The Delhi Bench of Income Tax Appellate Tribunal(ITAT) upheld the order of the Commissioner of Income Tax(Appeals)[CIT(A)], which quashed the second-round assessment for the assessment year 2009-10 due to the lack of mandatory approval under section 153D of the Income Tax Act, 1961.
The Revenue-appellant challenged the order dated 07.01.2016, passed by CIT(A) for assessment year 2009-10.The case involved S.S. Con-Build Pvt. Ltd., the respondent-assessee, whose second-round assessment was quashed by the CIT(A) for not obtaining prior approval under section 153D of the Income-tax Act, 1961.
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The Assessing Officer (AO) passed the second-round assessment on 11.06.2015, following the directions of the ITAT, but failed to secure the mandatory approval under section 153D before finalizing the assessment.
The AO had argued that since the case was being handled as part of remand proceedings from the ITAT, the approval under section 153D was not necessary. The AO contended that the assessment was not being framed afresh but was simply giving effect to the ITAT’s order. The AO also referred to Circular No. 3 dated 12.03.2008 from the Central Board of Direct Taxes (CBDT), which did not explicitly require such approval in cases where the assessment had not been annulled but only remanded for further action.
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However, the CIT(A) disagreed with this view, stating that the ITAT had effectively set aside the original assessment, and as a result, the AO was required to frame a fresh assessment. Therefore, the CIT(A) concluded that approval under section 153D was mandatory.
The CIT(A) emphasized that the order passed by the AO on 11.06.2015 led to a fresh demand, and the right to appeal before the CIT(A) was provided, further solidifying the fact that it was a new assessment rather than merely an administrative order.
The Revenue argued that the failure to obtain approval under section 153D was a procedural defect, not invalidating the assessment.
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The two member bench comprising Satbeer Singh Godara(Judicial Member) and M.Balaganesh(Accountant Member) upheld the CIT(A)’s decision, agreeing that an assessment, whether the first round or second, cannot be valid without the required approval under section 153D. The tribunal thus confirmed the CIT(A)’s order to quash the second-round assessment.
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