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2019 (7) TMI 365 - AT - Income TaxValidity of assessment u/s 153A - invalid and incomplete and inchoate approval u/s 153D - no approval u/s 153D on final draft order - validity of assessments completed by the DCIT - HELD THAT - When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. In the instant case, the approving authority has clearly mentioned that the approval given is a technical approval. Moreover, he has directed the DCIT to ensure the seized materials and the findings of the appraisal report to be incorporated in the final assessment order. This clearly goes to proves that the approval given by the JCIT is not a final approval as required u/s 153D but a conditional approval subjected to modifications by the DCIT after receiving of the approval which makes it an invalid, qualified, uncertain approval. This is not the mandate of the Act. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. The approval has to be statutory nature after due application of mind, it should be neither technical nor proforma approval which is envisaged u/s 153D As relying on SMT. SHREELEKHA DAMANI 2018 (11) TMI 1563 - BOMBAY HIGH COURT and M/S. M3M INDIA HOLDINGS (FORMERLY M/S. KRISHNA FLEXI SOLUTION) VERSUS THE DCIT, CENTRAL CIRCLE-II, FARIDABAD. 2019 (3) TMI 895 - ITAT DELHI assessments completed by the DCIT do not stand in the eyes of law. - Decided in favour of assessee.
Issues Involved:
1. Validity of the addition of ?150 lacs as unaccounted income. 2. Legality of the assessment framed under Section 153A/143(3) based on invalid approval under Section 153D. Issue-wise Detailed Analysis: 1. Validity of the Addition of ?150 Lacs as Unaccounted Income: The assessee contested the addition of ?150 lacs to their income, arguing that the share capital was incorrectly treated as unaccounted money. The contention was that no incriminating documents were found during the search operations under Section 132, and the assessment had already been completed before the search. Despite these arguments, the CIT (Appeals) upheld the addition, leading to the assessee's appeal. 2. Legality of the Assessment Framed Under Section 153A/143(3) Based on Invalid Approval Under Section 153D: The assessee introduced an additional ground challenging the validity of the assessment framed under Section 153A/143(3) for AY 2012-13, claiming it was void ab initio due to invalid approval under Section 153D by the JCIT, Central Range, Meerut. The approval was argued to be incomplete and inchoate, as it lacked finality and was conditional upon further verification by the DCIT. The Tribunal admitted this additional ground, recognizing it as a purely legal issue. The Tribunal relied on the Supreme Court judgment in NTPC v. CIT, which allowed raising new legal questions if relevant facts were on record. Arguments and Findings: The assessee's representative cited various case laws to support the claim of invalid approval, emphasizing that the JCIT's approval was merely technical and conditional, which is not the statutory requirement under Section 153D. The revenue's representative argued that the JCIT had duly approved the assessment orders and that the format of approval was not fixed. The Tribunal examined the approval letter dated 30.12.2016, noting that it was termed a "technical approval" and directed the DCIT to ensure the incorporation of seized documents and appraisal report findings in the final assessment order. This conditional nature of the approval rendered it invalid, as the Act requires a final and unqualified approval before passing the assessment order. The Tribunal referenced the Bombay High Court judgment in Pr CIT vs. Smt. Shreelekha Damani, which emphasized that approval under Section 153D must involve application of mind and should not be a mere formality. Conclusion: The Tribunal concluded that the JCIT's approval was invalid as it was conditional and not the final approval mandated by the Act. Consequently, the assessments completed by the DCIT were deemed null and void. Given this conclusion, the Tribunal refrained from adjudicating other issues, as they became academic in nature. Judgment: The appeals of the assessee were allowed, and the orders passed by the DCIT and CIT(A) were quashed. The assessments were treated as null and void due to the invalid approval under Section 153D. The judgment was pronounced in the Open Court on 04/07/2019.
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