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2023 (11) TMI 432 - AT - Income TaxValidity of assessment order passed u/s 153A - whether a valid approval granted by the additional commissioner of income tax u/s 153D? - HELD THAT - The draft proposal of Assessment Orders was sent on 31.12.2018 and approval u/s 153D was granted on 31.12.2018 itself. From the Letter of proposal for approval, it is revealed that the AO has written in office letter No. section 153B whereas in the subject he had written section 153D of the Act per se reveals the Non-application of mind by the AO in framing the Assessment and the approving authority in granting approval u/s 153 D of the Act on the same date. A mere endorsement to a list of cases of Assessment Orders by putting signature with rubber stamping on the letter without application of mind will not satisfy the requirement of the law for approval or sanction u/s 153D of the Act. Therefore, we hold that in the present case, the prior approval of the Additional CIT required before passing of the Assessment Orders in pursuant to a search operation being a mandatory requirement of section 153D of the Act, was not granted as per law because such approval is not meant to be given in mechanical manner without application of mind by the Additional CIT which resulted in vitiating the assessment orders per se. We hold that mandatory approval was being granted mechanically without application of mind by Additional Commissioner of Income Tax, Central- Range, Jalandhar, and therefore, this mechanical exercise of power has vitiated entire assessment proceedings and consequently, the said assessment orders are rendered void ab initio. Accordingly, the impugned order is held to be infirm, illegal and bad in law and same is as such quashed. Appeals of the assessee are allowed.
Issues Involved:
1. Validity of the Assessment Order under section 153A. 2. Approval procedure under section 153D of the Income Tax Act. 3. Mechanical and ritualistic approval process. Summary: 1. Validity of the Assessment Order under section 153A: The appellant challenged the validity of the assessment orders for the years 2012-13, 2013-14, and 2015-16 to 2017-18, arguing that the proper procedure of law was not followed by the authorities while granting approval under section 153D of the Income Tax Act. The appellant contended that the assessment orders were unsustainable as the statutory and mandatory approval required under section 153D was mechanical and ritualistic. 2. Approval procedure under section 153D of the Income Tax Act: The appellant's counsel argued that the approval under section 153D was granted on the same date the assessment orders were passed, indicating a mechanical manner of approval. The counsel highlighted that the Joint Commissioner of Income Tax, Central Range, Jalandhar, granted approval for multiple assessment years on the same day, which was practically impossible given the volume of documents and submissions involved. The Tribunal admitted this additional legal ground for adjudication based on the judgment of the Hon'ble Supreme Court in NTPC Ltd. v. CIT. 3. Mechanical and ritualistic approval process: The Tribunal observed that the approval process was indeed mechanical and lacked the necessary application of mind. It noted that the Joint Commissioner had to approve multiple assessment orders on the same day, which was humanly impossible. This mechanical exercise of power rendered the assessment orders invalid. The Tribunal cited several precedents, including the Hon'ble High Court's decision in Pr. CIT v. Subodh Agarwal, which emphasized that approval under section 153D should involve a thorough examination of the assessment records and not be a mere formality. Conclusion: The Tribunal held that the mandatory approval under section 153D was granted mechanically without proper application of mind, thus vitiating the entire assessment proceedings. Consequently, the assessment orders were rendered void ab initio, and the appeals of the assessee were allowed. The Tribunal did not proceed to adjudicate the issues raised on merits in quantum addition due to the invalidity of the assessment orders. The judgment was pronounced in the open court on 26.07.2023.
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