Balaji Metal Tech Pvt. Ltd. Vs DCIT (ITAT Delhi)
Mechanical Invalid Approval Invalidates Assessment & Assessment Under Wrong Section Fatal
ITAT Delhi has quashed the assessment framed for AY 2018-19 & dismissed Revenue’s appeals for AYs 2014-15 to 2017-18. The Tribunal held that the assessment was vitiated since approval was granted mechanically without application of mind & the AO had wrongly completed the proceedings u/s 143(3) instead of 153C, despite clear reference to section 153C in the approval process.
Assessee had challenged the validity of the assessment for AY 2018-19 contending that the order was framed u/s 143(3), whereas it ought to have been completed u/s 153C/143(3), given that the satisfaction note & approval u/s 153D were obtained. It was further argued that no notice u/s 153C was ever issued & that the assessment order was also in violation of CBDT Circular No.19/2019 since no DIN was mentioned. The Assessee placed reliance on the Delhi High Court judgment in PCIT Vs. Shiv Kumar Nayyar [ITA No.285/2024] & Supreme Court ruling in ACIT Vs. Serajuddin & Co. [(2023) 150 taxmann.com 146], to contend that the approval was routine & without due consideration of incriminating material.
On the other hand, Revenue argued that approval is only an administrative act & that minor mistakes cannot invalidate the assessment. It was submitted that the reference to section 153C in approval for AY 2018-19 may have been inadvertent.
