Delhi ITAT: Proper Approval from Authority is Required Before Passing Any Assessment/Reassessment in a Search Case

The Income Tax Appellate Tribunal ( ITAT ) of the New Delhi bench for a case ruled that the assessment or reassessment in an investigation concerned with the matter could not be passed without proper approval of the competent authority and quashed it. It was noted that the approval allotted u/s 15D of the Income Tax Act signifies that the approving authority has neither analyzed the assessment records nor the seized materials.

The taxpayer is in the business of chartered services, ground handling of international aircraft; maintaining, repairing aircraft, etc. An investigation has been performed u/s 132 on the taxpayer, and proceedings under section 153A were initiated against the taxpayer. The taxpayer matter was referred for audit in the course of assessment proceedings as per section 142(2). The taxpayer does not adhere to the queries asked via AO and the special auditor as noted by AO. Therefore u/s 153A r.w.s. 143(3) r.w.s 144 the assessment orders were passed.

A revision application was filed by the taxpayer u/s 264. CIT set aside the assessment orders while disposing of the revision applications with the direction to AO to complete them de novo post furnishing the due and reasonable chance of being heard to the taxpayer. AO again takes up the Assessment proceedings for the impugned assessment years. Lastly, he finished the assessment more or less, reiterating the additions made in the original assessment orders.

The taxpayers against the assessment orders so passed, preferred appeals before the First Appellate Authority on the ground that the assessment orders were not true as no proper approval was there u/s 153D. The First Appellate Authority did not encounter any infirmity in the approval granted u/s 153D.

It was seen that by plain reading of section 153D, no assessment or reassessment order in a search-related matter could be passed rather than the prior approval of the competent authority.

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The AO sent draft assessment orders concerning 6 different taxpayers for various assessment years for approval of the Additional Commissioner as per section 153D, and on the very same day, the Additional Commissioner granted approval u/s 153D.

Section 153D of the Income Tax Act obligates that no assessment or reassessment order will be passed via AO below the rank of Joint Commissioner without the prior approval of the Joint Commissioner or a higher-ranking officer.

The two-member Bench Saktijit Dey (Vice President) and Naveen Chandra (Accountant Member) marked that the approval granted u/s 153D of the Act pointed out that the Approving Authority has neither inspected the assessment records nor the seized materials.

It is proved that on an identical day, the letter of the Assessing Officer (AO) with the draft assessment orders was obtained, and approval u/s 153D of the act was allotted via the approving authority.

The above-mentioned facts show that while granting approval under section 153D of the Act the Approving Authority has acted as a mere rubber stamp. The granted approval is mechanical without application of mind, the bench mentioned. ITAT permitted the petition of the taxpayer.