Inder Pal Singh Arora Vs DCIT (ITAT Dehradun)
Held that in the present case the approving authority has acted casually and granted the approval u/s. 153D in a mechanical manner without judicious exercise of power. According, approval granted u/s 153D was quashed and consequently the assessment order u/s 153A was also quashed.
Facts-
Pursuant to the search, the assessment for the year was completed u/s 153A(1)(b) r.w.s. 143(3) of the Act. AO made additions of Rs. 36,05,000/- and Rs. 36,00,950/- as undisclosed investment and unexplained credit u/s 68 of the Act respectively. CIT (A) has upheld the additions made by AO and hence the assessee has preferred the present appeal.
The assessee has raised additional grounds challenged validity of assessment order on the ground of invalid approval in terms of provisions of section 153D of the Act.
Conclusion-
Held that the Statute mandates approval of assessment order for ‘each’ assessment year referred to in section 153A(1)(b) which necessarily means that independent approval is required for draft assessment order of each assessment year and it is not open to the approving authority to accord blanket approval as has been done in the present case.
In the present case, the entire exercise of grant of approval u/s 153D and passing the final assessment order was completed within a single day. Further, vide common letter, the approval has been granted to multiple draft assessment orders passed in 20 odd cases on the very same day of receiving the draft assessment order. It is self-evident that the approval has been accorded without going through the facts of the individual cases.
Held that as we have negated the approval u/s 153D, the assessment order passed u/s 153A r.w.s 143(3) of the act stands vitiated for want of approval u/s 153D of the Income Tax Act, 1961 and is hereby quashed.
FULL TEXT OF THE ORDER OF ITAT DEHRADUN
Both the appeals are arising out of common search undertaken u/s 132 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) undertaken on the Juyal Group of cases and are being hereby heard and decided together as a common legal issue in involved in both the appeals.
2.0 First, we are taking up appeal in the case of the assessee Shri Inder Pal Singh Arora bearing ITA No.3900/Del/2015. This appeal is against the order passed by the Ld. Commissioner of Income Tax – Dehradun {(CIT (A)} vide order dated 30/03/2015 and is relating to assessment year 2007-08. The brief facts of the case are that a search action u/s 132 of the Act was carried out on 21/10/2010 on the Juyal Group covering the case of the assessee. Pursuant to the search, the assessment for the year under consideration was completed u/s 153A(1)(b) r.w.s. 143(3) of the Act vide order dated 28/03/2013. The Assessing Officer (AO) made additions of Rs. 36,05,000/- and Rs. 36,00,950/-as undisclosed investment and unexplained credit u/s 68 of the Act respectively. The Ld. CIT (A) has upheld the additions made by the assessing officer and hence the assessee is in appeal before us.
2.1 The assessee has raised the following grounds of appeal:
1. That in facts and circumstance of the case, the Learned CIT has erred wrongly in sustaining the addition of Rs. 72,05,950/ – treating Rs. 36,00,950/ – as unexplained cash credit and Rs. 36,05,000/- as unexplained investment.
2. That in facts and circumstances of the case, sustaining the addition of Rs. 36,00,950 / – without going through the Balance Sheet wherein at the liability side the name of M/s Bankev Bihari Marketing (P) Ltd. is clearly mentioned and the party has filed the confirmation of account. The addition is arbitrary and illegal.
3. That in facts and circumstances of the case, the Assessing Officer has incorrectly invoked the provision of section 68 and sustained by the CIT(A) in the absence of any incriminatory document found during the course of search.
4. That in facts and circumstances of the case, sustaining the addition of Rs. 35,00,000/-advance to Shri Kumar S Vishal and interest thereupon Rs. 1,05,000/- treating the same as undisclosed income is wrong and bad at law.
5. That the addition to the returned income as sustained by the ld. CIT (A) may please be deleted.
2.2 In addition to the grounds raised in the memo of appeal, the assessee has also raised additional grounds vide application dated 28/12/2018 which are as under:
1. That having regard to the facts and circumstances of the case, Ld. CIT(A)has erred in law and on facts in not quashing the impugned assessment order and that too when Ld. AO has passed the impugned order without valid statutory approval in terms of section 153D of the Income Tax Act,1961.
2. That in any case in any view of the matter, action of Ld. CIT(A) in not quashing the impugned assessment order and that too when Ld. AO has passed the impugned order without valid statutory approval in terms of section 153D of the Income Tax Act, 1961, is bad in law on facts and circumstances of the case.
3.0 The assessee has raised additional grounds challenging the validity of the assessment order on the ground of invalid approval in terms of provisions of section 153D of the Act. This ground was not raised before the Ld. first appellate authority and the same has been raised for the first time before this Tribunal. As the additional grounds involve legal issue challenging the validity of the assessment order, it would be appropriate to hear both the parties on the same first.
4.0 The Ld. Counsel appearing for the assessee submitted that the additional grounds are purely of legal nature and requested the admission of the same by citing various judicial decisions. On merits of the additional ground, our attention was drawn to the approval u/s 153D of the Act dated 28/03/2013 placed at Pages 2-3 of the Paper book. It was submitted that the approving authority u/s 153D of the Act is vested with important power to grant approval and same should be exercised after due application of mind. It was submitted that the assessing officer forwarded the copy of draft assessment order to the Addl. CIT on 28/03/2013 and the approval was granted on the same date i.e. 28/03/2013. The Ld. Counsel further highlighted that a common approval was accorded to the draft orders passed in the cases of 20 assessees in very limited time i.e. only on a single day. It was the submission of the Ld. Counsel that the approving authority has mechanically granted the approval without even going through the draft assessment order and as such the approval u/s 153D of the Act was invalid and bad in law.
5.0 The Ld. DR, on the other hand, placed on record the report submitted by the assessing officer in respect of the additional grounds taken by the assessee and argued that the approval accorded by the Addl. CIT u/s 153D was valid.
6.0 We have considered the rival submissions and have gone through the material available on record. As far as the issue of admissibility of additional grounds is concerned, it is noted that the issue of approval u/s 153D of the Act is a legal ground and goes to the very root of the matter. Further, it is observed that no new facts are required for adjudication of the additional grounds and same can be decided on the basis of material available on record which duly forms part of assessment record. Moreover, even the assessing officer in his report dated 14/02/2019 addressed to Ld. CIT DR has not objected to the admission of the additional grounds. In the light of the facts of the case and guidance by the Hon’ble Supreme Court in the case of NTPC Ltd. v. CIT 229 ITR 383 (SC), we are of the considered view that the additional grounds challenging the validity of assessment being purely of legal nature deserve admission and are hereby admitted for adjudication.
7.0 Now coming to the merits of the additional grounds, the Ld. Counsel has vehemently argued that the approval granted by the Addl. CIT was invalid and same was not in conformity with the provisions of section 153A of the Act. On careful perusal of the sequence of events, the following facts emerge:
