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2022 (8) TMI 1363 - AT - Income TaxAssessment u/s 153A - valid approval from ACIT, Central Range Jalandhar u/s 153D - HELD THAT - The process of approval is a continuous process which was going by the AO with his senior officers. After a detailed discussion this approval was made. The approval was done on 21/03/2016 assessment order was passed on 22/03/2016. We find no lacuna in the approval of the revenue authorities. Further in section 153D specifically mention about only for the approval. So, the grounds related to section 153D for mechanically approval is dismissed. We are dismissing the additional ground of the assessee. Incriminating material during the assessment proceeding found - whether this assessment was made on basis of incriminating or non-incriminating material? - HELD THAT - The return of the assessee was filed u/s 139(1) which was processed u/s 143(1). Factually it is correct that the processing of return is only basis on same arithmetical adjustment and allowable deduction there is no such application of mind related to documents of the assessee. Respectful observation of this order which is stated that during processing of return u/s 143(1) there is no application of mind. In this factual interpretation the addition was made u/s 2(22)(e) related to deemed dividend such shares invested by the assessee to the company where he has the substantial interest. This particular investment is reflected in the books of account of the assessee. There is coherent relation in between company and assessee. The counsel of the assessee filed an additional ground which is under adjudication. CIT-DR vehemently opposed pointed out that assessee had never taken this additional ground anywhere before the any of the lower authorities. The acceptance of additional ground was not in question in Rahul Mittal, supra case. We accept the additional ground in light of judgment of Rahul Mittal, supra, respectfully considering the judgment of Hon ble Apex Court in the case of NTPC 1996 (12) TMI 7 - SUPREME COURT . The additional ground of the assessee is accepted related assessment U/s 153A of the Act and the appeals of the assessees are allowed. Assessment u/s 153C - Additional ground - whether CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned assessment order u/s 143(3) r.w.s. 153C of the Act and that too without complying with the mandatory requirements and conditions u/s 153D as envisaged under the Income Tax Act? - The 153C will be applicable after the satisfaction noted by the ld. AO in relation to the related party. The notice U/s 153C was initiated on 12/10/2017 the order of assessment had completed on dated 27/12/2018. In this point, the assessment not at all time barred. In the case of Super Malls 2020 (3) TMI 361 - SUPREME COURT is not come under the factual matrix of the assessee s submission. As per the ld. Counsel the ld. CIT(A) has also erred by confirming the action of the ld. AO in passing order u/s 153D. Further adjudication is required against this issue. We accept that the additional ground set aside the issue before the ld. CIT(A) by considering the additional ground of the assessee. issue u/s 153C is allowed for statistical purpose.
Issues Involved:
1. Section 153A - Validity of assessment without incriminating material. 2. Section 153D - Validity of approval process. 3. Section 153C - Jurisdiction and limitation period for assessment. Issue-wise Detailed Analysis: Section 153A - Validity of Assessment Without Incriminating Material: The assessee challenged the validity of the assessment under Section 153A of the Income Tax Act, arguing that no incriminating material was found during the search. The Tribunal noted that the additions made under Section 2(22)(e) related to deemed dividends were based on the assessee's books of accounts and not on any incriminating material found during the search. The Tribunal referred to the judgments in the cases of Krishan Kumar Mittal vs. DCIT and Rahul Mittal vs. DCIT, where similar assessments were quashed due to the absence of incriminating material. The Tribunal accepted the additional ground raised by the assessee and allowed the appeals, holding that the assessment under Section 153A was invalid in the absence of incriminating material. Section 153D - Validity of Approval Process: The assessee argued that the approval under Section 153D was granted mechanically without application of mind. The Tribunal examined the approval process and found that the approval was granted after detailed discussions between the Assessing Officer (AO) and the higher authorities. The approval was given on 21.03.2016, and the assessment order was passed on 22.03.2016. The Tribunal distinguished the assessee's case from other cases cited by the assessee's counsel, where the approval was found to be mechanical. The Tribunal concluded that there was no lacuna in the approval process and dismissed the additional ground related to the mechanical approval under Section 153D. Section 153C - Jurisdiction and Limitation Period for Assessment: The assessee contended that the assessment under Section 153C was barred by limitation. The Tribunal noted that the proceedings under Section 153C were initiated on 12.10.2017, and the assessment order was passed on 27.12.2018. The Tribunal referred to the satisfaction note recorded by the AO and the subsequent issuance of notices under Section 153C. The Tribunal held that the assessment was not time-barred and that the satisfaction note and the initiation of proceedings were in accordance with the law. However, the Tribunal accepted the additional ground related to the approval under Section 153D and set aside the issue to the CIT(A) for further adjudication, providing the assessee with a reasonable opportunity to be heard. Conclusion: The Tribunal allowed the appeals related to Section 153A, holding that the assessment was invalid in the absence of incriminating material. The additional ground related to the mechanical approval under Section 153D was dismissed. The issue related to Section 153C was set aside to the CIT(A) for further adjudication, with directions to provide the assessee a reasonable opportunity to be heard. The appeals were partly allowed. Order Pronounced: The order was pronounced in the open court on 11.08.2022.
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