Case Law Details
PCIT Vs Anuj Bansal (Delhi High Court)
Introduction: The Delhi High Court recently addressed the case of PCIT vs. Anuj Bansal, concerning the assessment for the fiscal year 2017-18. The appeal was made by the Principal Commissioner of Income Tax (PCIT) to challenge the order passed by the Income Tax Appellate Tribunal (Tribunal). The case revolved around the approval process under Section 153D of the Income Tax Act.
Detailed Analysis: In this case, the appellant (revenue) sought to appeal the order dated October 31, 2022, issued by the Tribunal. However, it is essential to note that the respondent (assessee) had previously filed a cross-objection for the same assessment year (AY) 2017-18, which was disposed of by the Tribunal via an order dated April 29, 2022.
The appeal filed by the revenue against the order dated April 29, 2022, was numbered as ITA No. 368/2023 and was also related to AY 2017-18. This appeal was decided by the Delhi High Court in a separate judgment dated July 2023, titled “Pr. Commissioner of Income Tax (Central)-2 vs. Anuj Bansal.” In that judgment, the court emphasized that the approval for the assessment was granted without a proper examination of the assessment record or the search material. The court found that there was a lack of application of mind by the Additional Commissioner of Income Tax (ACIT) when granting approval.
The ACIT had approved the draft assessment order, where the returned income was Rs. 87,20,580, while the total assessed income by the Assessing Officer (AO) was Rs. 16,69,42,560. The court pointed out the significant discrepancy between these figures and noted that the approval was granted in a mechanical manner without a valid application of mind. As a result, the assessment order was vitiated for the lack of valid approval under Section 153D of the Income Tax Act.
In the appeal under consideration, the Delhi High Court, after reviewing the findings of the Tribunal, concluded that no substantial question of law arose for their consideration. The Tribunal’s findings were based on facts and upheld the annulment of the assessment order. The High Court determined that the absence of the application of mind by the ACIT in granting approval was a crucial issue. Since it was a factual matter and not a question of law, the appeal was closed.
Conclusion: The Delhi High Court’s decision in the case of PCIT vs. Anuj Bansal reaffirms the importance of a thorough and well-reasoned approval process under Section 153D of the Income Tax Act. In this instance, the approval was found to be granted mechanically, without proper consideration, leading to the annulment of the assessment order. The court’s decision highlights the significance of adhering to statutory procedures and applying due diligence in the assessment process.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 48330/2023 [Application filed on behalf of the appellant/revenue seeking condonation of delay of 03 days in filing the appeal]
CM APPL. 4833 1/2023 [Application filed on behalf of the appellant/revenue seeking condonation of delay of 15 days in re-filing the appeal]
1. These are applications seeking condonation of delay in filing and re-
2. According to the appellant/revenue, there is a delay of 3 days in filing of the appeal and 24 days in re-filling the appeal.
3. Counsel for the respondent/assesee submits that he would have no objection if the delay is condoned.
3.1 It is ordered accordingly.
4. Consequently, the above-captioned applications stand disposed of, in aforesaid terms.
ITA 537/2023
5. This appeal concerns Assessment Year (AY) 2017-18
6. Via this appeal, the appellant/revenue seeks to assail the order dated 31.10.2022 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”].
7. Mr Sanjay Kumar, learned senior standing counsel, who appears on behalf of appellant/revenue, informs us that insofar as the respondent/assessee’s cross-objection for the same AY i.e., AY 2017-18 was concerned, it was disposed of by the Tribunal via order dated 29.04.2022.
8. We are informed that the appellant/revenue preferred an appeal before this court against the order dated 29.04.2022, which was numbered as ITA No. 368/2023. This appeal was disposed by this court via decision dated 07.2023, tilted Pr. Commissioner of Income Tax (Central)-2 vs Anuj Bansal, 2023:DHC:4924-DB. In that order, we have made the following observations:
“…13. In another words, it was emphasized that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter:
“17.1 However, in the preset case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs. 87,20,580/-. Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560/- had he applied his mind. The addition of Rs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes.
17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (supra). In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed income and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act.
In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed”.
[Emphasis is ours]
“14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration.
15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act.
16. We are not inclined to interdict the order of the Tribunal…
9. In view of aforesaid facts and circumstances, and since the annulment of the assessment order has been sustained by this Court, no substantial question of law arises for our consideration in this appeal.
10. Accordingly, the appeal is closed.
Parties will act based on the digitally signed copy of the order.
