The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the search assessment against the assessee for the assessment year 2013-14, noting a lack of proper approval under Section 153D of the Income Tax Act, 1961.
A search and seizure operation was conducted on 1-03-2016 against the Devipriya group in Meerut. Following this, the Principal Commissioner of Income Tax ( PCIT ), Meerut, transferred the case of the assessee to the Assessing Officer (AO), who recorded a satisfaction note and issued a notice under Section 153C on October 11, 2017.
The assessee filed a return in response, but the AO assessed the total income at ₹2,06,20,220, making substantial additions Rs. 1,86,06,022 under Section 69A of the Income Tax Act, 1961 for gains on equity shares, and Rs. 7,44,240 under Section 69C of the Income Tax Act for alleged commission expenses.
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Although the assessee appealed before the Commissioner of Income Tax (Appeals) [ CIT( A ) ], there was no favourable decision, and thus the assessee appealed before the ITAT.
The counsel on behalf of the assessee pointed out a major flaw in the approval process mandated under Section 153D of the Income Tax Act, The approval granted by the Joint Commissioner of Income Tax (JCIT) was a single consolidated sanction covering multiple assessment years, rather than separate approvals for each year. Moreover, the JCIT had approved the draft assessment orders without reviewing crucial documents such as seized materials, electronic data, and responses submitted by the assessee.
The tribunal held that the approval granted in this case lacked proper scrutiny, rendering the entire search assessment void from the beginning.
The ITAT allowed the assessee’s appeal, and the assessment order was quashed.
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