2024 (9) TMI 728 - AT - Income Tax

ITAT quashes section 153A assessment order after finding section 153D approval was invalid ritual lacking proper consideration

M.G. Metalloy P. Ltd. Versus DCIT, Central Circle, Noida. And (Vice-Versa)

The ITAT Delhi quashed an assessment order under section 153A, ruling that the approval granted under section 153D was invalid. The tribunal found that ... Assessment u/s 153A - addition u/s 68 - Validity of approval under section 153D - as argued approval granted for framing assessment order is contrary to provision - HELD THAT:- We observed that the approval granted by JCIT, Central Circle, Noida in which the approval granted u/s 153D of the Act was granted to the eighteen assessees including the case of the assessee. In the case of M.G. Metolloy Pvt. Ltd [2023 (10) TMI 686 - ITAT DELHI] assessee’s own case, which was also granted approval by the same letter wherein held manifestly, the JCIT, without any consideration of factual and legal position in proposed additions/disallowances and without contents of appraisal report before him or incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a simplicitor approval with caveats and disclaimers. This approach of the JCIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and can not thus be countenanced in law. We are unhesitatingly disposed to hold that the assessment order for AY 2014-15 in question, in pursuance of a hollow & cosmetic approval accorded u/s 153D and undeniably without application of mind, is rendered unenforceable in law and hence quashed. Decided in favour of assessee. Issues Involved:1. Scope of jurisdiction under section 153A of the Income-tax Act, 1961.2. Validity of approval under section 153D of the Income-tax Act, 1961.Detailed Analysis:1. Scope of Jurisdiction under Section 153A:The primary issue raised by the assessee was that the addition of loans amounting to Rs. 14,63,05,000/- made by the assessing officer under section 68 of the Income-tax Act, 1961, was beyond the scope of section 153A of the Act. The assessee argued that the assessment order should be quashed as it was contrary to the provisions of section 153D of the Act. The Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] dismissed the jurisdictional issue but partly allowed the appeal for statistical purposes. The Tribunal found that since the assessment itself was deemed bad in law, the addition under section 68 did not survive.2. Validity of Approval under Section 153D:The assessee contended that the assessment order was contrary to the provisions of section 153D, which mandates that no order of assessment or reassessment shall be passed by the assessing officer below the rank of Joint Commissioner without prior approval. The assessee provided evidence that the approval granted by the JCIT was merely technical and without a proper examination of the facts of the case. The Tribunal observed that the JCIT received the draft assessment order on 31.12.2016 and granted the approval on the same day, indicating a lack of due diligence and application of mind. The Tribunal cited several judicial precedents, including decisions from the Allahabad High Court and other ITAT benches, which supported the view that such approvals must be substantive and not merely procedural.The Tribunal noted that the JCIT himself admitted that the approval was granted hurriedly and was merely technical, thus failing to meet the statutory requirements. The Tribunal emphasized that the approval process under section 153D should involve a thorough examination of the assessment records and seized materials. The Tribunal concluded that the approval granted was invalid, rendering the assessment order null and void.In light of these findings, the Tribunal allowed the appeals filed by the assessee and dismissed the appeals filed by the Revenue. The assessment orders for the relevant assessment years were set aside as they were deemed unenforceable in law due to the invalid approval process under section 153D.Conclusion:The Tribunal ruled in favor of the assessee on both issues, holding that the assessment orders were invalid due to the improper approval process under section 153D. Consequently, the additions made under section 68 did not survive, and the appeals filed by the assessee were allowed, while those filed by the Revenue were dismissed.