Assessment order quashed for legal flaws, Revenue appeal dismissed, assessee cross objection allowed

The Tribunal quashed the assessment order due to legal infirmities in the 153D approval, following prior decisions. As a result, the Revenue's appeal was deemed academic and not adjudicated. The cross objection by the assessee was allowed, and the Revenue's appeal was dismissed as infructuous.

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Issues Involved:
1. Deletion of addition treated as unexplained money u/s 69A.
2. Validity of assessment order u/s 153A/143(3).
3. Validity of statutory approval u/s 153D.
4. Timeliness of assessment order u/s 153B.

Summary:

The appeal by the Revenue and cross objection by the assessee arise from the order of ld. CIT (A) dated 25.06.2021, pertaining to AY 2015-16.

Issue 1: Deletion of Addition Treated as Unexplained Money u/s 69A

The Revenue contended that the ld. CIT (A) erred in deleting the addition of Rs.5,40,25,000/- treated as unexplained money u/s 69A, arguing that the assessee was not having any cash out of sales consideration and the submitted documents were self-serving and unverifiable by third parties. Furthermore, the Revenue argued that the assessee fabricated a story about cash sales to cover up cash seized by the ED.

Issue 2: Validity of Assessment Order u/s 153A/143(3)

The assessee challenged the assessment order passed u/s 153A/143(3) dated 31.12.2019, asserting it was ultra vires to the provisions of the Act. The assessee argued that the assessment lacked valid statutory approval u/s 153D and was time-barred u/s 153B, making the orders void ab initio and jurisdictionally flawed.

Issue 3: Validity of Statutory Approval u/s 153D

The primary issue pressed by the assessee was the lack of valid and requisite mandatory statutory approval u/s 153D. The assessee referred to a consolidated approval for AYs 2013-14 to 2019-20, which was found invalid in a prior ITAT decision for AY 2017-18. The ITAT had previously noted that the approval was granted mechanically without application of mind, as evidenced by errors in the assessment order and lack of review of assessment records by the Addl. CIT.

After due analysis, the ITAT concluded that the approval u/s 153D was invalid and bad in law due to non-application of mind by the Addl. CIT, thus vitiating the assessment order.

Issue 4: Timeliness of Assessment Order u/s 153B

The assessee argued that the assessment order was time-barred u/s 153B, which was rejected by ld. CIT (A) on arbitrary grounds.

Conclusion:

Following the principle of stair decisis and prior ITAT decisions, the Tribunal quashed the assessment order due to legal infirmities in the 153D approval. Consequently, the Revenue's appeal on merits was deemed academic and not adjudicated.

In result, the cross objection filed by the assessee was allowed, and the appeal of the Revenue was dismissed as infructuous.

Order pronounced in the open court on this 12th day of April, 2023.

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