2023 (3) TMI 320 - AT - Income Tax

Validity of Assessment order passed u/s 153A - inappropriate approval u/s 153D granted by then Addl. CIT(A) - HELD THAT - ITAT Delhi Bench order 2023 (2) TMI 697 - ITAT DELHI for AY 2010-11 in the case of ACIT vs M/s Tirupati Buildings Offices Pvt. Ltd., there was a noting for five assessees whose approval was granted by the same Addl. CIT u/s 153D of the Act which has included the name of the assessee as clearly discernable that the approval u/s. 153D of the Act was sought by the DCIT/Assessing Officer on 28.03.2013 from ACIT which was granted on the same date i.e.28.03.2013 by the ACIT to the Assessing Officer and said approval has been held by the Tribunal in the case of Subhash Dabas 2022 (3) TMI 643 - ITAT DELHI and 2021 (11) TMI 1140 - ITAT DELHI , as has been given without application of mind and thus the same is invalid bad in law and liable to be quashed and Tribunal has quashed the same. Thus, this issue is squarely stand covered in favour of the assessee by the decision of the ITAT above. The ITAT after examining the approval which included inter alia the name of the assessee as well has concluded that the same has been given without application of mind, thus, the same is invalid bad in law and liable to be quashed. It is not the case that the above decision has been set-aside by the Hon ble jurisdictional High Court. Hence, we quash the assessment order passed u/s 153A - Appeal of assessee allowed.

Summary

Issues:
1. Addition on account of unexplained cash expenditure
2. Addition under Section 14A read with Rule 8D
3. Validity of assessment order passed under Section 153A
4. Additional ground challenging the approval granted under Section 153D

Issue 1 - Addition on account of unexplained cash expenditure:
The appeal challenged the addition of Rs. 5,929,000 as unexplained cash expenditure, contending that the source of the expenditures was not considered adequately. The assessee argued that the cash flow statement and documentary evidence supported the utilization of the surrendered amount under Section 132(4) of the Income Tax Act, 1961. The CIT(A) confirmed the addition, leading to the appeal.

Issue 2 - Addition under Section 14A read with Rule 8D:
The appeal contested the addition of Rs. 1,824,298 under Section 14A read with Rule 8D of the Income Tax Rules, 1962. The CIT(A) upheld this addition, subject to verification by the Assessing Officer. The grounds of appeal challenged this decision, seeking a different outcome.

Issue 3 - Validity of assessment order passed under Section 153A:
The assessee raised an additional ground questioning the legality of the assessment order passed on 28.03.2013 under Section 153A. The argument was based on inappropriate approval granted under Section 153D by the Addl. CIT, leading to the assertion that the assessment order was illegal and void. The ITAT's decision in a related case supported the assessee's position, resulting in the quashing of the assessment order for the Assessment Year 2011-12.

Issue 4 - Additional ground challenging the approval granted under Section 153D:
The additional ground raised by the assessee focused on challenging the approval granted under Section 153D by the Addl. CIT. The ITAT's decision in a related case highlighted that the approval, which included the name of the assessee, was given without proper application of mind, rendering it invalid and bad in law. Consequently, the assessment order passed under Section 153A for the Assessment Year 2011-12 was quashed based on this additional ground.

In conclusion, the ITAT allowed the appeal by the assessee, quashing the assessment order for the Assessment Year 2011-12 on the additional ground raised regarding the inappropriate approval granted under Section 153D. The decision was supported by the ITAT's findings in a related case, emphasizing the invalidity of the approval due to a lack of proper application of mind.