MDLR Airline (P) Ltd. Vs DCIT (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi, in the case of MDLR Airline (P) Ltd. Vs DCIT, addressed the validity of assessment orders approved under Section 153D of the Income Tax Act. Section 153D mandates prior approval of the competent authority for assessments in search-related cases. The tribunal emphasized that such approval requires due application of mind and cannot be granted mechanically.
Referring to the judgment in ACIT v. Serajuddin & Co. by the Orissa High Court, ITAT underlined that the approving authority must carefully evaluate the draft assessment order and ensure compliance with legal and procedural requirements. The judgment also specified that the approving officer must not act as a rubber stamp. This view was upheld by the Supreme Court through the dismissal of an SLP filed by the Revenue.
Further, the tribunal cited PCIT v. Anuj Bansal, where the Delhi High Court invalidated approvals granted without examination of assessment records and seized materials. In MDLR Hotels Pvt. Ltd. & Ors. Vs ACIT, the tribunal had previously invalidated approvals on similar grounds. In the present case, it was revealed that the draft assessment orders were sent for approval without supporting records or seized materials. The approval was granted on the same day without any meaningful scrutiny, demonstrating a lack of application of mind.
The ITAT concluded that such mechanical approvals under Section 153D render the assessment orders invalid. Accordingly, the tribunal quashed the impugned assessment orders and set aside the appellate authority’s decisions. Consequently, the Revenue’s appeals became infructuous and were dismissed.
This decision underscores the judiciary’s insistence on the substantive examination of assessment orders by approving authorities. Mechanical approvals that fail to adhere to statutory requirements and judicial precedents will not withstand legal scrutiny, ensuring accountability in tax assessments.
FULL TEXT OF THE ORDER OF ITAT DELHI
