2023 (6) TMI 1329 - HC - Income Tax

Court Upholds ITAT Decision: Revenue's Appeal Dismissed Due to Inadequate Approval Under Income Tax Act Section 153 D.

Principal Commissioner of Income Tax (Central) Versus M/s. Shilpa Seema Construction Pvt. Ltd.

The Court dismissed the revenue's appeal against the ITAT order, affirming that the Joint Commissioner's approval under section 153 D of the Income Tax ... Validity of assessment u/s 153A - due approval was not granted u/s 153D - Tribunal set aside the assessments, pursuant to the approval, on purported reason that there was no application of mind in granting them - HELD THAT:- 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 [2023 (3) TMI 785 - ORISSA HIGH COURT] as held there is not even a token mention of the draft orders having been perused by the Additional CIT. The letter simply grants an approval. 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. Decided against revenue. Issues involved: Appeal against order of Income Tax Appellate Tribunal (ITAT) based on approval under section 153 D of Income Tax Act, 1961, lack of application of mind in granting approval by Joint Commissioner, applicability of judgment in ACIT vs. M/s. Serajuddin and Co. Kolkata.Issue 1: Approval under section 153 D of Income Tax ActThe appellant's counsel, Mr. Chimanka, representing the revenue, sought admission of appeal against the ITAT order dated 29th November, 2019. He highlighted that due approval was granted under section 153 D of the Income Tax Act, 1961, by the Joint Commissioner on 23rd November, 2017, after the Assessing Officer's request on 17th November, 2017. Mr. Chimanka argued that the Tribunal erroneously set aside the assessments despite the approval, emphasizing the need for proper application of mind in granting such approvals. He pointed out the specific approval date and referenced a judgment of the First Division Bench of the Court to distinguish the current case from the cited precedent.Issue 2: Lack of application of mind in approval processThe respondent's counsel, Mr. Parida, representing the assessee, countered the appellant's argument by asserting that the contention raised by the revenue was covered by the judgment in ACIT vs. M/s. Serajuddin and Co. Kolkata. He specifically referred to paragraphs 22 to 25 of the judgment to highlight the lack of application of mind by the Joint Commissioner in granting approval for 27 cases, out of which the department intended to appeal against 15. Mr. Parida emphasized the importance of the approving authority examining the draft orders and ensuring compliance with legal requirements, as outlined in the Technical Manual of Office Procedure.Separate Judgment:In a separate judgment, the Court noted the similarities between the facts of the case at hand and those in the Serajuddin and Co. Kolkata case. The Court highlighted the necessity for the approving authority to demonstrate a thoughtful consideration of the draft orders, rather than merely granting approval without proper scrutiny. Citing the Technical Manual of Office Procedure, the Court emphasized the importance of timely submission of draft orders, written final approvals, and explicit mention of approval in the assessment order. Ultimately, the Court dismissed the appeal, concluding that the issue raised was adequately addressed in the Serajuddin and Co. Kolkata judgment.This summary provides a detailed breakdown of the issues involved in the legal judgment, highlighting the arguments presented by both parties and the Court's decision based on the application of relevant legal principles and precedents.