The Income Tax Appellate Tribunal (ITAT) Chennai Bench upheld that approval granted under Section 153D of Income Tax Act,1961 is in light of seized material and appraisal report submitted by investigation wing.
Assessee Natural Food Products was a Private Limited Company and is engaged in the business of trading of eggs, dhal, oil and sugar.
The main product supplied by the appellant during the period was Egg (hen) which was supplied as per the terms of the contract entered with ICDS and Noon Meal Scheme of Govt. of Tamil Nadu. The assessee Company has filed return of income under Section 139(1) of the Income Tax Act for all assessment years.
A search and seizure, under Section 132 of the Income Tax Act was conducted on 5-7-2018 in the premises of the appellant. During the course of search a statement under Section 132(4) Income Tax Act is said to have been recorded from Mr.T.Gnanasekaran Accounts Manager.
After concluding the search, notice under Section 153C of the Income Tax Act issued to assessee, In response to this notice assessee filed return of income on 22-07-2019 for Asst. Years 2015-16 to 2018-19 and for Asst. year 2010-11 on 03-08- 2021 and declared total income which has been declared in the return of income filed under Section. 139(1) of the Act for all assessment years.
Thereafter, the assessee case was selected for scrutiny. After making certain additions the AO passed the assessment order.
By challenging the approval granted under Section 153D of the Income Tax Act for making assessment proceedings for assessment year 2015-16 to 2018-19 the assessee filed an appeal before the Commissioner of Income Tax (Appeal) {CIT(A)}, who dismissed the appeal . Accordingly, against the order the assessee filed an appeal before the tribunal.
Before the bench, the assessee challenged the legality of search conducted under Section 132 of the Income Tax Act, and consequent assessment proceedings in light of jurisdiction of the assessing officer and transfer of case from one assessing officer to another officer in violation of relevant provisions.
During the proceedings D. Anand , counsel for the assessee submitted that the authority erred in giving prior approval to the orders under Section 153C read with Section 143(3) of the Income Tax Act to bring to tax the undisclosed income and unexplained expenditure in a mechanical manner, without application of mind and own reasoning, in complete defiance to the requirements of law or procedure.
Further counsel argued that the primary duty while granting approval under Sec.153D of the Act, is to see that the draft order did not suffer from legal infirmity and that proper investigation has been conducted to unravel the facts.
Thus, there was no proper approval as required under Section 153D of the Income Tax Act and such argument has been placed on the basis of correspondence between the Assessing Officer and the Addl. CIT, Range Head.
M. Rajan, Counsel for Revenue, supported the decision of lower authorities and argued that there is no dispute with regard to the fact that the assessment order has been passed with prior approval from the Range head in terms of section 153D of the Income Tax Act .
The Addl. CIT categorically observed that on verification of seized material with ITR filed by the assessee there is a difference in income reported for various assessment years. He had also discussed other issues and gave directions to the Assessing Officer. Therefore, it cannot be said that approval granted under Section 153D of the Income Tax Act is mechanical and without any application of mind.
It was observed by the tribunal that the provisions of section 153D of the Act, deals with prior approval necessary for assessment in cases of search under Section 132 or requisition under Section 132A of the Income Tax Act .
Thus, there was enough proof to conclude that the Addl. CIT has given approval under Section 153D of the Income Tax Act after great deliberations with draft assessment order passed by the Assessing Officer in light of seized material and appraisal report submitted by DDIT(Inv).
After reviewing the facts and submissions of the both parties, the two member bench of V. Durga Rao, (Judicial Member)and Manjunatha. G, (Accountant Member)dismissed the appeal and upheld approval granted under Section 153D of Income Tax Act,1961 ine e light of seized material and appraisal report submitted by investigation wing.
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