PCIT Vs Citron Infraprojects Limited (Bombay High Court)
Bombay High Court held that grant of approval under section 153D of the Income Tax Act cannot be merely a ritualistic formality. Thus, proceedings u/s. 153A, based on approval u/s. 153D granted without application of mind, is vitiated.
Facts- The present petition has been preferred by the department. the only substantial question involved in all these Appeals is whether, in the facts and circumstances of the present case, the ITAT was justified in faulting the prior approval under Section 153D of the Income Tax Act on the ground that the same was vitiated by non-application of mind.
Conclusion- In Principal Commissioner of Income-tax Vs. Shiv Kumar Nayyar, the Delhi High Court held that the grant of approval under Section 153D cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.
Held that the only inference that could be drawn is that the AO regarded this requirement of obtaining prior approval as merely a formality, and the Additional Commissioner who granted the approvals, likewise, was entirely in agreement with such an approach. These are sufficient grounds for the ITAT to quash the approvals. In the absence of valid approvals, the action under Section 153A cannot be justified and was rightly not upheld by the ITAT. The ITAT cannot be faulted for not adverting to the merits of the matter because in the absence of fulfilment of the jurisdictional requirement of a valid and prior approval under Section 153D, the action under Section 153A would be legally vulnerable.
