Assessment order annulled for lack of approval under Section 153D, appeal allowed.

The Tribunal annulled the assessment order due to lack of proper approval under Section 153D, allowing the appeal filed by the assessee. Other issues regarding disallowances and fair market value were not specifically addressed due to the annulment. The Tribunal held that the approval granted was mechanical and lacked proper application of mind, rendering the assessment order invalid under Section 143(3) read with Section 153A. The Assessing Officer is granted liberty to take further action as per the law.

---

---

Issues Involved:
1. Disallowance of rent paid to Tobaccowala.
2. Disallowance of brokerage paid to HDFC Realty.
3. Adoption of fair market value of leasehold land as on 01.04.1981.
4. Validity of the assessment order under Section 143(3) read with Section 153A due to alleged non-compliance with Section 153D.

Issue-wise Detailed Analysis:

1. Disallowance of Rent Paid to Tobaccowala:
The assessee challenged the disallowance of Rs. 60,23,270/- rent paid to Tobaccowala, which was upheld by the Commissioner of Income Tax (Appeals) on the ground that it was personal in nature. The Tribunal did not specifically address this issue in the final judgment as the assessment order itself was annulled.

2. Disallowance of Brokerage Paid to HDFC Realty:
The assessee contested the disallowance of Rs. 2,20,500/- brokerage paid to HDFC Realty for arranging new premises. The Commissioner of Income Tax (Appeals) upheld the disallowance on the grounds that the expenditure was for non-business purposes. Like the first issue, this disallowance was not specifically addressed due to the annulment of the assessment order.

3. Adoption of Fair Market Value of Leasehold Land as on 01.04.1981:
The assessee disputed the adoption of Rs. 700/- per square foot as the fair market value instead of Rs. 1000/- per square foot for the property at 11, Damani House, Cuffe Parade, Mumbai. The Tribunal did not delve into this issue separately due to the annulment of the assessment order.

4. Validity of the Assessment Order under Section 143(3) read with Section 153A due to Alleged Non-Compliance with Section 153D:
The core issue revolved around the validity of the assessment order under Section 143(3) read with Section 153A, due to alleged non-compliance with Section 153D. The assessee argued that the approval granted by the Additional Commissioner of Income Tax was devoid of application of mind, thus rendering the assessment order invalid.

The Tribunal examined the approval letter dated 31.12.2010, which stated that the draft order was submitted on the same day and was approved without much time to analyze the issues on merit. The Tribunal noted that the approval must reflect the application of mind to the facts of the case, as mandated by Section 153D and supported by various judicial precedents, including the Supreme Court's decision in Sahara India vs. CIT and the Calcutta High Court's decision in Peerless General Finance & Investment Co. Ltd. vs. DCIT.

The Tribunal concluded that the approval granted by the Additional Commissioner was mechanical and lacked proper application of mind. Consequently, the assessment order under Section 143(3) read with Section 153A was deemed bad in law and annulled.

Conclusion:
The Tribunal annulled the assessment order due to the lack of proper approval under Section 153D, thereby allowing the appeal filed by the assessee. The other issues regarding disallowances and fair market value were not specifically addressed due to the annulment of the assessment order. The Tribunal also noted that the Assessing Officer is at liberty to take any course of action as per the provisions of the law, as per Section 153A(2).

---