2023 (12) TMI 804 - AT - Income Tax

Assessment orders under section 153C quashed due to invalid approval under section 153D lacking proper consideration

The ITAT Delhi quashed assessment orders issued under section 153C due to invalid approval under section 153D. The tribunal found that the JCIT's approval ... Validity of notices issued u/s 153C - No valid approval as per mandate of sec 153D as alleged on absence of application of mind by the ACIT - addition u/s 68 - HELD THAT:- Since the copy of the letter of DCIT Central Circle Noida to JCIT Central Range Meerut and approval order issued by JCIT Meerut includes names of present assessee Smt. Ruchi Garg at serial no. 6 and M/s M.G Metalloy Pvt. Ltd. at serial no. 10, therefore, we have no hesitation to hold that the legal contention of assessee envisaged in ground of cross objection one is squarely covered in favour of the assessee leading to inevitable invalidation of assessment orders as the formal and cosmic approval accorded u/s. 153D of the Act issued without application of mind to the relevant assessment orders and records has to be rendered un-enforceable in law and hence the same is quashed. It is pertinent to mention that the said conclusion also gets strong support from the judgement of Anuj Bansal [2023 (7) TMI 1214 - DELHI HIGH COURT] as relied by the ld. AR. Our conclusion drawn for AY 2011-12 would also apply mutatis mutandis to other three appeals pertaining to AY 2012-13, 2013-14 & 2015-16 and consequently impugned reassessment orders in other three appeals are also quashed - Cross objection no. 1 is allowed Issues Involved:1. Validity of the assessment order under Section 153D of the Income Tax Act, 1961.2. Deletion of addition of Rs. 4,02,00,000/- under Section 68 of the Income Tax Act, 1961.Summary:Issue 1: Validity of the Assessment Order under Section 153DThe Tribunal examined the validity of the assessment order passed by the Assessing Officer (AO) under Section 153D of the Income Tax Act, 1961. The assessee contended that the assessment order was liable to be quashed as it was contrary to the provisions of Section 153D, arguing that the approval granted was merely technical and without proper application of mind. The Tribunal referred to a similar case involving a company of the Apple Group, M.G. Metalloy Pvt. Ltd., where the approval under Section 153D was deemed invalid due to lack of proper examination by the JCIT. The Tribunal found that the JCIT granted approval in a hurried manner without evaluating the assessment records or seized materials, thus rendering the approval a mere formality. The Tribunal concluded that the assessment orders were invalid and quashed them, citing the judgment of the Hon'ble Delhi High Court in the case of PCIT vs. Anuj Bansal, which emphasized the necessity of proper application of mind in granting approval under Section 153D.Issue 2: Deletion of Addition under Section 68The Revenue challenged the deletion of the addition of Rs. 4,02,00,000/- made under Section 68 of the Income Tax Act, 1961 by the CIT(A). The CIT(A) had deleted the addition on the grounds that the genuineness of the transaction and the creditworthiness of the creditors could not be proved. The Revenue argued that the unsecured loans received by the assessee were through the rotation of funds within the group of companies or through family members, creating fictitious turnover by circular trading. The CIT(A) failed to appreciate that the unsecured loans were from companies where the assessee or her family members were directors and that these companies were not conducting genuine business but providing accommodation entries. However, since the Tribunal quashed the assessment orders on the ground of invalid approval under Section 153D, the issue of deletion of addition under Section 68 was not adjudicated.Conclusion:The Tribunal allowed the cross objections of the assessee, quashing the assessment orders for all the assessment years under consideration due to invalid approval under Section 153D. Consequently, the appeals filed by the Revenue were not adjudicated. The order was pronounced in the open court on 13.10.2023.