Chemical Agencies Vs Office of The ACIT (ITAT Delhi)
Summary: The Delhi Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal and quashed the assessment order passed under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2019-20. The assessee had filed its return on 26.09.2018 declaring income of Rs.2,81,790/-. A survey under Section 133A was conducted on 31.10.2018 in connection with the assessee’s business of food chemicals and other items. According to the assessment proceedings, material impounded during the survey indicated cash sales allegedly not recorded in the books. The Assessing Officer considered cash sales of Rs.65,17,451/- recorded for the period from 10.09.2018 to 23.10.2018 and extrapolated the alleged undisclosed sales to the full year at Rs.5,28,63,769/-. A gross profit addition of Rs.56,47,066/- was consequently made, which was confirmed by the first appellate authority.
The assessee raised both jurisdictional/legal grounds and grounds challenging the additions on merits. The principal legal challenge concerned the Assessing Officer’s statement in paragraph 10 of the assessment order that the order was passed with the prior approval of the Joint Commissioner of Income Tax, Central Range-8, New Delhi, through a letter expressly referring to Section 153D. The assessee contended that the proceedings arose from a survey under Section 133A and not a search under Section 132. It was argued that statutory prior approval under Section 153D is prescribed for assessments under Sections 153A and 153C and was not required for an assessment under Section 143(3) following a survey. The assessee further argued that obtaining such approval resulted in intervention by the superior authority and amounted to external dictation and abdication of the Assessing Officer’s quasi-judicial powers.
