Case Law Details
Emaar MGF Land Limited Vs ACIT (ITAT Delhi)
In a landmark decision, the Income Tax Appellate Tribunal (ITAT) of Delhi has declared the assessments of Emaar MGF Land Limited for the assessment years 2010-11 to 2015-16 void due to the lack of mandatory approval under Section 153D of the Income Tax Act, 1961. This ruling underscores the critical importance of procedural compliance in the tax assessment process. The decision was rendered on 30th May 2024, following appeals by both the assessee and the revenue against a prior order by the Commissioner of Income Tax (Appeals).
Background of the Case: The appeals were filed by Emaar MGF Land Limited and the revenue against the common order dated 30.11.2017, issued by the Commissioner of Income Tax (Appeals). The primary contention raised by the assessee was the absence of a valid Section 153D approval, which is a mandatory requirement for assessments concluded under Section 153A of the Income Tax Act.
Key Legal Provisions Involved:
- Section 153A: This section pertains to the assessment in cases where a search is initiated or requisition is made.
- Section 153D: This section mandates that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the prior approval of the Joint Commissioner.
Arguments and Proceedings:
During the hearings, the assessee raised several grounds of appeal, with the focal point being the legality of the assessments in the absence of proper approval under Section 153D. The ITAT considered this a pure question of law and admitted it for detailed examination.
The proceedings revealed a significant delay in compliance with the tribunal’s directions regarding the approval documentation. The Assessing Officer, Mr. Ankit Mishra, eventually appeared and provided an oral explanation, followed by a report. However, the tribunal found that the necessary approval letter from the competent authority was not produced.
Tribunal’s Findings:
The tribunal heavily relied on the precedent set by the Delhi High Court in the case of Rajsheela Growth Fund (P) Ltd. vs ITO, which emphasized the indispensability of Section 153D approval. The tribunal observed that the failure to produce the approval document led to the presumption that no such approval was granted. Consequently, any assessment made without this approval is rendered void.
The tribunal noted that:
1. The absence of the Section 153D approval nullifies the entire assessment process under Section 153A.
2. The failure to adhere to mandatory procedural requirements invalidates the assessments for the relevant years.
Conclusion:
The ITAT Delhi’s decision to void the assessments of Emaar MGF Land Limited from AY 2010-11 to AY 2015-16 due to the lack of Section 153D approval sets a significant precedent. This ruling reinforces the necessity of strict compliance with procedural mandates in tax assessments. The tribunal also left a window open for the revenue to present any subsequent evidence of the requisite approval, highlighting a fair and balanced approach.
In conclusion, this case underscores the critical role of adherence to statutory requirements in the tax assessment process and serves as a crucial reminder for tax authorities to ensure thorough compliance to avoid legal pitfalls. The decision provides a significant reference point for future cases involving procedural lapses in tax assessments.
FULL TEXT OF THE ORDER OF ITAT DELHI
These are appeals preferred by the assessee as well as revenue against the common order dated 30.11.2017 of the Commissioner of Income Tax (Appeals) (hereinafter referred to as Ld. First Appellate Authority or ‘the FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short), for AY 2010-11 onwards till AY 2015-16.
2. Heard and perused the record.
3. At the time of hearing it came up that on behalf of assessee an application of additional grounds of appeal under Rule 11 of the Income Tax Appellate Tribunal) Rules, 1963 have been filed wherein following grounds are raised:-
“1. That on the facts and circumstances of the case and in law, the assessment completed and the additions made therein under section 153A r.w.s143(3) of the Income Tax Act, 1961 (“the Act”) are illegal, bad in law, void ab initio, without jurisdiction and barred by limitation.
2. That, on the facts and circumstances of the case and in law, the issuance of Section 143(2) notice is illegal and beyond the time prescribed in law. Hence, as issuance of Section 143(2) is barred by limitation, the entire assessment is illegal and liable to be quashed.
3. That, on the facts and circumstances of the case and in law, the AO has erred in not appreciating that this is a case of ‘completed assessment and in the absence of any incriminating material qua each issue, the said additions are illegal and liable to be deleted.
4. That, on the facts and circumstances of the case and in law, the AO has erred in not appreciating that no incriminating material has been found for the year under consideration which belongs to the said year, and hence the said additions are illegal and liable to be deleted.
5. That, on the facts and circumstances of the case and in law, the approval under Section 153D of the Act is mechanical and without any application of mind and thus the impugned assessment order is illegal, bad in law liable to be quashed.
6. That on the facts and circumstances of the case and in law, the addition made on account of Section 14A disallowance is illegal, bad in law and without jurisdiction. The same is illegal in the absence of any satisfaction recorded by the AO and also the same is illegal worked out/wrong computed and highly excessive. It is not as per the mandate of law.”
4. At this stage only ground no. 5 was pressed and considering the same to be pure question of law, the same stands admitted. In regard to this ground no. 5 during the course of hearing following orders were passed on 14.05.2024, 20.05.2024 and 21.05.2024, respectively:-
14.05.2024
“When the matter was called out, Ld. Representative for the assessee submitted that the compliance to the direction of the Bench dated 29.11.2023 with regard to the approvals granted by the competent authority u/s 153D of the Act is still awaited. In response, the Ld. CIT-DR sought more time, as according to him, the concerned officer from the field was yet to respond.
Considering that sufficient time has lapsed and even now, the Ld. CIT DR has not put forth any time frame for compliance, we deem it fit and proper to direct the AO to appear in person on 20th May, 2024 and explain reasons for the delay. Accordingly the Registry is directed to notify the said case for hearing on 20th May, 2024. Both parties informed in the open court.”
20.05.2024
“In continuation of the proceedings dated 14.05.2024, the Assessing Officer, Shri Ankit Mishra appeared and orally submitted the reasons for delay in complying with the directions of the earlier Bench dated 29.11.2023 with respect to the approval granted by the Competent Authority u/s. 153D of the Act.
The Assessing Officer is required to submit a factual Report accordingly, and the Registry is directed to stand over the case to 21.05.2024 for appropriate orders. Both parties informed in the Court.”
21.05.2024
“Pursuant to the earlier directions dated 20.05.2024 of the Bench, the Ld. CIT (DR) placed a copy of Report filed by the AO concerned (Shri Ankit Mishra) ACIT, CC-02, Delhi, received by email, with regard to 153D approval letter of the Range Head for the perusal and consideration of the Bench. After perusing the said report, the matter is listed for hearing on 22.05.2024. Both parties informed in the Court.”
5. Learned AR has heavily relied on the judgment of Hon’ble Delhi High Court in the case of Rajsheela Growth Fund (P) Ltd. vs ITO ITA No. 124/2020 and other judgment dated 08.05.2024 to contend that as there is no order available with the Department for the purpose of section 153D of the Income Tax Act 1961, presumption has to be drawn that no such order was passed and in the absence of such order the assessment concluded in the relevant assessment years under section 153A read with section 143(3) of the Act are void.
6. Learned DR has although tried to defend the case of the revenue on this count by referring to the concluding para 7 of the assessment order, and submit that there is reference of a letter No. Jt.CIT/C.R-1/153D Appr./2016-17/1025 dated 26.12.2016, by which approval was given, so it is not correct to contend that there was no approval under section 153D of the Act.
7. We have given thoughtful consideration to the aforesaid facts and circumstances and are of the considered view that it is now settled proposition of law that prior approval of competent authority under section 153D of the Act is mandatory and same is required to pass rigor of the law, to show that the approval was granted after due consideration of the assessment reocrd and it was not a mechanical approval. Inspite of giving reasonable and sufficient opportunities to the department AO has failed to produce any copy or other evidence of existence of the approval. That only gives rise to a presumption that there was no approval at all. In the absence of same no conclusion can be drawn as to if the approval was in accordance with law or not but to hold that the assessments in hand were concluded without the requisite approval u/s 153D of the Act.
8. Thus we are inclined to allow this additional ground no. 5, but with a caveat that, in case department is able to lay hand on any evidence showing existence and content of approval, application may be filed for re-calling the this order and to contest this issue afresh on merits along with other issues raised in respective appeals.
9. In the result the appeals of the assessee are allowed and the appeals of the revenue are dismissed.
Order pronounced in the open court on 30th May, 2024.
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