2023 (7) TMI 1214 - HC - Income Tax

Validity of assessment u/s 153A - allegation of non application of mind by the ACIT Tax in granting approval u/s 153D - addition made qua cash deposited in the bank and addition was made with regard to cash introduced via an entry operator - HELD THAT - The respondent had declared an income amounting to Rs. 87,20,580/-. However, while making the additions, strangely, the AO noted that the returned income was Rs. 11,00,460/-. Despite the additions which would have taken the assessed income well beyond what was crystallised by the AO ACIT failed to notice the error. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. Tribunal notes that all that was looked at by the ACIT, was the draft assessment order. Approval was granted without examining the assessment record or the search material. Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. Decided against revenue.

Summary

Issues:
1. Condonation of delay in re-filing the appeal.
2. Validity of approval granted under Section 153D of the Income Tax Act, 1961.

Condonation of Delay Issue:
An application was filed seeking condonation of a 180-day delay in re-filing the appeal by the appellant/revenue. The respondent/asseessee did not oppose the application, and the court allowed the prayer made in the application, disposing of the matter accordingly.

Validity of Approval Issue:
The appeal in question pertained to the Assessment Year 2017-18 and aimed to challenge the order passed by the Income Tax Appellate Tribunal. The Tribunal had set aside additions made to the income of the respondent/asseessee due to a lack of application of mind by the Additional Commissioner of Income Tax (ACIT) in granting approval under Section 153D of the Income Tax Act, 1961. The ACIT failed to notice errors in the assessment order, which included significant additions to the assessed income. The Tribunal found a complete non-application of mind by the ACIT, emphasizing that the approval was granted without examining the assessment record or search material. The Tribunal concluded that the approval was granted in a mechanical manner without proper consideration, rendering it invalid in the eyes of the law. As a result, the order passed under Section 153A was quashed, and the appeal was closed without finding any substantial question of law for consideration.

This summary provides a detailed overview of the issues involved in the legal judgment, highlighting the key arguments and conclusions reached by the court for each issue.