GD GOENKA PVT. LTD. ,DELHI V. ACIT, CENTRAL CIRCLE - 15, DELHI

ITA 4820/DEL/2024

AI Insights

G.D. Goenka Pvt. Ltd. appealed against the penalties imposed for the assessment years 2016-17, 2017-18, and 2018-19, which were based on enhancements and additions made during the assessment proceedings under sections 271(1)(c), 270A, and 271AAB respectively. The penalties were contested on grounds of legal and procedural improprieties, including defective notices and lack of jurisdiction. The ITAT's decision to allow the appeals was significantly influenced by its earlier ruling, which quashed the underlying assessment orders due to improper approval processes under section 153D, rendering the penalties unsustainable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 30372 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Other Referred Cases: Mysore Bhaskara Pankaja
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND BHASKAR
• Assessee Lawyers: AMIT GOEL
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 271(1)(c); 132; 153A; 274

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘C’, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA NOS. 4820, 4821 & 4822/DEL/2024 A.YRS. : 2016-17, 2017-18 & 2018-19 G.D. GOENKA PVT. LTD. N-85, CONNAUGHT PLACE, NEW DELHI – 1 PAN: AAACG0865A) Vs. ACIT, CENTRAL CIRCLE-15, ARA CENTRE, JHANDEWALAN, NEW DELHI – 55 (Appellant) (Respondent) ORDER PER SHAMIM YAHYA: AM These appeals filed by the Assessee are directed against the separate impugned orders all dated 24.01.2024 passed by the Ld. CIT(A)-26, New Delhi in relation to assessment years 2016-17 relating to penalty u/s. 271(1)(c), 2017- 18 relating to penalty u/s. 270A & 2018-19 relating to penalty u/s. 271AAB respectively. Since common issues involved in these appeals, hence, the same were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 4820/Del/2024 (AY 2016-17) being the lead case. Assessee by Shri Amit Goel, CA Department by Shri Anand Bhaskar, Sr. DR. 2 2. The grounds raised in Assessee’s appeal no. 4820/Del/2024 (AY 2016- 17) read as under:- i) On the facts and circumstances of the case and in law, the order passed by the ld. CIT(A) u/s. 271(1)(c) of the Act is bad in law and without jurisdiction. ii) On the facts and circumstances of the case and in law, the CIT(A) erred in imposing penalty of Rs. 7,50,000/- u./s. 271(1)(c) on addition /enhancement of Rs. 25,00,000/-. iii) On the facts and circumstances of the case and in law, the notice issued u/s. 274 r.w.s. 271(1)© of the Act is defective and therefore, penalty levied is liable to be canceled. 3. Briefly stated, facts are that in this case assessment u/s. 153A r.w.s. 143(3) of the Act was completed by the AO on 30.12.2019 and the income of the assessee was assessed at Rs. 49,60,063/-. Aggrieved by the assessment passed by the AO, the assessee filed an appeal before the Ld. CIT(A), who vide his order dated 20.10.2023 has partly allowed the appeal of the assessee. While adjudicating in appeal order dated 20.10.2023, penalty proceedings u/s. 271(1)(c) of the Act were initiated for concealment of income resulting from an enhancement of income to the extent of Rs. 25,00,000/-. Thereafter, Ld. CIT(A) vide its order dated 24.1.2024, imposed a minimum penalty u/s. 271(1)(c) of the Act @ 100% of tax sought to be evaded for concealing the particulars of its income, relating to the enhanced income of Rs. 25,00,000/- for AY 2016-17. Against the above order, assessee is in appeal before us. 4. At the time of hearing, Ld. Counsel for the assessee stated that the aforesaid appeals which relate to penalty levied by the CIT(A) on certain enhancements made by him and against the CIT(A) orders in quantum matters 3 the assessee filed the appeal before the ITAT and the ITAT, Delhi vide its common order dated 29.10.2024 passed in ITA Nos. 3607, 3608 & 3609/Del/2023 relating to assessment years 2016-17, 2017-18 & 2018-19 respectively has quashed the assessment orders. Thus, he submitted that there remains no quantum additions. Accordingly, the penalty levied does not survive and needs to be deleted. Per contra, Ld. DR did not raise any objection. 5. Upon hearing both the representatives and perusing the records, we find that in the quantum appeals relating to the penalty appeals, assessment have been quashed by the ITAT vide its order dated 29.10.2024 in assessee’s own case, by holding as under:- “5. We have carefully considered the rival submissions and perused the material placed on record and case laws cited. The legal objection of the transgression of requirements of approval under Section 153D of the Act, inter alia, is in controversy. 5.1 Pursuant to search carried out in the premises of the assessee on 26.07.2017, the assessment for A.Y. 2016-17, A.Y. 2017-18 & A.Y. 2018-19 under appeal were inter alia carried out under Section 153A r.w.s. 143(3) of the Act. It is noticed from the approval memo issued under s. 153D that in pursuance of the draft Assessment Orders for 7 years i.e. A.Y. 2012-13 to A.Y. 2017-18 and A.Y. 2018-19 by AO for endorsement and approval of the superior authority at the fag end of the limitation period on 28.12.2019 an approval dated 29.12.2019 was granted by the Addl. CIT, Central Range-4, New Delhi under Section 153D of the Act enabling the Assessing Officer to pass the final Assessment Orders. The approval memo apparently suggests that the superior authority has granted a combined and consolidated approval for multiple Assessment Years pertaining to large number of different assessee (as many as 58 assessee) in promtu on the very next day i.e. 29.12.2019. 5.2 It may also be pertinent to observe at this stage that impugned Assessment Orders were passed under Section 153A r.w.s. 143(3) of the Act pursuant to search carried out under Section 132 of the Act. S. 153D provides for approval of the JCIT before passing order under s. 153A of the Act. The prior approval under Section 4 153D of the Act by the superior authority acts as a statutory safeguard against arbitrary action of the Assessing Officer, if any. In sync with the object and purpose of such safeguards provided under the Act, the approving authority is necessarily required to objectively evaluate the contents of such proposed Assessment Order with utmost care and circumspection on various issues so as to derive his/her informed satisfaction that the proposed action of the AO is in conformity with the subsisting law. The requirement of law is to grant approval not merely as an empty formality for a symbolic act but a mandatory requirement coupled with duty. The AO is obligated to pass the Assessment Order exactly, as per approval/directions of the designated authority. Inevitably, this such approval is contingent upon appreciating of material gathered at the time of search as well as obtained in the course of assessment proceedings. 6. In the backdrop of facts emerging as noted in the preceding paras, it is the contention on behalf of the assessee that approval granted under s. 153D of the Act does not meet the requirement of law and hence impugned Assessment Orders passed in consequence of such non-est approval is a nullity in law. The Assessment Orders thus, passed giving rise to captioned appeal are vitiated in law which illegality cannot be cured. 7. In support of charge of non-est approval, several contentions have been broadly raised viz., i) Despite absence of quantification of assessed income, the approval under Section 153D of the Act has been accorded mechanically in breach of statutory safeguard. ii) Combined and consolidated approval has been granted to the large number of cases involving multiple Assessment Years showing non-application of mind. iii) The combined approval has been granted hurriedly in spur in few hours involving voluminous assessment spanning over several Assessment Years and thus, only a symbolic act to meet the requirement of law. 8. We find potency in the contentions raised on behalf of the assessee. The non- application of mind is glaringly demonstrable having regard to the peculiar facts of the case. Admittedly, combined and consolidated approval has been granted to large number of cases involving different Assessment Years and that too 5 before the end of the next day of the requisition from AO seeking approval. A bare glance at the approval so accorded makes it evident that such approval is generic, listless and accorded in a blanket manner without reference to any issue in respect of any of the Assessment years involved in the case of any of the assessee covered in the consolidated approval. Apparently, the approval has been granted on a dotted line without any availability of reasonable time which firms up the belief towards non- application of mind. Besides, the Addl. CIT has failed to note that the AO has not even cared to determine the assessed income. 9. The whole sequence of action towards approval under s. 153D appears to be illusory to merely meet the requirement of law as empty formality. 10. Identical dispute emanating from the same approval memo in question came up for adjudication in the case of Mysore Bhaskara Pankaja (supra) wherein the Co- ordinate Bench of Tribunal has discredited the validity of the approval granted under Section 153D of the Act in identical circumstances. It was held therein that the approval so granted suffers from vice of non-application of mind and consequently non-est in law. 11. In consonance with the view taken in Mysore Bhaskara Pankaja (one of the parties appearing in the approval memo), we hold that approval granted under Section 153D of the Act under challenge do not meet the requirement of law contemplated under Section 153D of the Act. The Assessment Orders passed in consequence of mechanical approval thus, are rendered non-est and invalid in the eyes of law and hence requires to be quashed. 12. Consequently, the additions/disallowances made in such invalid Assessment Orders do not call for adjudication on merits. 13. In the result, all the captioned appeals of assessee are allowed.” 5.1 In view of above, we are of the considered opinion that once the assessments have been quashed, the penalty levied thereon are not sustainable in the eyes of law and thus deserves to be deleted. We hold and direct accordingly. In the result, the ITA No. 4820/Del/2024 (AY 2016-17) stands allowed. 6 6. As regards assessment years 2017-18 & 2018-19 are concerned. Since the facts of the case are similar and identical to assessment year 2016-17 as aforesaid, hence, our aforesaid decision given for the assessment year 2016-17 shall apply mutatis mutandis to the assessment years 2017-18 & 2018- 19 as well. We hold and direct accordingly on the same directions, as aforesaid. As a result, the Assessee’s appeals for AYs 2017-18 & 2018-19 also stand allowed. 7. In the result, all the 03 Assessee’s appeals stand allowed in the aforesaid manner. Order pronounced on 17/02/2025. Sd/- (SUDHIR KUMAR) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER “SRBHATNAGAR” Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "