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2024 (1) TMI 17 - AT - Income TaxValidity of Assessment u/s 153A on non-generation of DIN on approval u/s. 153D - whether non-generation of DIN on approval u/s. 153D of the Act results into invalid assessment? - HELD THAT - As in spite of direction from the Addl. CIT vide para 5 of said Circular No. 19/2019 to take approval on ITBA portal, no DIN was generated in the ITBA platform. Further, no exceptional circumstances claimed nor brought to our notice in not generating the DIN in pursuance of para 3 of the said circular. DR vehemently contended that there was no requirement of law and guidance of the CBDT for generation of DIN for the approval by the Addl. CIT. We find no force in the arguments of the ld. DR as it is contrary to the guidelines contained in CBDT circular which is binding on all Income Tax Authorities. Para 4 of said circular provides that any communication which is not in conformity with para 2 and 3 shall be treated as invalid and shall be deemed to have never been issued, which clearly explains any communication without DIN is invalid in the eye of law. Thus, we find approval u/s. 153D of the Act is covered by para 2 of Circular No. 19/2019. Therefore, in the present case non-mentioning of DIN on approval granted u/s. 153D of the Act by the Addl. CIT renders the assessment order dated 30-09-2021 passed u/s. 153A r.w.s. 144 of the Act invalid treating the same deemed to have never been issued. Thus we note that approval u/s. 153D of the Act is akin to the approval u/s. 151 of the Act, wherein, we find sanction/approval u/s. 151 required from prescribed authority to initiate issuance of notice u/s. 148 of the Act, likewise, in order to proceed with the assessment u/s. 153A, AO required to take approval u/s. 153D of the Act, which in our opinion, is a statutory requirement, falling under the ambit of Circular No. 19/2019 to generate DIN. Therefore, we hold non-mentioning of DIN on approval granted u/s. 153D of the Act vitiate the final assessment order passed u/s. 153A r.w.s. 144 of the Act. Non-application of mind by the approving authority - The approval u/s. 153D is a mandatory requirement and such approval is not meant to be given mechanically. Such approval granted mechanically without application of mind by the Addl. CIT resulting in vitiating the assessment orders. We find in the present case that the AO sought approval u/s. 153D of the Act on 30-09-2021, the Addl. CIT granted approval on the same day and the final assessment order u/s. 153A r.w.s. 144 of the Act was also passed on the same day i.e. 30-09-2021 which clearly indicates that the approving authority granted approval mechanically without examining the relevant material. Admittedly, according to the AO, there were around 8300 pages, 16 hard disk and 6 pend drives found and seized in the case of group which were required to be taken into consideration while granting approval u/s. 153D of the Act by the Addl. CIT. Therefore, the Addl. CIT granted approval u/s. 153D of the Act mechanically without examining the above said relevant material without application of mind which resulting in vitiating the present final assessment order dated 30-09-2021 u/s. 153A r.w.s. 144 of the Act. Thus Addl. CIT as a approving authority without application of mind and without verifying in detail granted approval u/s. 153D of the Act in a most mechanical manner, of which, in our opinion, the assessee suffered serious prejudice of non- application of mind. Therefore, the final assessment order dated 30-09- 2021 passed u/s. 153A r.w.s. 144 of the Act is vitiated for want of non- application of mind. Difference between draft assessment orders and final assessment orders - AO made alterations to the draft assessment order and incorporated charging rate u/sec 115BBE - AR argued that the AO cannot pass final assessment order altering the draft assessment order - We note that the AO failed to apply the tax rate in the draft assessment order and which was approved by the Addl. CIT, thereafter, the AO added the tax rate u/s. 115BBE of the Act in the final assessment order, which clearly shows the AO deviated from the draft assessment order and by altering the same passed final assessment order, in our opinion, the AO cannot pass final order without fresh approval from the approving authority i.e. Addl. CIT. AO departed from the draft assessment order as approved by the Addl. CIT in the capacity of approving authority and pass final assessment order by altering the draft assessment order. Therefore, the ratio laid down by the Hon ble High Court of Bombay in the case of Mrs. Ratnabai N.K. Dubhash 1997 (9) TMI 88 - BOMBAY HIGH COURT is applicable to the facts on hand and thereby, the final assessment order dated 30-09-2021 passed u/s. 153A r.w.s 144 of the Act is liable to be quashed. Assessee appeal allowed.
Issues Involved:
1. Delay in filing appeals. 2. Validity of assessment orders due to non-generation of Document Identification Number (DIN) on approval under Section 153D. 3. Non-application of mind by the approving authority while granting approval under Section 153D. 4. Alteration of draft assessment orders without fresh approval. Summary: 1. Delay in Filing Appeals: The Tribunal condoned a delay of three days in filing the appeals, finding the reasons provided by the assessee, including travel evidence, to be bona fide. 2. Validity of Assessment Orders Due to Non-generation of DIN: The Tribunal found that the approval granted under Section 153D of the Income Tax Act did not contain a DIN, which is mandatory as per CBDT Circular No. 19/2019. The absence of DIN rendered the approval invalid, leading to the quashing of the final assessment orders. The Tribunal relied on various High Court decisions, including those of the Chhattisgarh and Bombay High Courts, which held that communications without DIN are invalid and deemed never to have been issued. 3. Non-application of Mind by the Approving Authority: The Tribunal observed that the approval under Section 153D was granted on the same day the draft assessment orders were submitted, indicating a mechanical approval without proper examination of the voluminous seized materials. The Tribunal cited decisions from the High Courts of Orissa and Allahabad, emphasizing that such approvals must involve an independent application of mind to ensure justice and prevent arbitrary actions. 4. Alteration of Draft Assessment Orders Without Fresh Approval: The Tribunal noted discrepancies between the draft and final assessment orders, including the addition of tax rates under Section 115BBE in the final orders, which were not present in the drafts. This alteration without fresh approval from the Additional CIT rendered the final assessment orders invalid. The Tribunal referred to the Bombay High Court's decision in Mrs. Ratnabai N.K. Dubhash, which held that the assessing officer cannot vary from the directions given in the approved draft orders. Conclusion: The Tribunal quashed the final assessment orders for all the assessment years in question due to the invalidity of the approval under Section 153D for non-generation of DIN and non-application of mind, as well as the unauthorized alterations in the final assessment orders. Consequently, the appeals of the assessee were allowed, and the appeal of the Revenue was dismissed.
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