DCIT, CENTRAL CIRCLE 17 , NEW DELHI V. VINOD KARSANBHAI PATEL, NEW DELHI

ITA 2629/DEL/2022

AI Insights

The case involves appeals by both the Assessee, Vinod Karsanbhai Patel, and the Revenue against the order of the CIT(Appeals)-27, New Delhi, which partly sustained additions made under section 69C and deleted additions made under sections 41(1) and 68 of the Income Tax Act for the assessment year 2017-18. The primary legal contention raised by the Assessee was the validity of the assessment order passed under section 143(3) without the necessary approval under section 153D, following a search conducted on 14.12.2016. The Tribunal examined whether the approval granted through a common approval for multiple assessment years, including 2017-18, was valid in law. The Tribunal's decision emphasized the mandatory nature of the approval under section 153D, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126751 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Other Referred Cases: Millenium Vinimay Pvt. Ltd. Vs. ACIT, NTPC Vs. CIT, CIT Vs. Jai Parabolics Print Pvt. Ltd., PCIT Vs. Sapna Gupta, Navin Jain, Vijayadevi Navalkishore Bhartia v. Land Acquisition Officer, Dharampal Satyapal Ltd. v. Union of India
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH; SAPNA BHATIA
• Assessee Lawyers: NIRBHAY MEHTA
• Section: 143(3); 153A; 68; 69C

Judgement Text

"ITA Nos.2534 & 2629/Del/2022 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A Nos.2534/Del/2022 िनधा रणवष /Assessment Year:2017-18 Vinod Karsanbhai Patel, 8A/8, 2nd Floor, Pusa Road, Karol Bagh, New Delhi. PAN No.AACPP0956G बनाम Vs. ACIT, Central Circle-17, Delhi. अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent & आ.अ.सं/.I.T.A Nos.2629/Del/2022 िनधा रणवष /Assessment Year:2017-18 DCIT, Central Circle-17, New Delhi. बनाम Vs. Vinod Karsanbhai Patel, 8A/8, 2nd Floor, Pusa Road, Karol Bagh, New Delhi. PAN No.AACPP0956G अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent Assessee by Shri Nirbhay Mehta, Adv. Ms. Vanshika Mehta, Adv. & Shri Anup Mehta, CA Revenue by Shri Amit Katoch, Sr. DR & Ms. Sapna Bhatia, CIT DR सुनवाईक\bतारीख/ Date of hearing: 03.02.2025 उ\u000eोषणाक\bतारीख/Pronouncement on 25.04.2025 ITA Nos.2534 & 2629/Del/2022 2 आदेश /O R D E R PER C.N. PRASAD, J.M. These two appeals are filed by the Assessee and Revenue respectively against the order of the Ld. CIT(Appeals)-27, New Delhi dated 18.08.2022 for the AY 2017-18 in partly sustaining the additions made u/s 69C of the Act and deleting the additions made u/s 41(1) and 68 of the Act. 2. The assessee in its appeal also raised the following additional grounds challenging the very validity of the assessment order passed u/s 143(3) of the Act by the AO for the search assessment year without the approval u/s 153D of the Act, as null and void: “Whether on the facts and circumstances of the case, the approval granted u/s 153D of the Act through a common approval for separate assessment orders passed u/s 153A for AY 2011-12 to 2016-17 and u/s 153A r.w.s. 143(3) of the IT Act for AY 2017-18 is considered valid in law in view of Judgment of Hon’ble ITAT Delhi Bench in the case of Millenium Vinimay Pvt. Ltd. Vs. ACIT in ITA No.458/Del/2022. Whether approval granted vide letter F.No. Addl.CIT/C.R.-5/153D/2018-19/973 dated 20.12.2018 is valid in terms of the provisions of section 153D of the I.T. Act.” ITA Nos.2534 & 2629/Del/2022 3 3. Ld. Counsel for the assessee submits that the above additional grounds are purely legal grounds going to the very jurisdiction of framing of assessment order u/s 143(3) r.w.s. 153A of the Act for the search assessment year and therefore the same may be admitted and adjudicated upon. Reliance was placed on the decisions of the Apex Court in the case of NTPC Vs. CIT (229 ITR 383) and the decision of the Hon’ble Delhi High Court in the case of CIT Vs. Jai Parabolics Print Pvt. Ltd. (276 ITR 42). 4. On hearing rival submissions and going through the additional grounds raised by the assessee, we find that the additional grounds are purely legal grounds going to the very validity of the assessment framed u/s 143(3) of the Act for the search assessment year and therefore respectfully following the decision of the Hon’ble Supreme Court in the case of NTPC Vs. CIT (supra), we admit the additional ground for adjudication. 5. Ld. Counsel for the assessee referring to the provisions of section 153D of the Act submits that no order of assessment or reassessment shall be passed by the Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of ITA Nos.2534 & 2629/Del/2022 4 section 153B except with the prior approval of the Joint Commissioner. 6. Ld. Counsel submits that in the case of the assessee search was conducted on 14.12.2016 i.e. during the previous year 2016-17 relevant to AY 2017-18. Ld. Counsel submits that the search assessment for the AY 2017-18 was completed on 20.12.2018 and the approval u/s 153D granted by Addl. CIT, Central Range-5, New Delhi was received by the Assessing Officer on 21.12.2018, the Assistant Commissioner of Income Tax, Central Circle-17, New Delhi. Therefore, it is the submission of the Ld. Counsel for the assessee that when the assessment for the search AY 2017-18 was completed u/s 143(3) on 20.12.2018 the Assessing Officer did not have approval u/s 153D of the Act and therefore in the absence of obtaining the approval u/s 153D by the Assessing Officer, the assessment framed u/s 143(3) of the Act for the search assessment year is void ab initio and bad in law. 7. On the other hand, the Ld. DR submitted that the Addl. CIT granted approval u/s 153D of the Act on 20.12.2018 i.e. on the day when the assessment order was passed u/s 143(3) for the search AY i.e. 2017-18 and therefore the assessment order passed by the Assessing Officer is in order. ITA Nos.2534 & 2629/Del/2022 5 8. We have heard rival submissions, perused the materials available on record. The provisions of section 153D wherein a prior approval was necessary before completion of assessment in the case of search or requisition read as under: - “153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153-A or the assessment year referred to in clause (b) of sub-section (1) of section 153-B, except with the prior approval of the Joint Commissioner.” 9. A plain reading of the provision of section 153D suggests that no order of assessment or reassessment shall be passed by the Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B except with the prior approval of the JCIT. Clause (b) of sub-section (1) of section 153A refers to income of six assessment years immediately preceding the assessment relevant to the previous year in which search was conducted or requisition was made. The assessment year referred to in clause (b) of sub-section (1) of section 153B is the assessment year relevant to the previous year in which search was conducted. Since in the case on hand search was conducted in the previous year relevant to AY ITA Nos.2534 & 2629/Del/2022 6 2017-18 the Assessing Officer was mandatorily required to take an approval u/s 153D for the six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted and also for the assessment year relevant to the previous year in which search was conducted as was referred to in clause (b) of sub-section (1) of section 153A and clause (b) of sub-section (1) of section 153B respectively. In the case on hand the present assessment year is 2017-18 and this is the assessment year relevant to the previous year in which search was conducted and therefore approval u/s 153D was necessary to complete the assessment for the search assessment year u/s 143(3) of the Act. The approval granted u/s 153D of the Act by the Addl. CIT, Central Range-5, New Delhi for completion of assessments for the assessment years 2011-12 to 2016-17 and for the search assessment year i.e. AY 2017-18 is as under: - ITA Nos.2534 & 2629/Del/2022 7 10. On perusal of copy of approval placed before us we observed that the Assessing Officer, the Assistant Commissioner of Income Tax, Central Circle-17, New Delhi received the approval u/s 153D on 21.12.2018 for the assessment years 2011-12 to 2016-17 and 2017-18 ITA Nos.2534 & 2629/Del/2022 8 to complete the assessment u/s 153A/143 and 143(3) respectively and whereas the assessment was already completed on 20.12.2018, which means, as on the date of completion of assessment by the Assessing Officer u/s 143(3) on 20.12.2018 for the AY 2017-18 there was no approval received by the Assessing Officer. In other words though the Additional CIT had granted approval u/s 153D for completion of assessment for the search assessment year u/s 143(3) on 20.12.2018, the said approval was communicated to the Assessing Officer only on 21.12.2018 and by which time the Assessing Officer completed the assessment on 20.12.2018 without any approval u/s 153D in his possession. As could be observed from the decision of the Hon’ble Allahabad High Court approval u/s 153D is not mere formality and it is mandatory. 11. In the case of PCIT Vs. Sapna Gupta (2023) (147 taxmann.com 288) held that the requirement of approval cannot be treated as mere formality. The Hon’ble High Court further held as under: “11. Section 153D of the Act relevant for our purposes are to be noted herein under: 153D \"Prior approval necessary? for assessment in cases of search or requisition.—No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, ITA Nos.2534 & 2629/Del/2022 9 except with the prior approval of the Joint Commissioner.\" Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA. 12. The Tribunal while quashing the assessment order had relied upon its earlier decision in Navin Jain (supra) wherein a detailed discussion has been made with regard to the requirement of prior approval of superior authority on the draft assessment order under section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word 'approval' though has not been defined in the Income-tax Act but the general meaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Navalkishore Bhartia v. Land Acquisition Officer [2003] 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. v. Union of India 2019 (366) ELT 253 has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered.” 12. In the facts and above circumstances, we hold that when the Assessing Officer passed/completed the assessment u/s 143(3) for the search AY 2017-18 he was not in possession of approval u/s 153D of the Act which was mandatory for completing the assessment ITA Nos.2534 & 2629/Del/2022 10 since the Assessing Officer was Assistant Commissioner of Income Tax and was below the rank of Joint Commissioner, as provided u/s 153D of the Act. Thus, since the assessment order passed u/s 143(3) for the search assessment year i.e. AY 2017-18 without receiving the approval, such assessment order dated 20.12.2018 is void ab initio, bad in law and legally not sustainable. Thus, the assessment order passed u/s 143(3) dated 20.12.2017 for the AY 2017-18 is bad in law and the same is quashed. The additional ground raised by the Assessee is allowed. 13. Since we have quashed the assessment order passed u/s 143(3) dated 20.12.2018 the other technical ground raised by the assessee i.e. the order passed by the Ld. CIT(Appeals) enhancing the income of the assessee without providing opportunity is bad in law, and all other grounds raised by the assessee on the merits of additions/disallowances sustained by the Ld. CIT(Appeals) are left open. Since adjudication of these grounds would become only academic at this stage. 14. Since we have quashed the assessment order on legal ground the appeal filed by the Revenue became infructuous. ITA Nos.2534 & 2629/Del/2022 11 15. In the result, appeal of the assessee is partly allowed as indicated above and the appeal of the Revenue is dismissed as infructuous. Order pronounced in the open court on 25.04.2025 Sd/- Sd/- (NAVEEN CHANDRA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.04.2025 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "