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2025 (3) TMI 805 - AT - Income TaxValidity of assessment u/s 153A - No valid approval granted u/s.153D - HELD THAT - Though the Addl. CIT has granted approval for Assessment Years. 2003-04 to 2009-10 still in para 3 of the approval letter he has directed the AO to verify whether any addition is proposed on account of specific expenditure incurred on wedding on 4th March 2009 in the assessment year 2009-10. This clearly shows that either the draft orders were not available with the Adl. CIT or he has not even bothered to gone through the same though he was giving approval for AY 2009-10 also. If the draft assessment order for AY 2009-10 was available with him there was no need to give such directions and he himself could take a note of this fact. In the case of Rishabh Buildwell 2019 (7) TMI 365 - ITAT DELHI the observations of the tribunal shows that the approval granted u/s 153D in the said case was similarly worded wherein JCIT has directed the DCIT to ensure the seized material and the findings of the appraisal report to be incorporated in the final assessment order. ITAT Delhi has observed that such directions clearly proves that the approval given by the JCIT is not a final approval as required u/s 153D of the Act but a conditional approval subject to modifications by the DCIT after receiving of the approval which makes it invalid qualified uncertain approval against the mandate of the Act. Decided in favour of assessee.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Assessment Order under Section 153A/143(3) The relevant legal framework involves Section 153A, which pertains to assessments in cases where a search or requisition has been initiated, and Section 143(3), which relates to the procedure for assessment. The crux of the issue was whether the assessment order was valid in the absence of a proper approval under Section 153D. The Tribunal considered the necessity of obtaining prior approval from the Joint Commissioner for each assessment year before passing an assessment order under Section 153A. This requirement is mandated to ensure that the assessment is conducted with due diligence and oversight. Key evidence included the approval letter dated 30.12.2010, which was alleged to be mechanical and lacking in independent application of mind. The Tribunal found that the approval was granted for multiple assessment years and different assessees through a single order, which contravened the requirement for specific approval for each assessment year and each assessee. The Tribunal concluded that the assessment order was invalid due to the lack of a valid approval under Section 153D, as the approval process was found to be mechanical and not in compliance with statutory requirements. Issue 2: Mechanical and Non-Application of Mind in Approval under Section 153D The Tribunal examined the legal precedents and the statutory requirements under Section 153D, which necessitate that the approving authority must apply an independent mind to the material on record for each assessment year and each assessee separately. The Tribunal referred to several judgments, including those of the High Courts and the Supreme Court, which emphasized that approval under Section 153D should not be a mere formality or rubber-stamping exercise. The Tribunal noted that the approval in question was granted on the same day for multiple cases, raising doubts about the thoroughness of the review process. In light of these findings, the Tribunal determined that the approval was indeed mechanical and lacked the necessary application of mind, rendering it invalid. 3. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
The Tribunal concluded by allowing the appeals of the assessee and dismissing those of the revenue, based on the invalidity of the approval process under Section 153D.
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