2023 (5) TMI 1094 - AT - Income Tax

Assessment u/s 153A - validity of granting the approval u/s 153D - HELD THAT - It is not mentioned in the approval that what is the amount of determination of income in each assessment year of each assessee. Approval was granted within 24 hours of proposal. Approval have been granted on the same day on 22.12.2017 despite the fact that A.O. was having his office at Jabalpur and JCIT was holding his Office at Bhopal in which there is a significant distance. Not humanly possible to look into assessment records as well as draft assessment orders thereon and apply its own mind objectively by a senior designated authority involving such complex matters and grant approval as contemplated under section 153D - Not mentioned as to how the draft order and assessment record, if any, have been received by JCIT, if he has gone through the assessment record or that assessment record, about the mode, through which, assessment record was transmitted by AO at Bilaspur to JCIT, Raipur and vice-versa. It is also noted that the AO had time till September 2019 for passing the assessment order, why the approvals were granted within 24 hours and order also was passed. The approval given was a conditional approval and on the basis of presumption only The action of the JCIT granting approval in this case was a mere mechanical exercise, accepting the draft order as it is, without any independent application of mind on his part. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. Assessment orders passed u/s 153A r.w.s. 143 (3) stand cancelled. Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the approval granted by the Joint Commissioner of Income Tax (JCIT) under section 153D.
2. Validity of the assessment orders passed under section 153A read with section 143(3).

Summary:

Issue 1: Legality of the approval granted by JCIT under section 153D

The assessee contended that the approval granted by the JCIT was devoid of application of mind and was done in a mechanical manner. The approval did not indicate what material and facts were perused before granting the approval. It was argued that the approval was granted within 24 hours, making it humanly impossible to review the assessment records and draft orders objectively. The approval was conditional and based on presumptions, thus making it invalid.

The Tribunal noted that the JCIT's approval was a mere mechanical exercise without independent application of mind. The approval letter did not show that the JCIT had reviewed the assessment records or the seized material. The Tribunal referred to multiple judicial precedents, emphasizing that the approval under section 153D is not a mere formality but requires a thorough review and application of mind by the approving authority.

Issue 2: Validity of the assessment orders passed under section 153A read with section 143(3)

The Tribunal found that the assessment orders were invalid as they were based on an invalid approval under section 153D. The JCIT's approval was granted without proper application of mind, making the subsequent assessment orders unsustainable. The Tribunal quashed the assessment orders on this ground.

Conclusion:

The Tribunal allowed the cross objections filed by the assessee, quashing the assessment orders passed under section 153A read with section 143(3) due to the invalid approval granted by the JCIT under section 153D. Consequently, the appeals filed by the Revenue were dismissed as infructuous.