ITAT Delhi Quashes Assessment; Holds Approval under Section 153D Mechanical and Invalid

A search under Section 132 was conducted in the case of Moin Akhtar Qureshi Group, which also covered the assessee, Aditya Sharma. The Assessing Officer completed the assessment under Section 143(3) read with Section 147 on 23 December 2017, calculating the total income of Rs. 11.50 crore as against the returned income of Rs. 2.25 crore. On appeal, the CIT(A) partly allowed relief, following which both the assessee and the Revenue filed cross appeals before the Income Tax Appellate Tribunal, Delhi.

In the appellant proceedings, the assessee raised an additional contention that the assessment order in itself was invalid since the approval granted under Section 153D was mechanical. It was contented that the JCIT had approved the order without examining the relevant seized material or assessment records, thereby violating the mandatory requirement of independent application of mind.

Main Issue: Whether the approval granted by the JCIT under Section 153D was mechanical and invalid, thus rendering the assessment order void.

ITAT Held: The Tribunal, while observing the communication between the Assessing Officer and the JCIT, found that the AO had simply forwarded the draft assessment order on 20 December 2017 without any supporting evidence or seized documents. The JCIT, on the other hand, had approved it solely based on the draft order. The Bench held that such approval was granted in a routine and mechanical manner, which is contrary and opposite to the legislative intent of Section 153D, which mandates a conscious and independent review by the approving authority.

Relying upon the High Court’s ruling in PCIT v. Anuj Bansal, the Tribunal observed that mechanical approval vitiates the entire assessment process. It further held that the Department’s argument of “close coordination” between the AO and JCIT could not substitute the statutory requirement of independent satisfaction. Referring also to Fin Doc Finvest Pvt. Ltd. v. DCIT, the Tribunal concluded that the assessment order suffered from a jurisdictional defect and was void ab initio. Therefore, the Revenue’s appeal was dismissed, and the penalty proceedings under Section 271(1)(c), being consequential, were also quashed.

To Read Full Judgment, Download PDF Given Below