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2021 (6) TMI 416 - AT - Income TaxValidity of assessment order passed u/s.153A - mandatory approval as required u/s.153D - as argued statutory and mandatory approval as required u/s.153D has not been obtained and the approval sought and granted was totally mechanical and ritualistic only - HELD THAT - From the said approval u/s 153D, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination/investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. The sanctioning authority has, in effect, abdicated his statutory functions and delightfully relegated his statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. ACIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be considered as actual approval in law. Hence, we quash the assessment framed u/s. 153A of the Act on this additional ground alone. - Decided in favour of assessee.
Issues Involved:
1. Admissibility of additional ground raised by the assessee. 2. Validity of the assessment order passed under section 153A due to alleged mechanical and ritualistic approval under section 153D. 3. Application of relevant case laws and judicial precedents. Detailed Analysis: 1. Admissibility of Additional Ground Raised by the Assessee: The assessee raised an additional ground challenging the validity of the assessment order passed under section 153A of the Income Tax Act, 1961, due to the alleged mechanical and ritualistic approval under section 153D. The Tribunal considered this ground to be purely legal in nature, requiring no new facts for adjudication. The Tribunal admitted the additional ground, referencing the Supreme Court's decision in the case of National Thermal Power Co. Ltd. (NTPC) Vs. CIT (1998) 229 ITR 383(SC), which permits raising purely legal grounds at any stage of the proceedings. 2. Validity of the Assessment Order Passed Under Section 153A: The assessee contended that the approval granted under section 153D was mechanical and lacked proper application of mind by the Additional Commissioner of Income Tax (Addl. CIT). The Tribunal examined the approval process and found that the draft assessment order was submitted by the Assessing Officer (AO) to the Addl. CIT on 29.06.2017, and the approval was granted on the same day. The Tribunal noted that the Addl. CIT's approval merely stated, "Necessary statutory approval u/s. 153D is given to pass the above assessment order as such," without any detailed analysis or application of mind. The Tribunal referred to several judicial precedents, including the Bombay High Court's decision in the case of PCIT Vs. Shreelekha Damani (2019) 307 CTR 218, where similar mechanical approval was deemed invalid. The Tribunal also cited other relevant case laws, such as Sanjay Duggal Vs. ACIT, M3M India Holdings Vs. DCIT, and Arch Pharmalabs Ltd. Vs. ACIT, which emphasized the requirement of a detailed and considered approval process under section 153D. 3. Application of Relevant Case Laws and Judicial Precedents: The Tribunal relied heavily on judicial precedents to support its decision. Key cases included: - PCIT Vs. Shreelekha Damani: The Bombay High Court held that approval granted without proper analysis and application of mind is invalid. - Arch Pharmalabs Ltd. Vs. ACIT: The Tribunal emphasized the need for a detailed and objective evaluation by the approving authority under section 153D. - Sanjay Duggal Vs. ACIT: The Tribunal reiterated that mechanical approval without proper scrutiny and application of mind renders the assessment order invalid. The Tribunal concluded that the Addl. CIT's approval in the present case was a mere formality, lacking the necessary application of mind. Consequently, the assessment order passed under section 153A was quashed on the grounds of invalid approval under section 153D. Conclusion: The Tribunal allowed the appeal of the assessee, quashing the assessment order passed under section 153A due to the invalid approval process under section 153D. The Tribunal did not adjudicate the grounds raised on merits, as the assessment was quashed on the jurisdictional issue of improper approval. The decision was pronounced on 07.06.2021.
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