PCIT Vs Subodh Agarwal (Allahabad High Court)
Allahabad High Court has dismissed an appeal by the Income Tax Department, upholding the Income Tax Appellate Tribunal (ITAT), Lucknow Bench’s decision to quash assessment orders for Subodh Agarwal for Assessment Year 2015-16. The High Court concurred with the Tribunal that the mandatory prior approval required under Section 153D of the Income Tax Act, 1961, for search assessments was granted in a mechanical manner, rendering the entire assessment proceeding void.
Case Background
The case stems from a search and seizure operation conducted under Section 132 of the Income Tax Act on August 31, 2015. Following this, Subodh Agarwal was issued a notice under Section 153A, requiring him to file an income tax return. The assessee complied, filing his return on April 17, 2017. Subsequently, the Deputy Commissioner of Income Tax, Central Circle-1, Kanpur, completed the assessment under Section 153A/143(3) of the Act on December 31, 2017, making various additions to the assessee’s income.
A key contention raised by the assessee was the validity of the prior approval obtained by the Assessing Officer (AO) from the Joint Commissioner of Income Tax (JCIT) under Section 153D of the Act. This section mandates that no assessment order in a search case, passed by an AO below the rank of Joint Commissioner, can be finalized without the JCIT’s prior approval. The assessee argued that this approval requires a thorough application of mind by the approving authority, including reviewing search material, seized documents, appraisal reports, inquiries, and the assessee’s responses, to ensure the AO has correctly appreciated all facts.
