Top Stories Simply Writing “I am satisfied” not a Valid Approval for Notice u/s 148 of Income Tax Act: Delhi HC [Read Order] “There is no whisper of any material that may have weighed for the grant of approval”, the High Court observed By Manu Sharma – On October 5, 2024 10:52 am – 2 mins read The Delhi High Court, recently held that simply recording “I am satisfied” is insufficient to validate an approval for issuing a notice under Section 148 of the Income Tax Act, 1961. In the case Capital Broadways Pvt. Ltd. v. Income Tax Officer, Ward 5(3), Delhi, the court emphasised that a mere mechanical sanction by the competent authority does not meet the requirements of the law, thereby quashing the notice issued for the assessment year 2010-11.

Get a Complete Kit of Essential Books for Daily Practice, Click Here The petitioner challenged the issuance of the notice under Section 148, asserting that the Principal Commissioner of Income Tax ( PCIT ), who approved the reassessment, did so without applying an independent mind. The court noted that the phrase “I am satisfied,” used by the PCIT to approve the notice, was devoid of any specific reasoning, making it a ritualistic and formal endorsement rather than a substantive evaluation of the material facts. In this context, the Bench of Justices Ravinder Dudeja and Yashwant Varma highlighted the need for rationale in the approval, stating, “The satisfaction arrived at by the concerned Officer should be discernible from the sanction order passed under Section 151 of the Act. However, as may be seen, the approval order is bereft of any reason. There is no whisper of any material that may have weighed for the grant of approval.”

Get a Complete Kit of Essential Books for Daily Practice, Click Here The judgment went on to observe that, “While elaborate reasons may not have been given, at least there has to be some indication that the approving authority has examined the material prior to granting approval. Mere appending the expression ‘Yes, I am satisfied’ says nothing.” The court referenced several earlier decisions to support its view, including the case of N.C. Cables Ltd., where it was held that “The mere appending of the expression ‘approved’ says nothing. It is not as if the Commissioner of Income-tax (Appeals) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded in the given case which can be reflected in the briefest possible manner.”

The court further reiterated that the purpose of Section 151 of the Income Tax Act is to introduce a supervisory check over the actions of the Assessing Officer. Without an independent application of mind, the notice under Section 148 of the Income Tax Act cannot be sustained. Get a Complete Kit of Essential Books for Daily Practice, Click Here The court concluded by setting aside the impugned notice, stating that the approval given was akin to a “rubber stamping” of the process rather than a considered evaluation.