2024 (6) TMI 265 - AT - Income Tax

Validity of assessment order passed u/s 153A - no approval u/s 153D taken - HELD THAT - As it is now settled proposition of law that prior approval of competent authority under section 153D of the Act is mandatory and same is required to pass rigor of the law, to show that the approval was granted after due consideration of the assessment record and it was not a mechanical approval. Inspite of giving reasonable and sufficient opportunities to the department AO has failed to produce any copy or other evidence of existence of the approval. That only gives rise to a presumption that there was no approval at all. In the absence of same no conclusion can be drawn as to if the approval was in accordance with law or not but to hold that the assessments in hand were concluded without the requisite approval u/s 153D of the Act. Assessee appeal allowed.

Summary

Issues involved: Appeals by assessee and revenue against common order of Commissioner of Income Tax (Appeals) for AY 2010-11 onwards till AY 2015-16.

Grounds raised by assessee:
1. Challenge to assessment and additions made under u/s 153A r.w.s143(3) of the Income Tax Act, 1961.
2. Illegal issuance of Section 143(2) notice.
3. Claim of completed assessment without incriminating material for additions.
4. Lack of incriminating material for the relevant year for additions.
5. Mechanical approval u/s 153D leading to illegal assessment.
6. Illegal Section 14A disallowance due to lack of satisfaction by AO.

Proceedings:
- Assessee pressed ground no. 5, related to approval under Section 153D.
- Assessing Officer's delay in providing compliance led to directions for explanation.
- Assessing Officer submitted reasons for delay and was directed to submit a factual report.
- CIT (DR) presented the report for Bench's consideration.

Judgment:
- Assessee relied on Delhi High Court judgment to argue that absence of order under section 153D renders assessments void.
- Department defended with reference to approval letter, but failed to produce evidence.
- Tribunal held that prior approval u/s 153D is mandatory and not proven in this case.
- Allowed additional ground no. 5 for assessee, subject to department producing evidence.
- Assessee's appeals allowed, revenue's appeals dismissed.

Conclusion:
The Tribunal's decision favored the assessee due to the lack of evidence for the mandatory approval under section 153D, rendering the assessments void. The department was given the opportunity to provide evidence to contest the issue further.