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2021 (1) TMI 909 - AT - Income TaxAssessment u/s 153A - Validity of approval u/s 153D - order passed by the JCIT/Addl. CIT in the case u/s. 153D in determining the validity of the assessments framed under section 153A - Assessee submitted that approval under section 153D is based on non-application of mind and without any independent enquiry and overlooking/ ignoring important/significant aspect of earlier assessments being made in the hands of M/s. JIL etc - HELD THAT - Assessments under section 153A have been framed by ACIT, Central Circle, New Delhi, therefore, prior approval of the JCIT in respect of each assessment year referred to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by the A.O. in the present cases in respect of each assessment years under section 153A/153B except with the prior approval of the Joint Commissioner Approval under section 153D have been granted by the JCIT without going through the seized material, appraisal report and other material on record. Thus, the approval is granted in a most mechanical manner and without application of mind. Therefore, same is invalid, bad in Law and void abinitio and as such all assessments under section 153A got vitiated and as such A.O. was not having jurisdiction to pass the assessment orders under section 153A. Granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act. While granting approval under section 153D, the JCIT shall have to peruse all the incriminating material and other seized material on record and proper procedure if have been adopted by the A.O. and appraisal report as well. The JCIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in Law. AO passed the draft assessment order on 30.03.2015 and submitted the same for approval before the Addl.CIT who is stationed at a place 250 Kms away from Dehradun on 30.03.2015, the Addl. CIT gave the approval subject to certain modifications/amendments on 30.03.2015 and the AO passed the order on the same date i.e., 30th March, 2015. On a pointed query raised by the Bench as to whether any movement register is available to verify as to whether the files were sent to the Addl.CIT at Meerut, the Ld.CIT-DR submitted that there is no separate movement register for the purpose of sending for approval of the draft assessment orders by the AO to the JCIT/Addl.CIT, Central Range, Meerut. Thus the approval was given in a mechanical manner by the Addl.CIT to the draft assessment orders passed by the AO. It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, there is nothing on record to suggest that the files have in fact moved from Dehradun to Meerut for obtaining approval. Therefore, in our opinion, the mandatory provisions as required u/s 153D has not been complied with. 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. The Act envisages that the JCIT s approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or rework the order once the approval has been accorded. We hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. - Decided in favour of assessee.
Issues Involved:
1. Validity of the approval under section 153D of the Income Tax Act. 2. Validity of the assessment orders under section 153A of the Income Tax Act. 3. Examination of the incriminating material and appraisal reports. 4. Double and triple additions in the assessments. 5. Issuance of direction under section 150 of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Validity of the Approval under Section 153D: The Tribunal examined whether the approval granted by the JCIT under section 153D was valid. The approval process was scrutinized to determine if it was done with due application of mind and in accordance with the law. It was found that the JCIT granted approval in a mechanical manner without examining the seized material, appraisal reports, or other relevant documents. The Tribunal cited various cases, including the Hon’ble Bombay High Court in the case of Pr. CIT vs. Smt. Shreelekha Damani, to emphasize that the approval must reflect due application of mind. The Tribunal concluded that the approval granted was invalid and bad in law, rendering the assessment orders void. 2. Validity of the Assessment Orders under Section 153A: The Tribunal considered the impact of the invalid approval under section 153D on the assessment orders passed under section 153A. Since the approval was found to be invalid, the assessment orders were also deemed to be vitiated. The Tribunal held that the assessments could not stand in the absence of a valid approval, leading to the quashing of the assessment orders. 3. Examination of the Incriminating Material and Appraisal Reports: The Tribunal noted that the JCIT did not refer to or examine the seized material or appraisal reports while granting approval. The assessment records alone were forwarded to the JCIT, which was insufficient for a proper approval process. The Tribunal emphasized that the JCIT must verify and consider each assessment year independently, especially distinguishing between abated and non-abated assessments. The lack of examination of the relevant material by the JCIT contributed to the finding that the approval was granted mechanically. 4. Double and Triple Additions in the Assessments: The Tribunal observed that the AO made several double or triple additions in the assessments, such as additions on account of share capital, investments, FDRs, loans, and capital gains, without considering the source of funds. The Tribunal highlighted the inconsistencies and the failure to provide telescopic benefits or netting of the money left. This resulted in serious prejudice to the assessees, further supporting the conclusion that the assessments were not conducted properly. 5. Issuance of Direction under Section 150: The Tribunal issued a notice to M/s. JIL to consider reopening their case under section 147/148. However, objections were raised, noting that the case of M/s. JIL was already under appeal before the Tribunal. The Tribunal acknowledged that issuing a direction under section 150 could prejudice the pending appeals. It was also noted that the AO would need to satisfy the requirements of section 147 if reopening the case. Given these considerations, the Tribunal decided not to issue any direction under section 150, discharging the notice against M/s. JIL. Conclusion: The Tribunal quashed the assessment orders under section 153A due to the invalid approval granted under section 153D. The assessments were found to be conducted without proper examination of the relevant material, leading to inconsistencies and double additions. The Tribunal allowed the appeals of the assessees and refrained from issuing directions under section 150 against M/s. JIL, considering the pending appeals and potential prejudice.
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