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2024 (6) TMI 336 - AT - Income TaxAssessment u/s 153A - Validity of the approval u/s 153D - As argued approval granted by the Joint Commissioner of Income Tax (JCIT) u/s 153D was mechanical and without due application of mind - HELD THAT - As 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 was filed by the Ld. AO before the ld. JCIT seeking approval of draft assessment order u/s 153D of the Act. The ld. JCIT has accorded approval for the said draft assessment orders on the very same day for various assessment years. 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 all the 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. Similar issue has been addressed in the case of PCIT vs. Anju Bansal 2023 (7) TMI 1214 - DELHI HIGH COURT wherein, under similar circumstances, it is 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 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 the approval u/s 153D of the Act. 2. Legality of the rectification order u/s 154 of the Act. 3. Validity of additions made u/s 69A and 69C of the Act. 4. Application of section 115BBE of the Act. 5. Overall validity of the assessment orders. Summary: 1. Validity of the approval u/s 153D of the Act: The Tribunal examined whether the approval granted by the Joint Commissioner of Income Tax (JCIT) u/s 153D was mechanical and without due application of mind. The assessee argued that the approval was granted on the same day the draft assessment orders were submitted, indicating a lack of thorough examination. The Tribunal found that the JCIT granted a single approval for multiple assessment years on the same day, which was deemed humanly impossible to do judiciously. The Tribunal cited the Hon'ble Delhi High Court's decision in PCIT vs. Anju Bansal, which held that statutory approval without due application of mind is fatal to the entire search assessment proceedings. Consequently, the Tribunal held that the approval u/s 153D was granted mechanically and without due application of mind, rendering the search assessments void ab initio. 2. Legality of the rectification order u/s 154 of the Act: The Tribunal noted that the Assessing Officer (AO) passed rectification orders u/s 154 for all assessment years, citing numerical mistakes in the additions made u/s 69A and 69C. The Tribunal observed that these rectifications indicated that the original search assessment orders were flawed, further supporting the argument that the JCIT's approval was mechanical and without due application of mind. 3. Validity of additions made u/s 69A and 69C of the Act: The assessee contended that the additions made by the AO u/s 69A and 69C were based on "dumb documents" and lacked proper appreciation of facts. The Tribunal did not delve into the merits of these additions, as the primary issue of the validity of the approval u/s 153D was sufficient to quash the entire assessment. 4. Application of section 115BBE of the Act: The assessee argued that the AO erred in invoking the provisions of section 115BBE while computing the tax payable. The Tribunal did not address this issue separately, as the quashing of the assessment orders rendered this argument academic. 5. Overall validity of the assessment orders: Given the Tribunal's finding that the approval u/s 153D was mechanical and without due application of mind, the entire search assessment framed in the hands of the assessee was declared illegal and bad in law. Consequently, the Tribunal allowed the appeals of the assessee, rendering other legal grounds and grounds on merits academic and left open. Conclusion: The Tribunal allowed the appeals of the assessee, quashing the search assessments for all the assessment years under consideration due to the invalid approval u/s 153D of the Act. The order was pronounced in the open court on 06/06/2024.
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