JCIT's mechanical approval under section 153D without proper consideration invalidates entire search assessment proceedings

ITAT Delhi held that approval under section 153D granted by JCIT was invalid as it was mechanical and without due application of mind. The JCIT approved draft assessment orders for multiple assessment years on the same day through a single approval letter, whereas the statute requires separate approval for each assessment year. Following the precedent in PCIT vs. Anju Bansal, the tribunal ruled that statutory approval by quasi-judicial authority without proper consideration renders the entire search assessment proceedings fatal. The approval process was deemed an empty ritual, making the assessment under section 153A invalid. Appeal decided in favor of assessee.

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Issues Involved:
1. Validity of the approval u/s 153D of the Act.
2. Legality of the rectification order u/s 154 of the Act.
3. Validity of additions made u/s 69A and 69C of the Act.
4. Application of section 115BBE of the Act.
5. Overall validity of the assessment orders.

Summary:

1. Validity of the approval u/s 153D of the Act:
The Tribunal examined whether the approval granted by the Joint Commissioner of Income Tax (JCIT) u/s 153D was mechanical and without due application of mind. The assessee argued that the approval was granted on the same day the draft assessment orders were submitted, indicating a lack of thorough examination. The Tribunal found that the JCIT granted a single approval for multiple assessment years on the same day, which was deemed humanly impossible to do judiciously. The Tribunal cited the Hon'ble Delhi High Court's decision in PCIT vs. Anju Bansal, which held that statutory approval without due application of mind is fatal to the entire search assessment proceedings. Consequently, the Tribunal held that the approval u/s 153D was granted mechanically and without due application of mind, rendering the search assessments void ab initio.

2. Legality of the rectification order u/s 154 of the Act:
The Tribunal noted that the Assessing Officer (AO) passed rectification orders u/s 154 for all assessment years, citing numerical mistakes in the additions made u/s 69A and 69C. The Tribunal observed that these rectifications indicated that the original search assessment orders were flawed, further supporting the argument that the JCIT's approval was mechanical and without due application of mind.

3. Validity of additions made u/s 69A and 69C of the Act:
The assessee contended that the additions made by the AO u/s 69A and 69C were based on "dumb documents" and lacked proper appreciation of facts. The Tribunal did not delve into the merits of these additions, as the primary issue of the validity of the approval u/s 153D was sufficient to quash the entire assessment.

4. Application of section 115BBE of the Act:
The assessee argued that the AO erred in invoking the provisions of section 115BBE while computing the tax payable. The Tribunal did not address this issue separately, as the quashing of the assessment orders rendered this argument academic.

5. Overall validity of the assessment orders:
Given the Tribunal's finding that the approval u/s 153D was mechanical and without due application of mind, the entire search assessment framed in the hands of the assessee was declared illegal and bad in law. Consequently, the Tribunal allowed the appeals of the assessee, rendering other legal grounds and grounds on merits academic and left open.

Conclusion:
The Tribunal allowed the appeals of the assessee, quashing the search assessments for all the assessment years under consideration due to the invalid approval u/s 153D of the Act. The order was pronounced in the open court on 06/06/2024.

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