2017 (4) TMI 1371 - AT - Income Tax

Tribunal annuls assessment orders due to legal flaws. Assessee's Rule 27 grounds allowed. Revenue's appeals dismissed.

AAA Paper Marketing Ltd. and Ors. Versus ACIT, Central Circle-I and Ors.

The Tribunal annulled the assessment orders under Section 143(3) read with Section 153A for the relevant assessment years, holding them bad in law due to ... Assessment under section 153A - Held that:- In the present case ACIT has granted impugned approval half heartedly without application of mind and without considering and perusing the material on record. Thus, we are inclined to hold that there has been no application of mind by the ACIT before granting the approval. Consequently, we hold that the assessment orders made u/s. 143(3) of the Act r.w.s. 153A of the Act in the case of M/s. Siddhbhumi Alloys Ltd. for Assessment Year 2006-07 is bad in law and deserve to be annulled, thus, we ordered accordingly. Issues Involved:1. Jurisdiction of the Assessing Officer under Section 153A.2. Validity of approval granted under Section 153D.3. Application of Rule 27 of the ITAT Rules, 1963.Issue-wise Detailed Analysis:1. Jurisdiction of the Assessing Officer under Section 153A:The assessee challenged the jurisdiction of the Assessing Officer (AO) under Section 153A, arguing that the Additional Commissioner granted approval in a mechanical manner. The CIT(A) affirmed the AO's jurisdiction, ignoring that no proceedings were pending on the date of the search, and the assessment was framed without reference to incriminating material found as a result of the search.2. Validity of Approval Granted under Section 153D:The assessee contended that the approval under Section 153D was granted mechanically without application of mind. The approval and the assessment order were both dated 31.03.2014, indicating a lack of time for proper consideration. The Tribunal noted that the ACIT's approval letter explicitly stated that the approval was given mechanically due to time constraints, without any meaningful discussion or investigation. The Tribunal cited cases such as CIT Vs. Akil Gulamani Somji and Smt. Shree Lekha Damani Vs. DOT, concluding that the approval was devoid of any application of mind and rendered the assessment order void ab initio.3. Application of Rule 27 of the ITAT Rules, 1963:The assessee invoked Rule 27 to challenge the CIT(A)'s decision on grounds not raised before lower authorities. The Tribunal referenced the case of DOT Vs. Jubiliant Enpro Pvt. Ltd., explaining that Rule 27 allows a respondent to support an order on grounds decided against him even if not appealed. The Tribunal admitted the legal ground raised by the assessee under Rule 27, noting that it ensures the respondent can contest unfavorable decisions on aspects of an issue that were decided in their favor.Conclusion:The Tribunal annulled the assessment orders under Section 143(3) read with Section 153A for the relevant assessment years, holding them bad in law due to the mechanical and non-application of mind in granting approval under Section 153D. Consequently, the additional grounds raised by the assessee under Rule 27 were allowed, and the appeals of the Revenue were dismissed. The Tribunal did not adjudicate on the merits of the grounds raised by both parties as they became academic and infructuous following the annulment of the assessment orders.