2023 (6) TMI 1328 - HC - Income Tax

Appeal Dismissed: Lack of Proper Review in Tax Approval Process for 2010-11, Aligns with Previous Case Findings.

Principal Commissioner of Income-Tax Versus Dilip Construction Pvt. Ltd.

The HC dismissed the appeal against the ITAT's order for the assessment year 2010-11, citing a lack of application of mind in the approval process under ... Validity of assessment u/s 153A - due approval was not granted u/s 153 D - Tribunal set aside the assessments, pursuant to the approval, on purported reason that there was no application of mind in granting them - HELD THAT:- As contention raised by revenue in seeking admission of the appeal is covered by Serajuddin and Co. Kolkata [2023 (3) TMI 785 - ORISSA HIGH COURT] as held even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere 'rubber stamping' of the letter seeking sanction by using similar words like 'see' or 'approved' will not satisfy the requirement of the law. We find similarity in facts found in the case by the ITAT. The approval does not even say the Joint Commissioner had perused the files. As such, the contention sought to be raised in the appeal is covered by Serajuddin and Co. Kolkata (supra). In the circumstances, the appeal and applications are dismissed. Issues Involved:The issues involved in this judgment are related to the admission of appeal against an order passed by the Income Tax Appellate Tribunal (ITAT) for the assessment year 2010-11, based on substantial questions arising from the approval granted under section 153 D of the Income Tax Act, 1961.Judgment Details:Issue 1: Approval under Section 153 DThe Senior Standing Counsel for the revenue submitted that the approval granted by the Joint Commissioner was based on due consideration of the files, and the Tribunal erred in setting aside the assessments. He highlighted the approval dated 23rd November, 2017, and pointed out that the approval was sought by the Assessing Officer on 17th November, 2017. The Counsel argued that a previous judgment of the Court was not applicable to the current case.Issue 2: Lack of Application of Mind in ApprovalThe advocate for the assessee contended that the approval granted by the Joint Commissioner lacked the necessary application of mind, citing a previous case where it was emphasized that the approving authority must examine the draft orders and ensure they meet legal requirements. The advocate relied on paragraphs 22 to 25 of the previous case to support the argument that there was no indication that the approving authority had reviewed the files.In paragraph 22 of the previous case, it was highlighted that the approving authority must examine the draft orders and indicate that they meet legal requirements. The Court found similarities in the facts of the current case with the previous case, where the approval did not mention that the Joint Commissioner had reviewed the files. Consequently, the Court dismissed the appeal and applications based on the lack of application of mind in the approval process.