2021 (4) TMI 476 - AT - Income Tax

Invalid Assessment Order Due to Lack of Proper Approval Under Section 153D

Asstt. Commissioner of Income Tax, Circle-Katni, M.P. Versus Shri C.R. Mittal & Sons (HUF) And (Vice-Versa)

The Tribunal held that the assessment order was invalid due to lack of proper approval under Section 153D of the Income Tax Act, 1961. The JCIT's approval ... Validity of assessment - Statutory approval of Draft Assessment order u/s 153D - Jurisdiction - Approval by the JCIT as required under section 153D obtained or not? - as argued no approval said to be granted by Joint Commissioner u/s. 153D - HELD THAT:- As relying on MITTAL ROADWAYS PVT. LTD. [2021 (3) TMI 555 - ITAT JABALPUR] this Tribunal is of the considered opinion that there is no approval u/s 153D of the Act for passing of the assessment order. Therefore, this Tribunal is unable to uphold the orders of the authorities below. Accordingly, the orders of the authorities below are quashed. - Decided in favour of assessee. Issues Involved:1. Validity of assessment order under Section 153D of the Income Tax Act, 1961.2. Application of mind by the Joint Commissioner of Income Tax (JCIT) in granting approval.3. Jurisdictional error due to lack of proper approval.4. Impact of technical approval on the validity of the assessment order.5. Consequences of non-compliance with mandatory provisions under Section 153D.Detailed Analysis:1. Validity of Assessment Order under Section 153D:The appeal concerns the validity of the assessment order for the Assessment Year 2005-06, which was challenged on the grounds that the approval required under Section 153D of the Income Tax Act, 1961, was not properly obtained. The Tribunal noted that the JCIT's approval was given without a thorough examination of the material on record due to time constraints, thus rendering the approval invalid.2. Application of Mind by the JCIT:The representative for the assessee argued that the JCIT did not apply his mind to the material available on record and the draft assessment order. The JCIT admitted that due to holding charges of six ranges, he could not delve deeply into the material and granted approval only to meet the technical requirement under Section 153D. The Tribunal emphasized that the approval must involve a detailed application of mind to the facts and material on record, which was not done in this case.3. Jurisdictional Error Due to Lack of Proper Approval:The Tribunal held that the assessment order passed by the AO without proper approval from the JCIT was a jurisdictional error. The JCIT's approval is a mandatory requirement, and without it, the AO does not have the jurisdiction to pass the assessment order. The Tribunal referred to previous judgments, including the Delhi Bench's decision in Sanjay Dungal & Others vs. M/s. ACIT, to support this view.4. Impact of Technical Approval on the Validity of the Assessment Order:The Tribunal found that the JCIT's technical approval, given without a detailed examination of the material, was not a valid approval under Section 153D. The Tribunal rejected the argument that discussions between the AO and JCIT constituted sufficient application of mind, noting that the JCIT's own admission of time constraints indicated a lack of proper approval.5. Consequences of Non-Compliance with Mandatory Provisions under Section 153D:The Tribunal concluded that non-compliance with the mandatory provisions under Section 153D rendered the assessment order invalid. The Tribunal noted that this was a jurisdictional issue, not a mere irregularity, and thus could not be rectified by remitting the matter back to the AO. The Tribunal quashed the assessment order and the orders of the lower authorities, dismissing the Revenue's appeal and allowing the assessee's cross-objection.Conclusion:The Tribunal's decision underscores the importance of obtaining proper approval under Section 153D, involving a detailed application of mind by the JCIT. The failure to do so results in a jurisdictional error, rendering the assessment order invalid and non-est in the eyes of the law. The Tribunal emphasized that such approvals are not mere formalities but carry significant legal sanctity.