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2021 (3) TMI 1414 - AT - Income TaxAssessment u/s 153A - approval by the JCIT as required u/s 153D - Prior approval necessary for assessment in cases of search or requisition - HELD THAT - From the correspondence between the A.O. on one hand and the JCIT on the other hand and the letter addressed by the JCIT to the Commissioner clearly shows that it was at the stage of discussion and the JCIT could not able to make his mind. Ultimately he simply says that due to shortage of time as he was holding charges for six ranges, it is not possible for him to go into the material deep, therefore, he approved the proposal technically as required u/s 153D of the Act, immediately, after the AO brings to his notice that the assessment is getting time barred. JCIT has not applied his mind even though there was a discussion between the A.O. and JCIT, the JCIT could not make his mind. Hence, this kind of casual approval/technical approval without going to the matter and without applying his mind to the material available on record is not an approval at all. Therefore, A.O. has no jurisdiction to pass the assessment order. In other words, the assessment order passed by A.O. as confirmed by C.I.T.(A) is void, nullity, non-est, hence, cannot be stand in the eye of law. An irregularity in the assessment order may be rectified by remitting back the matter to the assessing officer. In the case on hand it is not an irregularity in the assessment order, it is a jurisdictional error. A.O. has no jurisdiction to pass the assessment order unless the JCIT granted approval. This Tribunal is of the considered opinion that this is not a rectifiable error since it is a jurisdictional error and not an irregularity in the assessment proceeding. Moreover, even if the matter is remitted back, the AO cannot do anything better, since time limit provided under the Act has already expired. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below were set-aside and the entire assessment order as confirmed by C.I.T.(A) are quashed. Decided in favour of assessee.
Issues Involved:
1. Validity of JCIT's approval under Section 153D of the Income Tax Act, 1961. 2. Jurisdiction of the Assessing Officer (AO) to pass the assessment order. Issue-wise Detailed Analysis: 1. Validity of JCIT's Approval under Section 153D: The primary contention revolves around the validity of the approval granted by the Joint Commissioner of Income Tax (JCIT) under Section 153D of the Income Tax Act, 1961. The representative for the assessee argued that the JCIT did not apply his mind to the material available on record and only granted a technical approval due to a shortage of time. The JCIT's letter explicitly stated that he could not delve deeply into the matter due to holding charges of six ranges, thereby approving the draft assessment orders only to fulfill the technical requirement under Section 153D. The Tribunal emphasized that Section 153D mandates that no assessment order shall be passed unless it is approved by the JCIT, which implies that the JCIT must apply his mind to the material on record and the draft assessment order. The Tribunal referred to various judgments, including the Delhi Bench's decision in Sanjay Dungal & Others vs. M/s. ACIT and the Bombay Bench's decision in ACIT vs. Shreelekha Damani, to support the argument that the approval by JCIT is not a mere formality but a mandatory requirement. The Tribunal concluded that the JCIT's approval in this case was merely technical and did not involve the application of mind, rendering the approval invalid. The Tribunal also noted that the Supreme Court's judgment in C.I.T. vs. Jai Prakash Singh, which dealt with the service of notice on legal heirs, was not applicable to the facts of this case. 2. Jurisdiction of the Assessing Officer (AO) to Pass the Assessment Order: Given the invalidity of the JCIT's approval, the Tribunal examined whether the AO had the jurisdiction to pass the assessment order. The Tribunal reiterated that the AO is prohibited from passing any assessment order without the JCIT's approval, as mandated by Section 153D. Since the JCIT's approval was found to be invalid, the AO lacked the jurisdiction to pass the assessment order. The Tribunal further observed that this was not a mere irregularity that could be rectified by remitting the matter back to the AO, but a jurisdictional error. The Tribunal emphasized that the AO could not do anything better even if the matter was remitted back, as the time limit provided under the Act had already expired. Separate Judgment by Accountant Member: The Accountant Member concurred with the Judicial Member's conclusion that the assessments failed for want of necessary approval under Section 153D. However, the Accountant Member provided additional reasoning, emphasizing that the approval by the JCIT was not valid in law due to the lack of application of mind and the time constraint cited by the JCIT. The Accountant Member highlighted that the legislative intent behind Section 153D was to improve the quality of assessments and provide a check on arbitrary use of power through high-pitched assessments. The Accountant Member also noted that the provision of Section 153D is mandatory, and any assessment order passed without a valid approval is invalid in law. The Accountant Member expressed concern over the management of work and the commitment of the officers involved, urging the Revenue to take steps to prevent such occurrences in the future. Conclusion: The Tribunal set aside the orders of both the lower authorities and quashed the entire assessment order as confirmed by the Commissioner of Income Tax (Appeals) [C.I.T.(A)], declaring it void, null, and non-est. All the appeals of the assessee were allowed. The Tribunal's decision underscores the mandatory nature of the JCIT's approval under Section 153D and the jurisdictional requirement for the AO to pass a valid assessment order.
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