Assessment orders under section 153A declared invalid due to defective mechanical approval under section 153D

The ITAT Amritsar held that assessment orders passed under section 153A were invalid due to defective approval under section 153D. The draft proposal and approval were both made on the same date (31.12.2018), with the assessing officer erroneously referencing section 153B instead of 153D, indicating non-application of mind. The Additional CIT's approval was deemed mechanical, involving mere rubber stamping without proper consideration. Since mandatory prior approval under section 153D requires genuine application of mind and cannot be granted mechanically, the assessment orders were rendered void ab initio. The appeals were allowed and impugned orders quashed.

---

---

Issues Involved:
1. Validity of the Assessment Order under section 153A.
2. Approval procedure under section 153D of the Income Tax Act.
3. Mechanical and ritualistic approval process.

Summary:

1. Validity of the Assessment Order under section 153A:
The appellant challenged the validity of the assessment orders for the years 2012-13, 2013-14, and 2015-16 to 2017-18, arguing that the proper procedure of law was not followed by the authorities while granting approval under section 153D of the Income Tax Act. The appellant contended that the assessment orders were unsustainable as the statutory and mandatory approval required under section 153D was mechanical and ritualistic.

2. Approval procedure under section 153D of the Income Tax Act:
The appellant's counsel argued that the approval under section 153D was granted on the same date the assessment orders were passed, indicating a mechanical manner of approval. The counsel highlighted that the Joint Commissioner of Income Tax, Central Range, Jalandhar, granted approval for multiple assessment years on the same day, which was practically impossible given the volume of documents and submissions involved. The Tribunal admitted this additional legal ground for adjudication based on the judgment of the Hon'ble Supreme Court in NTPC Ltd. v. CIT.

3. Mechanical and ritualistic approval process:
The Tribunal observed that the approval process was indeed mechanical and lacked the necessary application of mind. It noted that the Joint Commissioner had to approve multiple assessment orders on the same day, which was humanly impossible. This mechanical exercise of power rendered the assessment orders invalid. The Tribunal cited several precedents, including the Hon'ble High Court's decision in Pr. CIT v. Subodh Agarwal, which emphasized that approval under section 153D should involve a thorough examination of the assessment records and not be a mere formality.

Conclusion:
The Tribunal held that the mandatory approval under section 153D was granted mechanically without proper application of mind, thus vitiating the entire assessment proceedings. Consequently, the assessment orders were rendered void ab initio, and the appeals of the assessee were allowed. The Tribunal did not proceed to adjudicate the issues raised on merits in quantum addition due to the invalidity of the assessment orders. The judgment was pronounced in the open court on 26.07.2023.

---