Gulzar Ahmed Vs DCIT (ITAT Dehradun)
Summary: ITAT Dehradun quashed the assessment of Gulzar Ahmed for Assessment Year 2011-12 after sustaining an additional jurisdictional ground challenging the validity of approval under Section 153D of the Income-tax Act, 1961. The assessment had been passed by DCIT, Central Circle, Dehradun on 30 March 2015 under Section 153C read with Section 143(3). The Tribunal admitted the additional ground because it went to the root of assumption of jurisdiction. It noted that a coordinate Bench in Uttarkhand Uthan Samiti v. ITO had already considered the approval granted by the competent authority on 30 March 2015, which covered 16 assessees assessed under Section 153A and five assessees assessed under Section 153C. That approval had been held invalid for violation of the mandatory requirements of Section 153D because approval must follow application of mind to the assessment record and incriminating material.
The Tribunal found Gulzar Ahmed’s case squarely covered on facts by that decision. It further relied upon the Delhi High Court judgment in PCIT v. Shiv Kumar Nayyar, ITA 285/2024 & CM APPL 28994/2024, dated 15 May 2024, for the principle that exercise of powers under Section 153D must withstand scrutiny that such powers were not exercised mechanically. Examining the approval reproduced in Uttarkhand Uthan Samiti, the Tribunal observed that approval had been granted for multiple years and multiple assessees, without any reference to material considered or even an indication that the assessment records had been examined. Consequently, the additional ground was sustained, the impugned assessment order was quashed and the assessee’s appeal was allowed.
Cases Discussed
- PCIT v. Shiv Kumar Nayyar (Delhi High Court), ITA 285/2024 & CM APPL 28994/2024, order dated 15.05.2024 — Relied upon for the settled proposition that exercise of powers under Section 153D must not be mechanical.
- Uttarkhand Uthan Samiti v. ITO (ITAT), ITA Nos. 48 to 52/DDN/2019 & ITA No. 130/DDN/2019 — Followed on facts. The coordinate Bench had considered the same approval dated 30.03.2015, covering 16 assessees under Section 153A and five assessees under Section 153C, and held that the mandatory requirements of Section 153D were violated because approval had not been granted after application of mind to the assessment record and incriminating material.
FULL TEXT OF THE ITAT ORDER
The assessee has come in appeal against the order dated 28.02.2017 passed by the Commissioner of Income Tax (Appeals)-IV, Kanpur (hereinafter referred as Ld. First Appellate Authority or in short ‘FAA’) in Appeal No. CIT(A)-IV/60/DCIT-CC/DDN/2015-16/284, for the assessment year 2011-12 against the assessment order dated 30.03.2015 passed u/s 153C read with section 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle, Dehradun (hereinafter referred as the AO).
2. Learned AR has pointed out about application for admission of additional grounds of appeal which includes a ground wherein the impugned assessment order has been challenged on the basis of invalid approval u/s 153D of the Act. As the ground goes to the root of assumption of jurisdiction, the same is admitted.
3. We find that in ITA nos. 48 to 52/DDN/2019 and ITA no. 130/DDN/2019 in the case of Uttarkhand Uthan Samiti v. ITO, coordinate Bench has taken into consideration the approval which was granted by the Competent Authority on 30.03.2015 and has held that this approval which is granted in the case of 16 assessees for assessment u/s 153A and 5 assessees in case of assessment u/s 153C, was not a valid assessment and there was violation of the mandatory provisions of section 153D of the Act which require the approval to be issued after application of mind to the assessment record and incriminating materials. We find that the case of the assessee is squarely covered on facts with the case relied by the learned DR in the case of Uttarkhand Uthan Samiti v. ITO (supra). Further, it is now a settled provision of law that exercise of powers u/s 153D have to pass the scrutiny that the same were not exercised mechanically. Reliance in this regard can be placed on the judgment of Hon’ble Delhi High Court in the case of PCIT v. Shiv Kumar Nayyar [ITA 285/2024 & CM APPL 28994/2024 – order dated 15.05.2024]. The copy of approval as reproduced in case of Uttarkhand Uthan Samiti (supra) shows for multiple years and multiple assessees the approval is granted. There is no reference of any material considered or even if assessment records were examined.
4. In the light of aforesaid additional ground is sustained. The appeal of the assessee is allowed and the impugned assessment order is quashed.
Order pronounced in open court on 19.02.2025.
