2022 (9) TMI 494 - AT - Income Tax

Assessment order u/s 153A/143(3) passed before receiving the approval of the higher authority - Sanctity of the approval u/s 153D of the Act related to completion of the assessment u/s 153A - Necessity of prior approval u/s 153D for passing the order u/s 153A - HELD THAT - In the instant case, the issue involved is identical to the issue involved 2021 (8) TMI 1336 - ITAT AMRITSAR - The assessing authority had passed without receiving the prior approval of the Addl.CIT. Ld. CIT DR was unable to show that the approval was received before or during passing of order on dated 27.07.2016. The appellate authority had also accepted the fact that the approval was duly received by the assessing authority on 28.07.2016. The direction of the statute for prior approval was ignored by the revenue authority before passing of the order U/s 153A/143(3) of the Act. The order is erroneous and liable to be quashed. Assessee appeal allowed.

Summary

Issues:
Challenge to the sanctity of approval u/s 153D for completion of assessment u/s 153A.

Analysis:

Issue 1: Challenge to the sanctity of approval u/s 153D
The appeals were filed against the order of the Commissioner of Income Tax (Appeals) for Assessment Years 2007-08 to 2013-14, originating from the order of the Deputy Commissioner of Income Tax, Central Circle-1, Jalandhar. The main contention raised by the assessee was regarding the sanctity of the approval u/s 153D for passing the assessment order u/s 153A. The assessee argued that the approval granted by the Additional Commissioner of Income Tax was mechanical and without proper application of mind. The approval was granted on 27.07.2016, but received by the Assessing Officer on 28.07.2016, after the assessment order was already passed on 27.07.2016. The assessee contended that this violated the provisions of section 153D, which requires prior approval of the Joint Commissioner before passing an assessment order. The assessee relied on the judgment of a Coordinate Bench in a similar case, which was decided in favor of the assessee.

Issue 1.1: Compliance with Section 153D
The Assessing Officer sent the record to the Additional Commissioner of Income Tax for approval on 27.07.2016, and the approval was granted on the same day. However, the approval was received by the Assessing Officer on 28.07.2016, after the assessment order was passed. The contention was that the approval should have been received before or during the passing of the assessment order, as mandated by section 153D. The failure to comply with the requirement of prior approval rendered the assessment order erroneous and liable to be quashed. The argument was supported by the fact that the approval was granted after the assessment order was already passed, indicating a clear violation of the statutory provision.

Conclusion:
The Tribunal found merit in the assessee's argument regarding the lack of proper approval u/s 153D before passing the assessment order u/s 153A. The failure to obtain prior approval as required by law rendered the assessment order erroneous. Therefore, the appeal of the assessee was allowed, and all the appeals were allowed accordingly. The judgment highlighted the importance of strict compliance with statutory provisions, especially regarding the requirement of prior approval for assessment orders in cases of search or requisition under the Income Tax Act.