JPMC HOSPITAL AND PATH LAB,MORADABAD V. ACIT CENTRAL CIRCLE, MORADABAD

ITA 2907/DEL/2023

AI Insights

The case involves JPMC Hospital and Path Lab, a partnership firm running a hospital, which faced an assessment order from the Assistant Commissioner of Income Tax, Central Circle Moradabad, for the assessment year 2019-20. Following a search and seizure operation, the assessee surrendered additional income, which was contested in subsequent appeals. The primary legal contention raised was the lack of mandatory approval under section 153D of the Income Tax Act, 1961, for the assessment order. The Tribunal, referencing various precedents and the principles of law, concluded that the absence of such approval rendered the assessment void.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396506 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2019-2020
• Other Referred Cases: Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC), M/s Emaar MGF Land Limited vs. ACIT ITA NO- 825/Del/ 2018, Improvement Trust, Ludhiana Vs. Ujagar Singh & Ors Civil Appeal No. 2398 of 2008, Zerita Ashlen Rocha vs Ann Marry Varghese, Rajsheela Growth Fund (P) Ltd. va ITO ITA N 124/2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE FILED A PAPER BOOK CONTAINING PAGES; DAYAINDER SINGH SINDHU
• Assessee Lawyers: KAPIL GOEL
• Keywords: Search and seizure; Assessment record; Competent authority
• Section: 143(3); 153A; 2

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.2907/Del/2023 Assessment Year: 2019-20 JPMC Hospital and Path Lab, A-40 Gandhi Nagar Moradabad -244001 PAN No. AADFJ9156B Vs. Asstt. Commissioner of Income tax, Central Circle Moradabad (APPELLANT) (RESPONDENT) Appellant by Dr. Kapil Goel, Advocate Respondent by Sh. Dayainder Singh Sindhu, CIT DR Date of hearing: 22/05/2025 Date of Pronouncement: 28/05/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal is preferred by the assessee against the order dated 24.08.2023 of the Commissioner of Income Tax, Appeal Lucknow -3 [hereinafter referred to as “Ld. CIT(A)”] arising out of the order of the Asstt. Commissioner of Income Tax Central Circle Moradabad dated 19.04.2021 passed under section 2 153A/ 143(3) of the Income Tax Act, 1961 [herein after, the Act] for the assessment year 2019-20, on the following grounds: “ 1. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining addition after applying certain percentile (42.82%) at Rs. 32,06,110/- against additional/surrendered income of Rs. 25,00,000/- offered in ITR, on account of suppressed sale on extrapolation. 2. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining addition of Rs. 7,06,110/- is against the ratio laid down by Apex Court in case of Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC). 3. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining addition of Rs. 64,961/- is bad in law since the 1\" floor of the clinic/nursing home is used by the partners of the firm, who are doctors by the profession. 4. BECAUSE, on the facts and in the circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) is plain arbitrary and purely based on conjectures and surmises and hence bad in law and liable to be set-aside and quashed. 5. BECAUSE, on the facts and in the circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) is bad in law as no due and proper opportunity of hearing was granted to the assessee therefore deserves to be set-aside and quashed. 6. The humble assessee, craves for leave to add/ amend any other ground with the prior permission of your honours.” 2. At the time of hearing it came up that on behalf of assessee an application of additional grounds of appeal under Rule 11 of Income Tax Appellate Tribunal Rules 1963 have been filed wherein following ground are raised: \"That impugned assessment order passed by Ld. AO (ACIT/DCIT Central Moradabad) dated 19.04.2021 as partly sustained by Ld CIT-A are void ab initio and is jurisdictionally flawed as said 3 assessment order is undisputedly and admittedly PASSED without valid/requisite /mandatory approval u/s 153D as answered/responded/admitted in the recent rti reply dated 08.07.2024 given by office of Ld. AO (ACIT Central Circle Moradabad) and therefore impugned asst order and first appeal order may please quashed for total want of valid /requisite approval u/s 153D of 1961 Act\" 3. The brief facts of the case are that the assessee is a partnership firm and running hospital in the name and style of M/s JOMC Hospital and path Lab namely Dr. P. K. Khanna and Dr. Rita Khanna with share of profit in equal portion. The assessee filed return of income for A.Y. 2019-20 declaring total income of Rs. 25,65,020/- on 13-09-2019. A search and seizure operation u/132 of the Act was conducted at the M/S JPMC Hospital including of its partners Dr. P.K. Khanna and Dr. Rita Khanna on 17-01-2019. During the search operation incriminating documents were found and cash of Rs 23,00,000/- and gold jewellery of Rs 1,26,98,321/- and other documents were seized. During the search proceedings the assessee has surrendered the income of Rs. 25,00,000/- .Notices u/s 143 (2) and 141 (1) of the Act were issued to the assessee. In the response of the notice the Ld. AR attended the 4 proceedings. The A.O. has completed the assessment and assed the total income of Rs. 1,19,34,010/-/- after making the additions. 4. Aggrieved by the order, the assessee filed appeal before the Ld. CIT(A) who vide his order dated 24-08-2023 partly allowed the appeal. Being aggrieved the order of Ld. CIT(A) the assessee preferred this appeal before the Tribunal. 5. First, we take up legal issue raised by the assessee in the grounds of appeal. Learned counsel has relied on the decision of the M/s Emaar MGF Land Limited vs. ACIT ITA NO- 825/Del/ 2018 and others to contend that as there is no order available with the department for the purpose of section 153D of the Act, presumption has to be drawn that no such order was passed and in the absence of such order the assessment concluded in the relevant assessment year u/s 153A read with 143(3) of the Act isvoid. 6. Learned DR has submitted that in the assessment order the A.O. has mentioned that the assessment order was framed after taking the prior approval of the Add. CIT, Central Range, 5 Lucknow and there is reference of a letter No. Addl. CIT/CR/LKO/153D/ 2020-21 dated 13-04-2021 by which approval was given. Reliance has been placed the case Improvement Trust, Ludhiana Vs. Ujagar Singh & Ors Civil Appeal No. 2398 of 2008 in which Hon’ble Supreme Court held that attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technalities. In the case of Zerita Ashlen Rocha vs Ann Marry Varghese the Hon’ble Kerla High Court held that courts should make every endeavor to dispose of a case on merits rater than on default. 7. Ld. Counsel for assessee filed a paper book containing pages 1to 100 wherein, various case laws have been referred and also relied the RTI answer given by the Department. The RTI answer furnished by the Department as under: 6 7 8. We have heard the both parties and perused the materials available on record. 9. The Co-Ordinate Delhi Bench in the case of M/s Emaar MGF Land Limited vs. ACIT ITA NO. 825/Del/2018 and others has decided the issue and observed as under: “ 5. Learned AR has heavily relied on the judgment of Hon'ble Delhi Hig Court in the case of Rajsheela Growth Fund (P) Ltd. va ITO ITA N 124/2020 and other judgment dated 08.05.2024 to contend that as there is ne order available with the Department for the purpose of sectam 153D of the Income Tax Act 1961. presumption has to be drawn that no such order was passed and in the absence of such order the assessment concluded in the relevant assessment years under section 153A read with section 1433) of the Act are void. 6. Learned DR has although tried to defend the case of the revenue on this count by referring to the concluding para 7 of the assessment order, and submit that there is reference of a letter No. Jt.CIT/C.R-1/1530 8 Appr./2016-17/1025 dated 26.12.2016, by which approval was given, so it is not correct to contend that there was no approval under section 153D of the Act. 7 We have given thoughtful consideration to the aforesaid facts and circumstances and are of the considered view that it is now settled proposition of law that prior approval of competent authority under section 153D of the Act is mandatory and same is required to pass rigor of the law, to show that the approval was granted after due consideration of the assessment reocrd and it was not a mechanical approval. In spite of giving reasonable and sufficient opportunities to the department AO has failed to produce any copy or other evidence of existence of the approval. That only gives rise to a presumption that there was no approval at all. In the absence of same no conclusion can be drawn as to if the approval was in accordance with law or not but to hold that the assessments in hand were concluded without the requisite approval u/s 153D of the Act.” 10. In the instant case information provided by the RTI shows that no approval for the assessment A.Y. 2019-20 was granted. Where the prior approval of competent authority u/s 153 D of the Act is mandatory and same is required to pass rigor of the law to show that the approval was granted after due consideration of the assessment record and it was not a mechanical approval. The A.O. has failed to produce the copy of the approval. The assessment order in hand was framed without the requisite approval u/s 153D of the Act. 11. Thus, we allowed the ground no 7 raised by the assessee, with this observation, in case department is able to show that 9 the valid approval was obtained by the A.O. application may be filed for recalling this order and to contest this issue as afresh on merits along with other issues raised by the assessee. Since we have decided the legal ground in favour of the assessee the other ground have become academic and keep them open for adjudication. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 28.05.2025. Sd/- Sd/- (MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 28.05.2025 Pooja, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "