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2024 (1) TMI 793 - AT - Income TaxValidity of assessments made u/s 153A - prior approval of the draft assessment order u/s 153D - as argued search assessment was framed pursuant to the approval granted u/s 153D by JCIT, Central Range-4 Delhi in a mechanical manner and accordingly, the entire search assessments deserve to be quashed - As per assessee approval u/s 153D of the Act had been accorded by the ld. JCIT within a short span of time of either one day or on the same day on which draft orders were forwarded to him - Whether the approving authority has not applied his mind for giving approval u/s 153D? - HELD THAT - We have gone through the approval granted by the ld. JCIT on the date mentioned in the table hereinabove u/s 153D of the Act. The said approval letter clearly states that a letter dated 29.12.2017 was filed by the Ld. AO before the ld. JCIT seeking approval of draft assessment order u/s 153D of the Act. JCIT has accorded approval for the said draft assessment orders on the very same day i.e., on 29.12.2017 for various assessment years in the case of various assessees. In any event, whether is it humanly possible for an approving authority like the ld. JCIT to grant judicious approval u/s 153D of the Act for 40 cases for various assessment years on a single day is the subject matter of dispute before us. Further, section 153D of the Act provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. JCIT has granted a single approval for all assessment years put together. We find that the reliance placed by the Ld. AR on the decision of the Hon'ble Orissa High Court in the case of M/s Serajuddin Co 2023 (3) TMI 785 - ORISSA HIGH COURT is well founded. We find that similar issue has been addressed in the case of PCIT vs. Anju Bansal 2023 (7) TMI 1214 - DELHI HIGH COURT wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. Thus we have no hesitation in holding that the approval u/s 153D of the Act has been granted by the ld. JCIT in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Decided in favour of assessee.
Issues Involved:
1. Validity of search assessments framed under Section 153A of the Income Tax Act, 1961. 2. Legality of approval granted under Section 153D of the Act by the Joint Commissioner of Income Tax (JCIT). Summary: Issue 1: Validity of Search Assessments under Section 153A The search and seizure operation under Section 132 of the Income Tax Act, 1961, was carried out on 23.07.2015 at the premises of certain groups and individuals. Various incriminating documents were found, leading to the centralization of the case to the Assistant Commissioner of Income Tax (ACIT), Central Circle 13, New Delhi. Notices under Section 153A were issued, and returns were filed by the respective parties. The assessments were made under Section 153A read with Section 143(3) on 29.12.2017 and 26.12.2017, with substantial additions being made to the returned incomes. Issue 2: Legality of Approval under Section 153D The core issue was whether the approval granted by the JCIT under Section 153D was done in a judicious manner with due application of mind. The assessees contended that the approval was granted mechanically, without proper examination of the draft assessment orders and the seized documents. The JCIT granted approval for 40 cases on the same day the draft orders were forwarded, raising doubts about the thoroughness and validity of the approval process. The Tribunal examined the approval process and found that the JCIT's approval was granted on the same day the draft assessment orders were received, indicating a lack of due application of mind. The Tribunal referenced several High Court judgments, including those from the Orissa High Court and the Allahabad High Court, which emphasized that the approval under Section 153D must be a judicious process involving independent application of mind. The Tribunal concluded that the approval granted by the JCIT was mechanical and did not meet the statutory requirements, rendering the entire search assessments invalid. Consequently, the additional grounds raised by the assessees were allowed, and the search assessments were quashed. Conclusion: The Tribunal held that the approval granted by the JCIT under Section 153D was invalid due to the lack of application of mind. As a result, the search assessments framed under Section 153A were declared illegal and bad in law. The appeals of the assessees were allowed, and the revenue's appeal was dismissed. Order Pronounced: The order was pronounced in the open court on 10/01/2024.
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