The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order, stating that the approval granted under Section 153D clearly indicates the approving authority neither examined the assessment records nor the seized materials.
The assessee MDLR Airline (P) Ltd was a resident corporate entity, stated to be engaged in the business of carriage of goods and passengers by air. As stated by the Assessing Officer, the objects of the assessee, in brief, are to carry on the business of chartered services, ground handling of international aircraft; to maintain, repair aircrafts etc.
Mr. Gautam Jain representing the assessee submitted that the approval granted under Section 153D of the Income Tax Act revealed mechanical approach of the Approving Authority and complete non-application of mind. He submitted, the approval granted clearly reveals that the Approving Authority has not examined either the seized materials or the assessment records before approving the draft assessment orders in terms of Section 153D of the Act.
Thus, he submitted, due to lack of proper approval under Section 153D of the Income Tax Act, the assessment orders are also invalid, hence required to be quashed. He submitted, while considering the validity of the assessment orders passed under similar facts and circumstances in case of other group entities arising out of very same approval, the Tribunal held that the approval granted being not in accordance with law, was invalid.
The bench found that approval granted under Section 153D of the Income Tax Act clearly indicated that the Approving Authority has neither examined the assessment records nor the seized materials. In fact, the letter of the Assessing Officer seeking approval also makes it clear that only draft assessment orders were sent for approval without any assessment record or seized material. It was further clear that on the very same day the letter of the Assessing Officer with draft assessment orders was received, approval under Section 153D of the Income Tax Act was granted by the Approving Authority. The aforesaid facts clearly reveal that the Approving Authority, while granting approval under Section 153D of the Income Tax Act, has acted as a mere rubber stamp. The approval granted was completely mechanical without application of mind.
The bench examined the facts of the present appeal, it is to be noted that the Assessing Officer, vide letters dated 21.03.2013 sent draft assessment orders in respect of six different assessees for various assessment years for approval of the Additional Commissioner in terms of section 153D of the Act. Perusal of copies of the aforesaid letters placed in the paper book reveals that the Assessing Officer has simply sent the draft assessment orders without the assessment records and seized material. Interestingly enough, on the very same day i.e. 21.03.2013 the Additional Commissioner has granted approval under Section 153D of the Income Tax Act in respect of six different assessees involving multiple assessment years.
The two member bench of the tribunal comprising Naveen Chandra (Accountant member) and Saktijit Dey (Vice President) quashed the assessment orders while deciding the legal grounds raised by the assessee, the ground raised on merits have become purely academic, hence do not require adjudication. Accordingly, assessee’s appeals were allowed.
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