2023 (10) TMI 686 - AT - Income Tax

Assessment u/s 153A - requirements of approval u/s 153D - As argued approval granted for framing assessment order is contrary to provision of Section 153D - HELD THAT - In the instant case, it is a matter of record by the own admission of JCIT that the approval granted is merely technical and without appraisal of evidences or enquiries. Thus fact thus need not be traversed any further. In the backdrop of the unequivocal observations made by the JCIT, approval granted u/s 153D apparently does not meet the requirement of law and hence assessment orders passed in consequence of such non-est approval is a nullity in law. The assessment order thus passed is vitiated in law which illegality cannot be cured. As discernible from the conjoint approval memo, the sanctioning authority (JCIT) has, in fact, under the force of circumstances, relegated his statutory duty to the subordinate AO, whose action the JCIT, was supposed to supervise as per the scheme of the Act. Manifestly, the JCIT, without any consideration of factual and legal position in proposed additions/disallowances and without contents of appraisal report before him or incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a simplicitor approval with caveats and disclaimers. This approach of the JCIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and can not thus be countenanced in law. We are unhesitatingly disposed to hold that the assessment order for AY 2014-15 in question, in pursuance of a hollow cosmetic approval accorded u/s 153D and undeniably without application of mind, is rendered unenforceable in law and hence quashed. Appeal of the Assessee is allowed.

Summary

Issues Involved:
1. Validity of initiation of assessment proceedings and issuance of notices.
2. Validity of assessment order due to alleged lack of jurisdiction.
3. Confirmation of addition of unsecured loans as unexplained cash credits.
4. Compliance with Section 153D of the Income Tax Act, 1961.

Summary:

1. Validity of Initiation of Assessment Proceedings and Issuance of Notices:
The assessee contended that the initiation of assessment proceedings and issuance of notices were not in accordance with the provisions of law. Specifically, the assessee argued that no notice under Section 143(2) was issued within the stipulated statutory time, rendering the assessment order invalid. The Tribunal did not address this issue separately due to the resolution of the primary legal objection.

2. Validity of Assessment Order Due to Alleged Lack of Jurisdiction:
The assessee argued that the assessment order was passed without jurisdiction. This issue was also not separately adjudicated by the Tribunal due to the resolution of the primary legal objection.

3. Confirmation of Addition of Unsecured Loans as Unexplained Cash Credits:
The assessee challenged the addition of unsecured loans amounting to Rs. 2,31,41,75,814/- as unexplained cash credits under Section 68 of the Income Tax Act, 1961. The Tribunal did not delve into the merits of this issue due to the resolution of the primary legal objection.

4. Compliance with Section 153D of the Income Tax Act, 1961:
The primary legal objection raised by the assessee was the lack of valid and effective approval under Section 153D by the competent authority. The Tribunal scrutinized the communication between the Assessing Officer (AO) and the Joint Commissioner of Income Tax (JCIT) and found that the approval granted was merely technical and lacked proper examination of facts. The JCIT admitted that the draft orders were received on the last date, leaving little time for proper evaluation. The Tribunal observed that the approval was a mere formality and did not meet the legal requirements. Consequently, the assessment order was deemed null and void due to the perfunctory approval under Section 153D.

Conclusion:
The Tribunal quashed the assessment order for AY 2014-15 due to the invalid approval under Section 153D, rendering the order unenforceable in law. As a result, other objections on jurisdiction or merits of additions/disallowances were not separately adjudicated. The appeal of the assessee was allowed. The order was pronounced on 08/05/2023.