ITAT Quashes Reassessment for Defective Approval Under Section 151: Changing Escapement Figures Showed Non-Application of Mind
In an important ruling concerning reassessment proceedings under sections 148 and 151 of the Income Tax Act, the Agra Bench of the Income Tax Appellate Tribunal (ITAT) has held that sanction granted under section 151 becomes legally unsustainable where the approval is based on uncertain and shifting figures of alleged escaped income. The Tribunal observed that frequent changes in the amount of alleged escapement clearly demonstrated non-application of mind by the Assessing Officer at the stage of seeking sanction for reopening of assessment.
The case arose in Adal Singh vs. ITO [ITA No.615/Agr/2025] where reassessment proceedings were initiated on the allegation that certain income had escaped assessment. While seeking approval under section 151 for issuance of notice under section 148, the Assessing Officer stated that income escaping assessment amounted to ₹1,11,37,000/-.
However, during subsequent proceedings under section 148A(d), the alleged escapement itself underwent substantial reduction and was revised to ₹66,13,961/-. Surprisingly, in the final reassessment order, the Assessing Officer ultimately treated only cash deposits of ₹27,00,000/- as escaped income.
The Tribunal carefully examined this changing stand adopted by the department at various stages of reassessment proceedings. It observed that the very foundation of sanction under section 151 requires proper application of mind and a prima facie satisfaction regarding the nature and extent of escaped income before reopening is approved.
According to the Tribunal, the drastic variation in the alleged escapement figures clearly showed that the Assessing Officer himself was uncertain about the exact amount of income which had allegedly escaped assessment at the time of seeking sanction. The Tribunal noted that the approval under section 151 cannot be granted mechanically or on tentative assumptions without a proper and settled formation of belief.
The ITAT emphasized that sanction under section 151 is not an empty procedural formality but an important statutory safeguard intended to prevent arbitrary reopening of completed assessments. The approving authority is expected to examine the material independently and apply conscious consideration before granting approval for reassessment proceedings.
In the present case, the Tribunal found that the sanction was obtained on one figure, modified substantially at the section 148A(d) stage, and finally culminated into a much smaller addition in the reassessment order itself. Such inconsistency, according to the Tribunal, indicated absence of proper satisfaction and lack of due application of mind at the initial stage itself.
Accordingly, the Tribunal held that the approval granted under section 151 suffered from non-application of mind and was therefore legally defective. Since valid sanction is a jurisdictional requirement for assumption of reassessment proceedings, the defect went to the very root of the matter.
The reassessment proceedings were consequently held to be unsustainable in law.
This ruling carries significant importance in modern reassessment litigation, particularly after the introduction of the new reassessment regime under sections 148A and 151. The judgment reinforces that reopening of assessments cannot be based on vague suspicion, uncertain figures, or mechanical approvals. The department must demonstrate clear satisfaction backed by proper material before invoking reassessment jurisdiction.
The decision is likely to provide strong support in cases where reassessment notices are issued on shifting allegations, inconsistent escapement figures, or approvals granted without meaningful examination of facts and material available on record.
The copy of the order is as under:
