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Facts
The assessee filed an appeal against the order of the CIT(A) which upheld the assessment order. The assessment proceedings were initiated pursuant to a search and seizure operation. The assessee contended that the approval u/s 153D of the Income Tax Act was not granted with due application of mind.
Held
The Tribunal, relying on the decision of a Co-ordinate Bench in the assessee's own case and the settled law regarding the application of mind for approval u/s 153D, found that the approval was granted mechanically. The assessment order was therefore quashed.
Key Issues
Whether the approval granted u/s 153D of the Income Tax Act, 1961, was done with proper application of mind by the approving authority.
Sections Cited
132, 153D, 153A(1)(b), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
(A.Y. 2018-19) Sh. Surendra Singh Dhull Vs. DCIT House No. 4229, Defence Central Circle, Karnal Colony, Jind, Haryana Haryana PAN: AARPD0817B Appellant Respondent Assessee by Sh. Ved Jain, Advocate and Ms. Uma Upadhyay, Advocate Revenue by Sh. Mahesh Kumar, CIT(DR) Date of Hearing 28/05/2025 Date of Pronouncement 04/06/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeals), Gurgaon-3 [‘Ld. CIT(A)’ for short] dated 07/07/2023 for the Assessment Year 2018-19.
Brief facts of the case are that, the assessment proceedings have been initiated against the Assessee pursuant to a search and seizure operation dated 25/04/2017 conducted u/s 132 of the Income Tax Act, 1961 (‘Act’ for short) in the business premises of M/s Skylark Group and the residential premises. The case of the Assessee was covered u/s 132 of the Act. An approval u/s 153D of the Act dated 25/12/2019 has been accorded by the Joint Commissioner of Income Tax, Central Range, Chandigarh in respect of the assessment year 2018-19 pursuant to the office letter of Deputy Commissioner of Income Tax(OSD), Central Circle, Karnal dated 24/12/2019. Based on the said approval granted u/s 153D of the Act, the assessment proceedings have been initiated for the assessment year under consideration. An assessment order came to be passed for Assessment Year 2018-19 on 30/12/2019 by making certain additions. As against the assessment order, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the Appeal of the Assessee vide order dated 07/07/2023, which is called in question before us in the present Appeal filed by the Assessee.
The Ld. Counsel for the Assessee addressing on the Ground No. 6 of the Appeal submitted that, the Ld. CIT(A) has erred both on facts and in lawin confirming the order passed by the A.O. despite the fact that assessment has been passed based on the approval accorded u/s 153D of the Act in violation of the provisions of the law and without applying mind. The Ld. Counsel further submitted that the Co-ordinate Bench of the Tribunal in Assessee’s own case for Assessment Year 2018-18 in while dealing with the similar approval granted u/Section 153D of the Act, set aside the assessment order. Thus, relying on the order of the Co- ordinate Bench sought for allowing the Appeal.
4. Per contra, the Ld. Department's Representative apart from addressing oral argument also filed written submission which is reproduced as under:-
We have heard both the parties and perused the material available on record and also gone through the order of the Co- ordinate Bench in Assessee’s own case for Assessment Year 2018-19 in ITA No. 2544/Del/2023.
6. The Co-ordinate Bench of the Tribunal while dealing with the similar worded approval letter dated 25-26/12/2019, after considering the identical submissions of the Department of Revenue held as under:-
“3. We find that although the ld. DR has supported the order of the ld. tax authorities below and the approval as granted but what is apparent is that in the present case approval for 23 cases had been granted by the Joint Commissioner, Central Range, Sector17, Chandigarh in regard to four set of assessee. The letter forwarded by the Assessing Officer, DCIT, Karnal, seeking approval in respect of Skylark Foods Pvt. Ltd. was received by the approving authority, i.e., JCIT, Chandigarh, on 24.12.2019 and the approval was granted on the same date. The ld. Counsel for the assessee has relied the order of the coordinate Bench in M/s Skylark Hatcheries Pvt. Ltd. vs. DCIT, order dated 27.02.2025, to contend that the coordinate Bench has annulled the assessment order on the ground that approval u/s 153D of the Act was granted in a mechanical manner without application of mind.
The case of the assessee is the outcome of a search and seizure operation u/s 132 of the Act conducted at the business premises of M/s Skylark Group, Safidon, Jind and residential premises of its members and the assessee had allegedly derived income from salary from Skylark Hatcheries Pvt. Ltd. and was also a partner/director or shareholder in other group companies of Skylark group.
5. The copies of letter issued on 24.12.2019 by the AO show that on 25.12.2019, the letter was received by the approving authority as there is a seal of 25.12.2019 on the letter showing receipt in the office of Addl. Commissioner of Income-tax, Range Central, Chandigarh. Then, we find that on 25/26.12.2019, by way of letters No. JCIT/RC/Chd/CC-KNL/OSD/184/2019-20/187/529 to 534; and JCIT/RC/Chd/CCKNL/OSD/190/2019-20/187/649; approval was granted. Although, the approval letters are separately issued for each assessment year. However, on going through the approval, we find that the approval letter does not bear any reference to what all material were considered in regard to the issues and incriminating materials relied by the AO for completing the search assessment. As for convenience, we consider it appropriate to scan the content of one of such letters below, which will make apparent that no other conclusion can be drawn other than the fact of non application of mind by competent authority while giving approval:-
In the light of the aforesaid discussions and the settled law that the approval letter should be indicative of application of mind by the approving authority for the purpose of section 153D of the Act and placing reliance on the judgement of the Hon’ble Supreme Court in the case of Serajuddin& Co. in SLP(C) Diary No.44989/2023, order dated 28.11.2023 and on the judgement of the Hon’ble Delhi High Court in the case of PCIT vs. Shiv Kumar Nayyar, 2024 (6) TMI 29, we are inclined to allow the additional ground.”
By respectfully following order of the Co-ordinate Bench in Assessees own case for Assessment Year 2018-19 in dated 09/05/2025, we quash the assessment order by allowing Ground No. 6 of the Assessee.
Since, we have allowed the Ground No. 6 and quash the assessment order, other grounds of Appeal require no adjudication.
In the result, appeal of the Assessee is partly allowed.