Search assessment under section 153A must follow valid jurisdictional notice; mechanical approval cannot cure defect.
In a search case, where the last panchnama concluded the search in the financial year relevant to the subsequent assessment year, the assessment had to be framed under section 153A read with section 153B of the Income-tax Act, 1961; an assessment made instead under section 143(3) without the jurisdictional notice under section 153A was held invalid. The approval under section 153D was also found to be mechanical because it was granted in a consolidated and generalized manner without application of mind to the assessee's specific facts, and it could not cure the jurisdictional defect. The assessment order was therefore quashed for want of valid jurisdiction.
Issues: (i) Whether the assessment for the relevant year in a search case was required to be framed under section 153A read with section 153B of the Income-tax Act, 1961, instead of section 143(3) of the Income-tax Act, 1961; (ii) Whether the approval granted under section 153D of the Income-tax Act, 1961 was mechanical and therefore unsustainable.
Issue (i): Whether the assessment for the relevant year in a search case was required to be framed under section 153A read with section 153B of the Income-tax Act, 1961, instead of section 143(3) of the Income-tax Act, 1961.
Analysis: The last panchnama recording conclusion of the search was drawn in the financial year relevant to the subsequent assessment year, and the assessment year in question fell within the ambit of the search provisions. In such a situation, the assessment machinery applicable was section 153A read with section 153B of the Income-tax Act, 1961. Framing the assessment under section 143(3) without the jurisdictional notice under section 153A rendered the assessment legally unsustainable.
Conclusion: The assessment framed under section 143(3) was invalid and liable to be quashed.
Issue (ii): Whether the approval granted under section 153D of the Income-tax Act, 1961 was mechanical and therefore unsustainable.
Analysis: The approval was granted in a consolidated and generalized manner for multiple assessment years, without demonstrating application of mind to the specific facts of the assessee's case. Such a mechanical approval could not cure the jurisdictional defect in the assessment process and supported the challenge raised by the assessee.
Conclusion: The approval under section 153D was mechanical and could not sustain the assessment.
Final Conclusion: The revenue's challenge failed, the assessee's objection succeeded, and the assessment order stood quashed for want of valid jurisdiction.
Ratio Decidendi: In a search case, once the search is concluded by the last panchnama in the relevant year, the assessment must be made under the search provisions applicable to that year, and an assessment framed under section 143(3) without the required jurisdictional notice is void; a mechanical approval cannot validate such a defective assessment.