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2022 (12) TMI 1021 - HC - Income TaxAssessment u/s 153A - Valid approval under Section 153D - Prior approval necessary for assessment in cases of search or requisition - as argued Approving Authority granted approval under Section 153D of the Act in a mechanical manner which vitiated the entire proceedings - HELD THAT - The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to each assessment year is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment orders under Section 153A. In the instant case, the draft assessment orders in 123 cases, i.e. for 123 assessment years placed before the Approving Authority on 30.12.2017 and 31.12.2017 were approved on 31.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 123 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeals being in the nature of second appeal. No substantial question of law arises for consideration before us. Appeals are dismissed being devoid of merit.
Issues Involved:
1. Validity of the assessment orders passed under Section 153A/143(3) of the Income Tax Act. 2. Requirement and validity of prior approval under Section 153D of the Income Tax Act. 3. Mechanical exercise of power by the Approving Authority in granting approval under Section 153D. Issue-wise Detailed Analysis: 1. Validity of the assessment orders passed under Section 153A/143(3) of the Income Tax Act: The case involves appeals filed by the Department-Revenue against the order of the Income Tax Appellate Tribunal, which quashed the assessment orders and the consequent orders of CIT (A) for assessment years 2013-14, 2015-16, and 2016-17. The assessments were completed under Section 153A/143(3) following a search and seizure operation conducted on 31.08.2015. The Tribunal concluded that the assessment orders were invalid due to the mechanical manner in which the approval under Section 153D was granted. 2. Requirement and validity of prior approval under Section 153D of the Income Tax Act: Section 153D mandates that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner without the prior approval of the Joint Commissioner. The Tribunal noted that the approval letters dated 30.12.2017 and 31.12.2017 covered 123 cases, including the respondent-assessee's cases. The Tribunal held that it was humanly impossible for the Approving Authority to peruse all the material in such a short time, indicating a mechanical exercise of power. 3. Mechanical exercise of power by the Approving Authority in granting approval under Section 153D: The Tribunal relied on its earlier decision in Navin Jain & Others Vs. Deputy C.I.T., Central Circle-II, Kanpur, where it was held that approval under Section 153D requires due application of mind by the Approving Authority. The Tribunal emphasized that the approval must reflect the application of mind to the facts of the case and cannot be a mere formality. The Tribunal concluded that the approval in the present case was mechanical, as the Approving Authority could not have perused the records of 123 cases in one day. Conclusion: The High Court upheld the Tribunal's decision, stating that the approval under Section 153D must be granted only on the basis of material available on record and must reflect the application of mind. The Court held that the requirement of prior approval under Section 153D is an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer. The Court found that the approval in the present case was a mechanical exercise, vitiating the entire proceedings. Consequently, the appeals were dismissed, and no substantial question of law was found for consideration.
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