2024 (12) TMI 553 - AT - Income Tax

Validity of approval u/s 153D - HELD THAT - We find that CIT(A) has observed that it is a normal practice in the department that the draft order is put up alongwith the assessment records and relied upon documents before the approving authority and the additional copy of the Appraisal report is already given to the Jt. /Addl. Commissioner. We further observed that CIT(A) noted from the records that it is nowhere evident which proves that these records were not provided to the approving authority. Hence, it has been rightly held by the CIT(A) that approving authority had approved the assessment order as per provisions u/s. 153D of the Act. In absence of any submission or material provided by the assessee, we do not find any infirmity in the findings of the CIT(A) on the jurisdictional issue of approval u/s. 153D. Accordingly, the grounds raised by the Assessee are rejected with regard to issue relating to merits of the case in absence of any material on record, we are not able to adjudicate the same. Accordingly, the appeal filed by the assessee for the AY 2012-13 stands dismissed.

Issues Involved:

1. Non-appearance of the assessee and lack of representation.
2. Validity of the approval granted under Section 153D of the Income Tax Act.
3. Additions made by the Assessing Officer based on alleged accommodation entries.
4. Jurisdictional issues related to the assessment order.

Detailed Analysis:

1. Non-appearance of the Assessee and Lack of Representation:

The tribunal noted that despite being served with multiple notices, the assessee did not appear for the hearing, nor was any counsel appointed to represent them. The absence of the assessee was considered indicative of a lack of interest in pursuing the case. Consequently, the tribunal proceeded to hear the case with the assistance of the Departmental Representative (DR) for the Revenue. This procedural aspect underscores the importance of representation in legal proceedings, as the tribunal had to rely solely on the submissions of the Revenue due to the assessee's absence.

2. Validity of the Approval Granted under Section 153D of the Income Tax Act:

The core issue revolved around the validity of the approval granted under Section 153D. The assessee contended that the approval was mechanical and lacked due application of mind. The tribunal examined the findings of the Commissioner of Income Tax (Appeals) [CIT(A)], which indicated that the draft assessment order, along with the appraisal report and seized materials, were provided to the Additional Commissioner for approval. The CIT(A) found no evidence suggesting that these records were not reviewed by the approving authority. The tribunal upheld the CIT(A)'s view that the approval process was conducted in accordance with the provisions of Section 153D, dismissing the appellant's claim of mechanical approval.

3. Additions Made by the Assessing Officer Based on Alleged Accommodation Entries:

The Assessing Officer (AO) had made additions to the assessee's income based on alleged accommodation entries provided by a group of entry operators. These entries included share capital, share application money, and other financial transactions, allegedly managed by a third party. The AO's order included protective and substantive additions based on commission income and disallowed expenses. The CIT(A), however, deleted these additions, finding them unsubstantiated. The tribunal, in the absence of any material evidence or representation from the assessee, did not find any reason to overturn the CIT(A)'s decision on this matter.

4. Jurisdictional Issues Related to the Assessment Order:

The assessee raised a jurisdictional issue regarding the assessment order's validity, particularly concerning the approval under Section 153D. The CIT(A) and the tribunal both found that the approval process adhered to the statutory requirements. The tribunal noted that the AO and the Additional Commissioner were in regular communication, and the draft order was prepared in consultation with the Joint/Addl. Commissioner, following the Central Board of Direct Taxes (CBDT) guidelines. The tribunal concluded that the jurisdictional challenge lacked merit, as the procedural requirements for approval were duly followed.

Conclusion:

The tribunal dismissed all three appeals filed by the assessee for the assessment years 2012-13, 2015-16, and 2016-17. The decision was primarily based on the assessee's non-appearance, the lack of evidence to support their claims, and the adherence to procedural requirements by the Revenue authorities. The tribunal found no infirmity in the CIT(A)'s findings, particularly regarding the approval under Section 153D, and upheld the assessment orders as valid and properly sanctioned.

← Previous Next →