2020 (8) TMI 147 - AT - Income Tax

Assessee's cross-objections allowed, assessment order quashed under Section 153D. Revenue's appeal dismissed as infructuous.

DCIT, Circle, Agartala Versus Shri Subhajit Paul And (Vice-Versa)

DCIT, Circle, Agartala Versus Shri Subhajit Paul And (Vice-Versa) - TMI Issues Involved:1. Relief on undisclosed income of Rs. 86,12,277/-.2. Relief on undisclosed income of Rs. 2,31,83,893/-.3. Validity of the assessment order due to non-compliance with Section 153D of the Income Tax Act.4. Validity of the assessment order due to the absence of a valid notice under Section 143(2) of the Income Tax Act.5. Time-barred appeal.Detailed Analysis:1. Relief on Undisclosed Income of Rs. 86,12,277/-:The Revenue challenged the Commissioner of Income Tax (Appeal) [CIT(A)]'s decision to allow relief on the undisclosed income of Rs. 86,12,277/-. The CIT(A) had deleted the arbitrarily made addition of this amount, which was considered surplus payment received from the Food Corporation of India (FCI) over liabilities. The Tribunal did not delve into the merits of this issue due to the resolution of the technical ground related to Section 153D.2. Relief on Undisclosed Income of Rs. 2,31,83,893/-:Similarly, the Revenue contested the CIT(A)'s decision to allow relief on the undisclosed income of Rs. 2,31,83,893/-, which was based on accounts maintained in Tally software. The CIT(A) had deleted the arbitrarily made additions of Rs. 1,64,58,199/- and Rs. 67,25,694/-, aggregating to Rs. 2,31,83,893/-. Again, the Tribunal did not address this issue on its merits due to the decision on the technical ground of Section 153D.3. Validity of the Assessment Order Due to Non-Compliance with Section 153D:The assessee argued that the assessment order dated 29.03.2016 was invalid as the Assessing Officer (AO) did not obtain prior approval from the Joint Commissioner of Income Tax (JCIT) as required under Section 153D of the Income Tax Act. The Tribunal examined this issue first as it went to the root of the matter.The Tribunal noted that compliance with Section 153D is mandatory. The AO had framed the assessment without obtaining the necessary approval from the JCIT. The Tribunal cited its previous decision in the case of Shri Swapan Kumar Paul, where it was held that the absence of such approval renders the assessment order void. The Tribunal emphasized that the approval process under Section 153D is not a mere formality but requires the JCIT to apply their mind to ensure proper enquiry and investigation by the AO.The Tribunal found that in the present case, the JCIT's approval was mechanical and lacked proper application of mind. The JCIT had approved the assessment on the same day the draft order was received without reviewing the relevant records. Consequently, the Tribunal quashed the assessment order dated 29.03.2016 as invalid and 'null' in the eye of law.4. Validity of the Assessment Order Due to Absence of a Valid Notice under Section 143(2):The assessee also contended that the assessment order was bad in law as no valid notice under Section 143(2) was served. However, the Tribunal did not adjudicate this issue separately as the assessment order was already quashed based on the non-compliance with Section 153D.5. Time-Barred Appeal:The assessee raised the issue that the appeal was time-barred. However, this issue was not separately adjudicated by the Tribunal as the assessment order was quashed on the technical ground related to Section 153D.Conclusion:The Tribunal allowed the assessee's cross-objections on the technical ground of non-compliance with Section 153D, thereby quashing the assessment order dated 29.03.2016. As a result, the Tribunal did not adjudicate on the merits of the other issues raised by both the Revenue and the assessee. The appeal filed by the Revenue was dismissed as infructuous.