Tribunal Cancels Assessments Due to Invalid Approval

The Tribunal allowed the assessee's appeals based on the invalid approval under Section 153D, leading to the cancellation of the assessments. The primary issue of additions under Section 68 for share capital and premium was upheld due to the assessee's failure to prove the transactions' genuineness. Other grounds, including the mechanical nature of orders and lack of incriminating evidence for invoking Section 153A, were not addressed separately. The Tribunal found the approval process under Section 153D to be casual and void-ab-initio, ultimately ruling in favor of the assessee on this legal basis.

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Issues Involved:
1. Addition under Section 68 for share capital and premium.
2. Deemed commission addition.
3. Invocation of Section 153A without incriminating evidence.
4. Discharge of burden under Section 68.
5. Reliance on irrelevant and incorrect evidence without cross-examination.
6. Jurisdiction of assessing officer.
7. Mechanical nature of orders.
8. Gross profit additions for unexplained sales.
9. Lack of show cause notice.
10. Validity of approval under Section 153D.

Summary:

1. Addition under Section 68 for Share Capital and Premium:
The assessee contested the addition of Rs. 22,33,09,760/- for A.Y. 2016-2017 and Rs. 9,70,00,000/- for A.Y. 2017-2018 under Section 68, arguing that the lower authorities erred in law and facts. The Tribunal found that the assessee failed to prove the identity, creditworthiness, and genuineness of the transactions, thus justifying the addition by the AO and CIT(A).

2. Deemed Commission Addition:
The assessee challenged the addition of Rs. 1,11,655/- as deemed commission for A.Y. 2016-2017. However, this issue was not separately adjudicated as the primary ground under Section 68 was upheld.

3. Invocation of Section 153A Without Incriminating Evidence:
The assessee argued that the invocation of Section 153A was void-ab-initio due to the absence of incriminating evidence. The Tribunal agreed, citing the lack of independent application of mind by the JCIT in granting approval under Section 153D, which was based on presumptions and mechanical in nature.

4. Discharge of Burden Under Section 68:
The assessee contended that the lower authorities failed to appreciate the evidence and arguments submitted to discharge its burden under Section 68. The Tribunal found that the assessee could not substantiate the required three essential ingredients, thus upholding the addition.

5. Reliance on Irrelevant and Incorrect Evidence Without Cross-Examination:
The assessee claimed a violation of the principle of natural justice as they were not given an opportunity to cross-examine or rebut the evidence relied upon by the lower authorities. The Tribunal did not find merit in this argument due to the overall findings on Section 68.

6. Jurisdiction of Assessing Officer:
The assessee argued that the orders were passed without jurisdiction as the source of credit was already assessed by the jurisdiction assessing officer. The Tribunal did not separately address this issue due to the primary findings on Section 68 and Section 153D.

7. Mechanical Nature of Orders:
The assessee claimed that the orders were highly mechanical and without application of mind. The Tribunal found that the approval granted by the JCIT under Section 153D was indeed mechanical and without proper verification, rendering the consequential assessments void-ab-initio.

8. Gross Profit Additions for Unexplained Sales:
The assessee contested the additions of Rs. 14,59,626/- and Rs. 15,50,000/- for A.Y. 2017-2018 on account of unexplained sales. These grounds became academic and were not adjudicated due to the primary findings on the invalidity of the assessment orders.

9. Lack of Show Cause Notice:
The assessee argued that the AO made additions without issuing a show cause notice. This issue was not separately addressed due to the primary findings on Section 68 and Section 153D.

10. Validity of Approval Under Section 153D:
The Tribunal critically examined the approval process under Section 153D, finding that the JCIT granted approval in a casual and mechanical manner without proper application of mind. This rendered the assessments void-ab-initio, and the appeals were allowed on this ground.

Conclusion:
The Tribunal allowed the appeals of the assessee on the legal ground of invalid approval under Section 153D, rendering other grounds academic. The orders were pronounced on 27/03/2023.

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