Calcutta High Court Sets Aside Reassessment Notice: Mechanical Approval Under Section 151 Renders Section 148A(d) Order Invalid

Overview

A significant ruling from the Calcutta High Court has reinforced the principle that statutory approvals granted under the Income Tax Act, 1961 must reflect genuine application of mind. In Jainco Transmission Limited Vs The ACIT, the Court set aside both the order passed under Section 148A(d) and the consequential notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2017-18, upon finding that the sanctioning authority's approval under Section 151 was granted in a purely mechanical fashion, without any consideration of the assessee's response.

Background of the Case

The assessee, Jainco Transmission Limited, approached the Calcutta High Court by way of a writ petition, challenging two instruments issued on 16th April, 2024:

  1. An order passed under Section 148A(d) of the Income Tax Act, 1961
  2. A notice issued under Section 148 of the Income Tax Act, 1961

Both were pertaining to Assessment Year 2017-18.

The central legal question before the Court was narrow but critical: whether the sanction granted by CCIT, Kolkata-2 under Section 151 of the Income Tax Act, 1961 could be regarded as a valid approval in the eyes of law.

The Assessee's Contentions

The assessee, represented by its learned advocate Mr. Majumder, placed the sanction order on record and raised a pointed objection. The petitioner argued that:

  • A response had been duly filed in reply to the notice issued under Section 148A(b) of the Income Tax Act, 1961.
  • Despite this, Column No. 15 of the sanction order under Section 151 explicitly recorded that no response had been filed by the assessee.
  • Since the approval-granting authority proceeded on an incorrect factual premise — that no reply existed — the sanction could not be treated as one granted after due application of mind.
  • Because the order under Section 148A(d) was passed on the basis of this flawed approval, it was equally tainted and liable to be quashed.

The Revenue's Defence

The Revenue, represented by Mr. Soumen Bhattacharya, did not place the actual case records before the Court but filed a short affidavit attempting to justify the discrepancy reflected in Column No. 15 of the sanction order. The Revenue's explanation proceeded on the following lines: