2024 (9) TMI 1663 - AT - Income Tax

Validity of assessments framed u/s 153A - no valid approval u/sec.153D - HELD THAT - Sec.153D approval has to be granted on standalone basis after perusing the entire records for each assessment year instead of treating it as a mere mechanical exercise. This tribunal s recent coordinate bench s order in SMW Ispat (P.) Ltd. 2024 (6) TMI 404 - ITAT PUNE has rejected the Revenue s arguments whilst concluding that a conditional approval than an absolute one is not sustainable in law and therefore the corresponding assessment(s) framed u/sec.153A of the Act is null and void. All the impugned sec.153A assessments all are not sustainable in law and therefore the same stand quashed in very terms since not framed after a valid approval u/sec.153D.

Summary

Issues Involved:

1. Validity of Section 153D approval.
2. Validity of assessments framed under Section 153A of the Income Tax Act.

Detailed Analysis:

1. Validity of Section 153D Approval:

The primary issue addressed in this judgment is the validity of the Section 153D approval granted by the Joint Commissioner of Income Tax (JCIT). The tribunal examined whether the approval was granted in a mechanical manner without proper application of mind. The JCIT had issued a "conditional" approval for the assessment years 2008-09 to 2014-15, which was deemed common for all years. The tribunal referenced several case laws, including Pr. CIT vs. Sapna Gupta and PCIT vs. Siddharth Gupta, which emphasized that Section 153D approval must be granted on a standalone basis after thoroughly reviewing the records for each assessment year. The tribunal concluded that a conditional approval, as opposed to an absolute one, is not sustainable in law, rendering the assessments framed under Section 153A null and void.

The tribunal further detailed that the JCIT's approval, dated 21-03-2016, was subject to compliance with procedural conditions and lacked any substantive application of mind regarding the facts and circumstances of the case. It was noted that the JCIT had only one working day to review the records for 49 assessments, which was deemed insufficient for a thorough examination. This led to the conclusion that the approval was granted mechanically, violating the mandatory requirements under Section 153D, as supported by the decision in S. Goyanka Lime & Chemicals Ltd., affirmed by the Supreme Court.

2. Validity of Assessments Framed under Section 153A:

The tribunal addressed the validity of the assessments made under Section 153A, which were based on the invalid Section 153D approval. The tribunal referenced the case law ACIT vs. Serajuddin & Co., which established that an assessment framed following an invalid Section 153D approval must be quashed. The tribunal held that the assessments dated 22.03.2016 were not sustainable in law due to the lack of a valid approval under Section 153D. Consequently, all the impugned assessments were quashed, and the related merits of the case were rendered academic.

Conclusion:

The tribunal allowed the assessee's appeals and cross-objections while dismissing the department's cross-appeals. The order emphasized the necessity of a proper, standalone Section 153D approval for each assessment year, without which the subsequent assessments under Section 153A are invalid. The tribunal's decision underscores the importance of adherence to procedural requirements in tax assessments to ensure their legality and validity.