Reopening Notice Quashed: Approval under Section 151 Granted Without Application of Mind
Summary in Key Points:
Issue: Was the approval granted under Section 151 for issuing a notice under Section 148 valid, given the discrepancy in the income figures between the approval and the draft order?
Facts: The assessee challenged the validity of a notice issued under Section 148 for AY 2019-20, arguing that the approval under Section 151 was granted without proper scrutiny, as there was a mismatch in the income figures mentioned in the approval and the draft order. The department attributed this to a typographical error.
Decision: The High Court quashed the notice under Section 148, holding that the discrepancy indicated a lack of application of mind in granting approval under Section 151. The Supreme Court dismissed the revenue’s SLP against the High Court’s order, both on grounds of delay and on merits, upholding the High Court’s decision.
Important Note: This decision emphasizes the importance of careful scrutiny and application of mind when granting approval for reopening assessments under Section 151. The discrepancy in the income figures, even if attributed to a typographical error, suggests that the approving authority did not thoroughly review the application. This ruling underscores the significance of due diligence in the reassessment process and ensures that approvals are not granted mechanically, protecting taxpayers from reassessments based on flawed or incomplete information.
SUPREME COURT OF INDIA
Assistant Commissioner of Income-tax
v.
Teleperformance Global Service (P.) Ltd.
J.B. PARDIWALA and R. Mahadevan, JJ.
SLP (CIVIL) Diary No.59263 of 2024
JANUARY 10, 2025
N. Venkataraman, A.S.G., Raj Bahadur Yadav, AOR, Vijay Awana, V.C. Bharathi, Mrs. Pankhuri Shrivastava, Sarthak Karol and Jagdish Chandra, Advs. for the Petitioner.
ORDER
1. There is a gross delay of 181 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner.
2. Even otherwise, we see no reason to interfere with the impugned order passed by the High Court.
3. The Special Leave Petition is, accordingly, dismissed on the ground of delay as well as merits.
4. Pending applications, if any, also stand disposed of.
______________
HIGH COURT OF BOMBAY
Teleperformance Global Service (P.) Ltd.
v.
Assistant Commissioner of Income-tax
K. R. SHRIRAM and Dr. Neela Gokhale, JJ.
WRIT PETITION (L) NO. 31772 OF 2023
MARCH 19, 2024
J.D. Mistry, Sr. Adv. and Madhur Agrawal for the Petitioner. Vikas T. Khanchandani and Eshaan Saroop for the Respondent.
ORDER
1. By this petition, Petitioner is challenging the impugned initial notice dated 21st March 2023 issued under Section 148A(b) of the Income Tax Act, 1961 (“the Act”), the impugned order dated 31st March 2023 passed under Section 148A(d) of the Act for AY 2019-20, and the impugned notice dated 31st March 2023 issued under Section 148 of the Act for AY 2019-20.
2. One Intelenet Global Services Pvt. Ltd. (“IGSPL”) amalgamated with Petitioner with effect from 7th July 2011 pursuant to an order dated 5th March 2013 passed by this Court. Petitioner was earlier called M/s. Serco BPO Pvt. Ltd.
3. Petitioner filed return of income on 29th November 2019 for AY 2019-20 disclosing total income of Rs.193,91,30,100/- under normal provisions of the Act and Rs.2,47,10,34,147/- as book profit under Section 115JB of the Act. It is averred in the petition that all the transactions during the relevant year were done by Petitioner being the transferee company but certain third parties have inadvertently booked the transactions with Petitioner in the erstwhile PAN of IGSPL and the said transaction are reflected in the 26AS of IGSPL. Petitioner has, however, considered all the transactions entered into by Petitioner in its return of income (“ROI”) irrespective of whether the transactions have been booked in PAN of Petitioner or IGSPL and claimed credit of all TDS irrespective of whether tax has been deducted in the PAN of Petitioner or IGSPL.
4. Petitioner, thereafter, received notice dated 21st March 2023 under Section 148A(b) of the Act from Respondent No.1. In the notice it was stated, inter alia:
“it is seen from the insight portal of the Income-tax Department that assessee company has transaction by the company by Intelenet Global Services Pvt. Ltd. (AACI7387P), now amalgamated with company M/s. Teleperformance Global Services Pvt. Ltd., the assessee has entered into the following transactions:
| Information Code | Information Description | Amount Description | Amount (Rs.) |
| TDS 194J | TDS Statement – Fees for professional or technical services | Paid or credited | 27,94,479/- |
| TDS 194A | TDS Statement -interest other than interest on securities | Paid or credited | 5,02,490/- |
| TDS 194J | TDS Statement – Fees for professional or technical services | Paid or credited | 93,158/- |
| TDS 194J | TDS Statement – Fees for professional or technical services | Paid or credited | 63,16,784/- |
The Petitioner is given a show cause as to why in view of the above transactions, information, a notice under Section 148 of the Act, should not be issued.”
5. Petitioner replied vide its letter dated 29th March 2023. Notwithstanding Petitioner’s explanation, an order dated 31st March 2023 is passed by Respondent No.1 rejecting Petitioner’s objections and holding that it was a fit case for issuance of notice under Section 148 of the Act. A consequent notice under Section 148 of the Act has also been issued. The order under Section 148A(d) of the Act and the consequent notice under Section 148 of the Act has the approval of the Principal Commissioner of Income Tax Devindra Kumar Gupta under Section 151 of the Act.
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 thorugh the proposal submitted by the Assessing Officer (AO) through the jurisdictional Range Heard. After exainig 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 CIT or the PCIT 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 31st March 2023 is also quashed and set aside.
9. Petition disposed. No order as to costs.