Paramasivam Mahalingam Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, allowed the appeal of Paramasivam Mahalingam against the order of the Commissioner of Income Tax (Appeals), ruling the assessment invalid due to the Income Tax Department’s failure to produce the mandatory prior approval record under Section 153D of the Income Tax Act, 1961 (the Act).
Background and Initial Assessment
The case stemmed from a search and seizure operation conducted on the Santosh/Km/VMI Group and its promoters on June 27, 2013. Following the search, assessment proceedings under Section 143(3) of the Act were initiated for the Assessment Year (AY) 2014-15 against the assessee, Paramasivam Mahalingam.
The assessee had filed a return declaring an income of Rs. 68,54,560/-. However, the Assessing Officer (AO), vide an order dated March 22, 2016, made a substantial addition of Rs. 3,39,78,354/- as unexplained cash credit under Section 68 of the Act. The assessee’s appeal against this addition was subsequently dismissed by the Learned CIT(A) on October 14, 2019.
The Core Legal Challenge: Validity of Approval
Before the ITAT, the assessee raised an additional ground of appeal challenging the validity of the assessment itself. The core argument was that the assessment was invalid because the requisite approval under Section 153D of the Act was granted by the Joint Commissioner of Income Tax (JCIT) without proper application of mind. The assessee contended that the approval was granted mechanically through a single, common communication on March 22, 2016, covering multiple assessment years (AY 2008-09 to AY 2014-15) for the appellant and simultaneously for 21 other cases belonging to the same group.
