Assessment orders under section 153A invalid due to mechanical approval under section 153D without proper consideration

ITAT Delhi held that assessment orders passed under section 153A were invalid due to improper approval under section 153D. The Addl. CIT granted approval for 43 cases on a single day (30.12.2018), including 14 cases for the assessee and related party, demonstrating mechanical approval without due application of mind. The tribunal noted that section 153D requires separate approval for each assessment year, but a single blanket approval was granted for all years. Following the precedent in PCIT vs. Anju Bansal, the tribunal ruled that such mechanical approval without judicious consideration renders the entire search assessment proceedings invalid. The assessee's additional ground challenging the validity of section 153D approval was allowed.

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Issues Involved:
1. Legality of the approval granted by the Additional Commissioner of Income Tax (Addl. CIT) under Section 153D of the Income-tax Act, 1961.
2. Whether the approval was granted in a mechanical manner without due application of mind.
3. Validity of the search assessments framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961.

Summary:

Issue 1: Legality of the approval granted by the Addl. CIT under Section 153D of the Income-tax Act, 1961.

The assessee raised an additional ground of appeal challenging the legality of the approval granted by the Addl. CIT under Section 153D for multiple assessment years with a single approval. The Tribunal admitted this additional ground for adjudication, noting that the facts and circumstances relevant to this issue were already on record.

Issue 2: Whether the approval was granted in a mechanical manner without due application of mind.

The assessee argued that the approval granted by the Addl. CIT was mechanical and lacked due application of mind. The draft assessment orders for 14 assessment years were sent for approval on 30.12.2018, and the Addl. CIT granted approval on the same day for all cases. The Tribunal noted that the Addl. CIT did not indicate that the draft orders were perused, which is a minimum requirement. The Tribunal also referred to information obtained under the Right to Information Act, which revealed that the Addl. CIT had granted approval for 43 cases on a single day, indicating a lack of due application of mind. The Tribunal cited decisions from the Hon'ble Orissa High Court and Hon'ble Allahabad High Court, which held that such approvals granted mechanically without application of mind are invalid.

Issue 3: Validity of the search assessments framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961.

The Tribunal found that the approval granted by the Addl. CIT was not in compliance with the mandatory requirement of law, as it was granted in a mechanical manner without due application of mind. The Tribunal held that such an approval is invalid and vitiates the entire search assessment proceedings. Consequently, the Tribunal declared the search assessments framed in the hands of the assessee for the assessment years 2011-12 to 2015-16 as illegal and bad in law. The Tribunal did not adjudicate on other legal grounds and grounds on merits raised by the assessee and the Revenue, as they were rendered academic in nature.

Conclusion:

In conclusion, the Tribunal allowed the appeals of the assessee and dismissed the appeal of the Revenue for the assessment year 2015-16, declaring the search assessments as illegal and bad in law due to the invalid approval granted under Section 153D.

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