The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that approval under Section 153D of the Income Tax Act, 1961 granted by the Joint Commissioner of Income Tax (JCIT) for the search assessment was mere mechanical manner without due application of mind. Therefore the bench nullified the search proceedings.
The assessee, Mysore Finlease Pvt Ltd filed the appeal against the assessment order passed by the JCIT. A search and seizure operation u/s 132 of the Act was carried out on 23.7.2015 and on subsequent dates in different business and residential premises of Shri Deepak Agarwal and Shri Mukesh Kumar and other cases of Mukesh Kumar Group and Deepak Agarwal Group based at Delhi.
According to the investigation wing, these groups were found to be interconnected with each other and with some group of entry operators providing accommodation entries to beneficiaries in the form of share capital, share premium, unsecured loans , purchase and sale bills etc. Various incriminating documents were found and seized during the course of search and seizure operation in the group cases
Accordingly, the case of the assessee was also centralized to ACIT , Central Circle 13, New Delhi vide order passed u/s 127 of the Act .Also notice under Section 153A of the Act was issued to. Assessee.
JCIT granted approval of the draft assessment orders under Section 153D of the Act for 40 cases for various Asst Years in respect of assessments to be completed under Section 153A of the Act
During the adjudication the Assesee representative, Kapil Goel argued that statutory approval was granted by the JCIT u/s 153D of the Act enabling the AO to complete the search assessment, was a mere mechanical approval without due application of mind on the part of the JCIT.Hence JCIT had granted approval by devoting very few minutes for each case in a mechanical manner u/s 153D of the Act without due application of mind.
Accordingly AR argued that the entire search assessments framed in the hands of the various assessees listed in the cause title u/s 153A r.w.s. 143(3) of the Actfor various Asst Years under consideration required to be quashed as void ab initio.
Sanjay Kumar, the Department argued that bare reading of provisions of section 153D of the Act talks only about existence of approval from the ld. JCIT. There is no mention of application of mind on the part of the ld. JCIT or the approving authority in the said section. The expression „application of mind‟ is only provided by the Judicial decisions and not provided in the statute.
It was observed by the tribunal that for framing search assessments, the AO can pass the search assessment order u/s 153A or u/s 153C of the Act only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the JCIT in terms of section 153D of the Act.
The bench after analyzing the facts determined that JCIT need not apply his mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose
Therefore the two-member bench Of Inturi M. Balaganeshr (Accountant Member) and Yogesh Kumar Us, (Judicial Member) concluded that approval under Section 153D of the Income Tax Act has been granted by the JCIT in the instant case before is a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual.
Thus the bench allowed the appeal filed by the assess.
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