KALINGA GUEST HOUSE AND RESORTS,ANGUL V. INCOME TAX OFFICER, ANGUL WARD, ANGUL, ANGUL

ITA 249/CTK/2025

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The case involves two appeals by Kalinga Guest House And Resorts against the orders of the CIT(A), Bhubaneswar-2, for the assessment years 2013-2014 and 2014-2015. The primary contention was regarding the mechanical approval by the JCIT for reopening the assessments, which the assessee argued was without proper application of mind. The Tribunal referenced a decision by the Madhya Pradesh High Court in the case of S. Goyanka Lime & Chemical Ltd., which was upheld by the Supreme Court, to support the view that such mechanical approvals are invalid. The CIT DR argued that the CIT(A) had thoroughly considered the issue, but the Tribunal found the mechanical nature of the JCIT's approval to be a critical flaw.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708615 (ITAT-CUTTACK)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2013-2014
• Other Referred Cases: S. Goyanka Lime & Chemical Ltd. vs. [2015] 56 taxmann.com 390 (MP), Arjun Singh (supra)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIM KUMAR CHAKRABORTY
• Assessee Lawyers: P.K.MISHRA; HIMANSHU JENA; NARAHARI SWAIN; ARS
• Keywords: Question of law; Reopening of assessment
• Section: 148

Judgement Text

" आयकर अपीलीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री राजेश क ुमार, लेखा सदस्य क े समक्ष । (THROUGH VIRTUAL HEARING) BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER आयकर अपील सं/ITA Nos.249 & 241/CTK/2025 (नििाारण वर्ा / Assessment Year : 2013-2014 & 2014-2015) Kalinga Guest House And Resorts C/o: Kamlesh Construction (P) Ltd Near FCI Chowk, Kulad, PO/PS/Dist : Angul-759145 Vs ITO, Angul Ward, Angul PAN No. :AALFK 7123 P (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri P.K.Mishra, Himanshu Jena & Narahari Swain, ARs राजस्व की ओर से /Revenue by : Shri Ashim Kumar Chakraborty, CIT-DR सुनवाई की तारीख / Date of Hearing : 15/07/2025 घोषणा की तारीख/Date of Pronouncement : 15/07/2025 आदेश / O R D E R Per Bench : These are two appeals filed by the assessee against the separate orders of the ld. CIT(A), Bhubaneswar-2, both dated 20.03.2025 for assessment years 2013-2014 & 2014-2015, respectively. 2. It was submitted by the ld AR that the approval granted by the ld. JCIT in both the assessment years were mechanical and without application of mind, and, therefore the approval granted is liable to be quashed and consequently the consequential notice issued u/s. 148 of the Act is also liable to be quashed. The Ld. AR has placed before us the approvals granted by the JCIT, Range-4, Bhubaneswar for both the assessment years under consideration which read as follows:- ITA Nos.249 & 241/CTK/2025 2 ITA Nos.249 & 241/CTK/2025 3 3. It was submission that in the approval by the JCIT has only mentioned “ Yes” and has not given any reason or mention anything about his satisfaction. It was submitted that in view of the Hon’ble Madhya ITA Nos.249 & 241/CTK/2025 4 Pradesh High Court in the case of S. Goyanka Lime & Chemical Ltd., reported in [2015] 56 taxmann.com 390 (MP) which has been approved by the Hon’ble Supreme Court in [2015] 64 Taxmannn.com 313 (SC), the approval granted by the ld. JCIT is liable to be quashed. 4. In reply Ld. CIT DR submitted that there is no requirement under the provision of section 151 of the Act that any approval needs to be taken. It was the submission that the ld. CIT(A) has considered the issue in depth when he has rejected the claim of the assessee in regard to approvals. Ld. CIT-DR reiterated the findings of the ld. CIT (A). 5. We have considered the rival submissions. A perusal of the decision of the Hon’ble Madhya Pradesh High Court in the case of S.Goyanka Lime & Chemical Ltd, referred to supra, shows that the Hon’ble Madhya Pradesh High Court has held that where the Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice u/s.148 of the Act, the reopening of assessment was invalid. The relevant observations of the Hon’ble M.P.High Court in paras 7 to 10 are as under :- 7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so \"Yes, I am satisfied\". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format \"Yes, I am satisfied\" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' ITA Nos.249 & 241/CTK/2025 5 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration. 6. This decision of the Hon’ble Madhya Pradesh High Court has been approved by dismissal of the SLP. Consequently the findings of the Hon’ble Madhhya Pradesh High Court has obtained finality and also become the rule. A perusal of the approval granted by the ld. JCIT shows that the words used is only “Yes”. Thus, the Hon’ble Madhya Pradesh High Court has held that just writing the term “Yes, I am satisfied” is mechanical approval and non-application of mind. Obviously, writing just “Yes” would also be on similar line. This being so, as it is noticed that the approval granted in a mechanical manner and without application of mind, respectfully following the principle laid down by the Hon’ble Madhya Pradesh High Court which has been approved by the Hon’ble Supreme Court, the approval granted for initiation of the reopening the by issuance of notice u/s 148 of the Act, stands quashed and consequential assessment also stands annulled for both the assessment years 2103-14 ad 2014-15. ITA Nos.249 & 241/CTK/2025 6 7. In the result both appeals of the assessee are allowed. Order dictated and pronounced in the open court on 15/07/2025. Sd/- (राजेश क ुमार) (RAJESH KUMAR) Sd/- (जाजज माथन) (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER ददनाांक Dated 15/07/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशािुसार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अधिकरण, कटक/ITAT, Cuttack 1. अपीलाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT, Cuttack 6. गार्ज फाईल / Guard file. सत्यापपत प्रयत //True Copy// "