Assessment orders for 2012-13 & 2013-14 quashed as invalid approval under section 153D; assessee's appeals allowed

The tribunal quashed the assessment orders for the assessment years 2012-13 and 2013-14, declaring them null and void due to the invalid approval under section 153D. Consequently, all other issues challenging the merits of the addition were rendered academic and not adjudicated upon. The appeals of the assessee were allowed, and the assessment orders and all collateral proceedings were quashed.

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Issues Involved:
1. Validity of assessment under section 153A without material found during the search.
2. Sustaining disallowance of Rs. 31,51,200/- as bogus revenue expenditure.
3. Excessive interest charged under sections 234A and 234B.
4. Various observations and conclusions by CIT(A) contrary to facts.
5. Arbitrariness and illegality of the assessment order.
6. Validity of approval under section 153D by the Additional Commissioner of Income Tax.

Issue-wise Detailed Analysis:

1. Validity of Assessment under Section 153A:
The assessee contended that the Assessing Officer (AO) should have accepted the income returned in the absence of any material found during the search corresponding to the additions made. The tribunal considered the legal requirement that any addition under section 153A must be based on material found during the search.

2. Sustaining Disallowance of Rs. 31,51,200/-:
The assessee argued that the disallowance of Rs. 31,51,200/- as bogus revenue expenditure was erroneous. The tribunal noted that the Commission was duly paid by account payee cheques, subjected to Tax Deduction at Source (TDS), and the parties were identifiable. The addition was made without discrediting the evidence brought on record, and the assumption that the commission was re-routed as an unsecured loan was based on incorrect presumptions.

3. Excessive Interest Charged under Sections 234A and 234B:
The assessee claimed that the interest under sections 234A and 234B was either not chargeable or had been excessively charged. The tribunal did not specifically address this issue in detail due to the ultimate decision to quash the assessment orders.

4. Various Observations and Conclusions by CIT(A):
The assessee contended that the CIT(A) made various observations and conclusions contrary to the facts on record. The tribunal found that the CIT(A) ignored documentary evidence and confirmed the disallowance based on incorrect assumptions.

5. Arbitrariness and Illegality of the Assessment Order:
The assessee argued that the assessment order was arbitrary, illegal, and contrary to the principles of natural justice. The tribunal agreed, noting that the assessment order was based on mechanically granted approval without proper application of mind.

6. Validity of Approval under Section 153D:
The tribunal focused extensively on the validity of the approval granted under section 153D by the Additional Commissioner of Income Tax. The tribunal found that the approval was granted mechanically without due application of mind. The Additional CIT’s order dated 26.03.2015 was based on an undertaking from the AO rather than an independent evaluation of the material. This rendered the approval invalid and the assessment order null and void.

Conclusion:
The tribunal quashed the assessment orders for the assessment years 2012-13 and 2013-14, declaring them null and void due to the invalid approval under section 153D. Consequently, all other issues challenging the merits of the addition were rendered academic and not adjudicated upon. The appeals of the assessee were allowed, and the assessment orders and all collateral proceedings were quashed.

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