Technical Approval Granted u/s 153D of Act is not valid: ITAT quashes Assessment Order [Read Order]

The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently while quashing the assessment order passed by the AO held that the technical approval granted under Section 153D of Income Tax Act, 1961 is not valid.

Section 153D of Income Tax Act, state procedure for prior approval of assessment proceedings in case of  search or requisition

Amit Goel counsel appeared for the assessee. Sarita Kumari counsel appeared for the revenue.

Assessee M.G. Metalloy Private Limited filed its return of income in consequence of notice issued under section 153A of the Income Tax Act. Thereafter the assessment order was passed under section 153A of the Act with the prior approval of the Joint Commissioner of Income Tax accorded under Section 153D of the Income Tax Act.

Aggrieved by the assessment order, assessee moved with an appeal before the CIT(A).

The assessee challenged the assessment order passed by the AO on the ground that the approval granted for framing assessment order is contrary to provision of Section 153D of the Income Tax Act. However the CIT(A) dismissed the appeal. Aggrieved, the order assessee filed a second appeal before the Tribunal.

Counsel for the assessee submitted that assessment order framed under Section 153A of the Income Tax Act is bad in law on account of absence of any valid and effective approval under Section 153D Income Tax Act by the competent authority.

Counsel for the revenue supported the decision of the CIT(A).

Section 153D Income Tax Act  bestows a supervisory onus on the designated authority in respect of search related assessment and thus enjoins a salutary duty of statutory nature.

CBDT Circular No.3 of 2008 dated 12.03.2008 that the legislature in its highest wisdom made it obligatory that the assessments of search cases should be made with the prior approval of superior authority.

Thus superior authority apply their mind on the materials and other attending circumstances on the basis of which the AO is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval of the respective Assessment order.

Further it was observed by the tribunal that,  in the instant  matter of record by the own admission of JCIT that the approval granted is merely technical and without appraisal of evidence or enquiries.

Finally, after considering the facts and circumstances of the case the two member bench Chandra Mohan Garg, (Judicial Member)  and Pradip Kumar Kedia, (Accountant Member) observed that the observations made by the JCIT, approval granted under Section 153D Income Tax Act apparently did  not meet the requirement of law and hence assessment orders passed in consequence of such non-est approval is a nullity in law.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates