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ITAT Quashes Tax Assessments, Citing Mechanical and invalid approval under section 153D

The tribunal found the section 153D approvals were granted mechanically without any proper review declaring the assessments a nullity .

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The Income Tax Appellate Tribunal (ITAT) Delhi bench has quashed several tax assessments,ruling that a mechanical and arbitrary approval process under section 153D renders the resulting orders a nullity.

The appeals are filed by the Minda Capital Pvt. Ltd and the Income Tax Department challenged the orders issued by the Commissioner of Income Tax Appeals due to the commonality of the issues they were consolidated for a joint hearing and were disposed of through a single order.

Submissions in the appeals contended that the assessment orders were null and void. The arguments were that any approval under section 153 D of the Act had been mechanical and arbitrary and the assessment order had lacked a Document Identification Number (DIN) violating a CBDT circular.

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The tribunal considered the admission of additional legal grounds finding them to be purely legal and fundamental to the case . These grounds were accepted, aligning with the ruling in NTPC Ltd vs. CIT as they challenged the very basis of the tax assessment .A central issue was the approval process under section 153D of the Income Tax Act.

The Commissioner of Income Tax CIT(A) highlighted a critical flaw which was common approval was granted mechanically for numerous cases and assessment years on the very same day. The approval itself lacked my reasoning , failing to discuss seized documents or the specific issues which led to the additions on various assessment years .

Furthermore a factual error by the CIT(A) regarding the supposed similarity of issues across all assessment years was highlighted.The practice of granting a common approval without proper review for each assessment year has been criticized by various high courts .

The assessment order was challenged under section 153D , was mechanical and arbitrary falling to meet legal requirements . In the case M/s Millenium Vinimay (P) Ltd. vs .ACIT concluded that such mechanical approvals were invalid .

The tribunal relied on judicial precedents notably in Shreelekha Damani vs DCIT and ACIT, Circle-1(2) Vs. Serajuddin and Co both affirmed by higher courts to establish that mechanical approvals under section 153D of the Act lack legal validity. The tribunal highlighted in the case PCIT vs Shiv kumar Nayyar that approval for numerous case or multiple assessment years issued on a single day without evident independent review of draft orders is a clear non- application of mind.

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The tribunal found that section 153D of the Act approvals in the case illegitimate , declaring the resulted assessment orders non existent and nullity lead to quashing .The decision rendered other grounds of appeal which related to the merits of additions or disallowances irrelevant and quashed the entire proceedings initiated under sections 153C and 153A of the Act citing the absence of a valid approval from the additional commissioner of income tax .

Consequently the taxpayer’s appeal for assessment year 2016-17 was partially allowed . Due to the similar facts the finds for assessment year 2016-217 were applied to assessment year 2017-2018 and 2018-19 those appeals also partially allowed.They dismissed the revenues appeal for the assessment year 2017-18 and 2018-19.

The bench consisting of Anubhav sharma (judicial member) and Rifaur rahaman(Accountant member) partially allowed the three appeals filed by the taxpayer and dismissed the appeal filed by the revenue.

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