9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 279 - AT - Income TaxAssessment u/s 153A - Valid approval given u/s 153D - additions u/s 68 r.w.s 115BBE - Whether approval given u/s 153D is not in accordance with law, the assessment order framed u/s 153A r.w.s.143(3) of the Act should be quashed? - HELD THAT - Function to be performed by the Addl. CIT or CIT in granting previous approval u/s 153-D of the Act, requires to adopt judicial approach and to apply his mind independently and to conduct the enquiry himself on the entire facts, material, evidence and proposal put up to him for approval in the light of the material placed and relied upon by the Assessing Officer because where any act or function requires application of mind and judicial discretion or approach by any authority it partakes and assumes the character and status of judicial or at least quasi-judicial act, particularly because their Act or function is likely to affect the rights of affected persons. As the question of validity of the approval goes to the root of the case and can vitiate the assessment proceedings itself and therefore the said power vested in the Commissioner to grant or not to grant approval is coupled with a duty and cannot be exercised casually and in a routine manner. In the present case, we have no hesitation in stating that there is complete non-application of mind by the Ld. Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income has been taken at Rs.Rs.11,00,460/- as against the returned income of Rs.87,20,580/-. Similarly, when the total assessed income as per the AO comes to Rs.16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs.1,65,07,560/- had he applied his mind. The addition of Rs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes. Even the factual situation is much worse than the facts decided in the case of Sanjay Duggal 2021 (1) TMI 909 - ITAT DELHI . In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed income and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that the approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D - Decided in favour of assessee.
Issues Involved:
1. Validity of additions made under Section 68 read with Section 115BBE. 2. Validity of approval under Section 153D. 3. Validity of assessment under Section 153A in the context of procedural and jurisdictional lapses. Detailed Analysis: 1. Validity of Additions Made Under Section 68 Read with Section 115BBE: The Assessing Officer (AO) made additions under Section 68 read with Section 115BBE based on the cash deposits and transactions involving shell entities. The AO added Rs. 15,04,35,000/- and Rs. 1,54,07,100/- to the assessee's income, suspecting the amounts as unexplained cash credits. a. Deletion of Rs. 15,04,35,000/-: The CIT(A) deleted the addition of Rs. 15,04,35,000/- by concluding: - No connection was established between the assessee and the 11 entities that deposited cash in their bank accounts. - The allegation that the cash deposited belonged to the assessee was based on presumption without any evidence. - There was no evidence of control by the assessee over the bank accounts of the entities. - The transactions between the entities and M/s SNRK existed before the assessee's involvement. - The assessee had obtained valid KYC documents and TIN of M/s SNRK, and the transactions were conducted through banking channels. - The AO of M/s SNRK had already assessed the income from these transactions, and taxing the same amount in the hands of the assessee would result in double taxation. b. Sustenance of Rs. 1,54,07,100/-: The CIT(A) sustained the addition of Rs. 1,54,07,100/- on the grounds that: - The transactions were different from those with M/s SNRK. - The entry operator, Sh. Vipin Garg, admitted to providing accommodation entries against cash received in Specified Bank Notes (SBNs). - The assessee failed to provide proof of delivery of gold or KYC documents of the buyers. - The transactions were deemed accommodation entries, and the source of money was unexplained. 2. Validity of Approval Under Section 153D: The assessee challenged the validity of the approval under Section 153D, arguing that it was granted mechanically without application of mind. The Tribunal noted: - The approval was granted on the same day the draft order was submitted, indicating a lack of thorough scrutiny. - The assessment records were not forwarded to the Addl. CIT, and the approval contained errors regarding the returned and assessed income. - The Tribunal cited various judicial precedents emphasizing the need for a proper and thorough scrutiny before granting approval under Section 153D. - The Tribunal concluded that the approval was given without application of mind, rendering it invalid and vitiating the assessment order. 3. Validity of Assessment Under Section 153A: The assessee contended that the assessment under Section 153A was invalid due to procedural and jurisdictional lapses, including: - The foundational search action was conducted to verify disclosed transactions, and no undisclosed income or assets were found. - The approval under Section 153D was given mechanically without proper application of mind. - The assessment order was time-barred and passed with a biased and premeditated mindset. The Tribunal, considering the procedural lapses and the invalid approval under Section 153D, quashed the assessment order passed under Section 153A read with Section 143(3). Conclusion: The Tribunal allowed the appeal filed by the assessee, quashing the assessment order passed under Section 153A read with Section 143(3) due to the invalid approval under Section 153D and the procedural lapses in the assessment process. The addition of Rs. 15,04,35,000/- was deleted, while the addition of Rs. 1,54,07,100/- was sustained by the CIT(A).
|
