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

ITAT Delhi quashed assessment orders passed under section 153A after finding that the approval granted under section 153D was invalid. The tribunal held that the Additional CIT's approval was mechanical, generic, and granted in a blanket manner without proper application of mind. The approval covered multiple assessment years without specific reference to individual issues and appeared to be a mere formality to meet legal requirements. The approving authority failed to demonstrate due consideration and effectively abdicated statutory functions to the subordinate officer. Such perfunctory approval lacks legal sanctity, rendering the consequent assessment orders nullities. The assessee's appeals were allowed.

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Issues Involved:

1. Validity of assessment u/s 153A without a search in the assessee's premises.
2. Additions u/s 69C for foreign travel expenses.
3. Additions u/s 68 for unexplained credit entries.
4. Additions u/s 69A for cash and demonetized currency found during search.
5. Validity of assessment orders based on approval u/s 153D.

Summary:

1. Validity of assessment u/s 153A:
The assessee contested the validity of the assessment u/s 153A, arguing that there was no search in their office or residential premises. The tribunal did not specifically address this issue in detail due to the resolution of the case on other grounds.

2. Additions u/s 69C for foreign travel expenses:
The assessee argued that the additions u/s 69C for foreign travel expenses were made on an ad-hoc and arbitrary basis without precise material evidence. The tribunal did not delve into the merits of these additions due to the resolution of the case on the legal ground of invalid approval u/s 153D.

3. Additions u/s 68 for unexplained credit entries:
The assessee contended that the additions u/s 68 were upheld without fulfilling the prerequisites for such additions. Again, the tribunal did not adjudicate on the merits due to the primary issue of invalid approval u/s 153D.

4. Additions u/s 69A for cash and demonetized currency found during search:
For the assessment year 2017-18, the assessee challenged the additions u/s 69A for cash and demonetized currency found during the search. The tribunal did not address these issues on merits due to the invalid approval u/s 153D.

5. Validity of assessment orders based on approval u/s 153D:
The tribunal found that the approval u/s 153D was granted in a mechanical and hurried manner without application of mind. The approval was generic, listless, and accorded in a blanket manner for multiple assessment years without specific reasoning. The tribunal cited several precedents, including the case of Shreelekha Damani vs. DCIT, to emphasize that such perfunctory approval lacks legal sanctity. Consequently, the tribunal quashed the assessment orders as they were based on invalid approval u/s 153D, rendering the assessments non-est and a nullity.

Conclusion:
The tribunal allowed the appeals filed by the assessee in ITA Nos. 294/Del/2022 and ITA No. 295/Del/2022, quashing the assessment orders due to the invalid approval u/s 153D, and did not adjudicate on the merits of the additions/disallowances.

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