the papers back for reconsideration. These officers have substituted form for substance,” the bench said.

The petitioner/assessee, Vodafone India, has assailed a notice under Section 148A(b) of the Income Tax Act, 1961, an order passed under Section 148A(d) of the Act. One of the grounds raised across the bar is that the sanction for issuance of the order under Section 148A(d) has been granted without application of mind by all five officers involved.

In the approval, the Principal Chief Commissioner of Income Tax (“PCCIT”) states, “Based on the material available on record and careful consideration of the same, I am satisfied that it is a fit case to issue notice under Section 148 of the IT Act. Hence, the draft order submitted by the Assessing Officer under Section 148A(d) of the Act is hereby approved.”.

The court held that it was an incorrect statement made by the PCCIT that the record had been carefully considered before granting approval. The record would certainly have contained the notice issued under Section 148A(d) and the information annexed to that notice, which states escapement of income in the sum of Rs. 42858,47,29,661/-, whereas the amount mentioned in the order passed under Section 148A(d) totals to Rs. 12431,99,24,486/-. In the d-order, there is not even an explanation as to how the amount has changed or has gone down.

“With great regret, we have to mention that these approvals are being granted mechanically and without application of mind, and this is not the only matter. Innumerable orders passed under Section 148A(d) of the Act are being set aside in view of the approval being granted without application of mind. Officers should realize that this is also delaying assessment and reassessment proceedings and is also affecting the revenue of the nation,” the court said.

Counsel For Petitioner: J. D. Mistri

Counsel For Respondent: Devvrat Singh

Case Title: Vodafone India Ltd. Versus Deputy Commissioner of Income Tax

Case No.: Writ Petition No.2108 Of 2023

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