Where there is variation in the quantum of income under approval and in draft order, such order u/s148(d) and consequential notice u/s 148 is liable to be quashed.

 

Hon’ble Bombay High Court recently in the case of Teleperformance Global Services (P.) Ltd Ltd Vs ACIT[2024] 161 taxmann.com 258 (Bombay) has held that approval under section 151 for issuance of notice u/s 148 along with order u/s 148A(d) had to be done after application of mind and is not mere approval per se.

In this case, Assessee contended that sanction/approval under section 151 had been obtained and granted without application of mind as the quantum of income which had escaped assessment as mentioned in approval and in draft order varied from each other.

In reply, the department mentioned it as a typographical error.

Assessee argued that the said explanation by the department could not be accepted because a typographical error could have been committed by AO, who was seeking approval, but if only Additional/Joint CIT or PCIT had read approval application and draft of order to be issued under section 148A(d), they would have certainly noticed discrepancy and they should have either refused approval or sent application back to AO for filing correct form for approval.

Bombay HC held that when there is variation in quantum of income under approval and in draft order, such order u/s148(d) and consequential notice u/s 148 is liable to be quashed. It further held as under:

1. “Sanction/approval under section 151 had been obtained and granted without application of mind as quantum of income which had escaped assessment as mentioned in approval and in draft order varied from each other”

2. “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”

The case is highly relevant in numerous cases wherein the order is passed U/s 148A(d) without application of mind and is done in a mechanical way.

 

The copy of the order is as under:

Teleperformance Order