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2023 (7) TMI 1399 - AT - Income TaxAssessment order passed u/s 153A - valid approval granted u/s 153D or not? - as argued statutory approval granted by the ld. Addl. Commissioner u/s. 153D of the Act enabling the ld. AO to complete the search assessment, was a mere mechanical approval without due application of mind on the part of the ld. Addl. CIT. - HELD THAT - Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-5, New Delhi, under Right to Information Act, wherein, it reveals that the Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from paper book which contains the approval u/s. 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether is it humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s. 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together. Similar issue has been addressed in the case of PCIT vs. Anju Bansal 2023 (7) TMI 1214 - DELHI HIGH COURT wherein, under similar circumstances, the Hon'ble jurisdictional High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. We have no hesitation in holding that the approval u/s. 153D of the Act has been granted by the Addl. CIT in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Such an approval has neither been mandated by the provisions of the Act nor endorsed - Hence, we find lot of force in the arguments advanced by the ld. AR in support of the additional ground raised for all the assessment years under consideration before us. Accordingly, the additional ground raised by the assessee is hereby allowed.
Issues Involved:
1. Legality of the approval granted by the Additional Commissioner of Income Tax (Addl. CIT) under Section 153D of the Income-tax Act, 1961. 2. Whether the approval was granted in a mechanical manner without due application of mind. 3. Validity of the search assessments framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961. Summary: Issue 1: Legality of the approval granted by the Addl. CIT under Section 153D of the Income-tax Act, 1961. The assessee raised an additional ground of appeal challenging the legality of the approval granted by the Addl. CIT under Section 153D for multiple assessment years with a single approval. The Tribunal admitted this additional ground for adjudication, noting that the facts and circumstances relevant to this issue were already on record. Issue 2: Whether the approval was granted in a mechanical manner without due application of mind. The assessee argued that the approval granted by the Addl. CIT was mechanical and lacked due application of mind. The draft assessment orders for 14 assessment years were sent for approval on 30.12.2018, and the Addl. CIT granted approval on the same day for all cases. The Tribunal noted that the Addl. CIT did not indicate that the draft orders were perused, which is a minimum requirement. The Tribunal also referred to information obtained under the Right to Information Act, which revealed that the Addl. CIT had granted approval for 43 cases on a single day, indicating a lack of due application of mind. The Tribunal cited decisions from the Hon'ble Orissa High Court and Hon'ble Allahabad High Court, which held that such approvals granted mechanically without application of mind are invalid. Issue 3: Validity of the search assessments framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961. The Tribunal found that the approval granted by the Addl. CIT was not in compliance with the mandatory requirement of law, as it was granted in a mechanical manner without due application of mind. The Tribunal held that such an approval is invalid and vitiates the entire search assessment proceedings. Consequently, the Tribunal declared the search assessments framed in the hands of the assessee for the assessment years 2011-12 to 2015-16 as illegal and bad in law. The Tribunal did not adjudicate on other legal grounds and grounds on merits raised by the assessee and the Revenue, as they were rendered academic in nature. Conclusion: In conclusion, the Tribunal allowed the appeals of the assessee and dismissed the appeal of the Revenue for the assessment year 2015-16, declaring the search assessments as illegal and bad in law due to the invalid approval granted under Section 153D.
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