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Facts
Multiple appeals and cross objections were filed by the Revenue and Assessees against the orders of the Commissioner of Income-tax (Appeals) concerning assessment orders passed under Section 153A/143(3) of the Income Tax Act, 1961. The core issue revolved around the validity of the approval granted under Section 153D of the Act.
Held
The Tribunal held that the approval granted under Section 153D of the Act was mechanical and vitiated due to a lack of application of mind. This was based on the fact that the approval process in the assessee's case mirrored that of a group company whose assessment order was quashed by the High Court and whose related SLP was dismissed by the Supreme Court.
Key Issues
Whether the approval granted by the competent authority under Section 153D of the Income Tax Act, 1961, was mechanical and lacked application of mind, rendering the assessment order illegal.
Sections Cited
153A, 143(3), 153D, 132, 11
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Income Tax Appellate Tribunal, DELHI BENCHES : E : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI ANUBHAV SHARMA
Date of Hearing : 24.04.2025 Date of Pronouncement : 21.05.2025 ORDER PER ANUBHAV SHARMA, JM: These are appeals and Cross Objections preferred by both the Revenue as well as the Assessees against the orders of the Ld. Commissioner of Income-tax (Appeals)-III, Delhi, (hereinafter referred to as the ‘Ld. First Appellate Authority or ‘the Ld. FAA’ in short) in appeals filed before him against the orders dated 31.12.2010 (in & CO No.153/Del/2023, 24.12.2010) of the ld. Asstt. Commissioner of Income-tax, Central Circle-22, New Delhi (hereinafter referred to as the Ld. AO, for short) passed u/s 153A/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:- ITA/CO No. & Appeal No. & Date of order of Assessment Year the CIT(A) AY: 2006-07 286/10-11, dated 18.10.2011 ITA No.67/Del/2012. AY: 2006-07 - do - ITA No.1922/Del/2012, AY : 2007-08 285/10-11, dated 08.02.2012 CO No.155/Del/2023 - do - (ITA No.1922/Del/2012),AY : 2007-08 ITA No.1923/Del/2012, AY : 2008-09 284/10-11, dated 09.02.2012 ITAs No.5590/Del/2011 & other 20 appeals and 6 COs filed by the assessees (Nimitaya Properties Ltd., Nimitaya Promoters Pvt. Ltd., Sanjeev Mahajan, Anita Rani & Nimitaya Infrastructure Pvt. Ltd.) And the Department CO No.156/Del/2023 -do- (ITA No.1923/Del/2012 ,AY : 2008-09)
AY 2005-06 287/10-11, dated 11.10.2011 AY : 2005-06 -do - ITA No.66/Del/2012, AY : 2006-07 288/10-11, dated 28.10.2011 CO No.154/Del/2023 -Do - (ITA No.66/Del/2012, AY : 2006-07) ITA NO.1220/Del/2012, AY : 2007-08 289/10-11, dated 13.01.2012 ITA No.1508/Del/2012, AY 2007-08 -Do - ITA No.1509/Del/2012, AY 2008-09 290/10-11 dated 16.01.2012 CO No.157/Del/2023 -Do - (ITA No.1509/Del/2012), AY 2008-09 ITA No.1510/Del/2012, AY 2009-10 291/10-11, dated 17.01.2012 CO No.158/Del/2023 -do - (ITA No.1510/Del/2012), AY 2009-10 ITA No.2850/Del/2012, AY : 2007-08 300/10-11, dated 16.05.2012 ITA No.3948/Del/2012, AY : 2007-08 -Do - ITA No.2851/Del/2012, AY : 2008-09 301/10-11, dated 17.05.2012 ITA No.3949/Del/2012, AY : 2008-09 -Do - ITA NO.2852/Del/2012, AY : 2009-10 302/10-11, dated 18.05.2012 ITA NO.3950/Del/2012, AY : 2009-10 -Do - ITA No.5022/Del/2011, AY : 2005-06 314/10-11, dated 07.09.2 AY 2007-08 315/2010-11/CIT(A)-III, dated 16.08.2013 ITA No.509/Del/2012, AY : 2007-08 317/10-11, dated 30.11.2011 CO No.153/Del/2023 -do - (ITA No.509/Del/2012), AY : 2007-08
Heard and perused the record. The ld. counsel has raised the issue of mechanical approval u/s 153D of the Act and we find that in all these appeals, by way of application under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 or by way of filing Cross Objections, the grounds have been raised. As for ITAs No.5590/Del/2011 & other 20 appeals and 6 COs filed by the assessees (Nimitaya Properties Ltd., Nimitaya Promoters Pvt. Ltd., Sanjeev Mahajan, Anita Rani & Nimitaya Infrastructure Pvt. Ltd.) And the Department convenience, we reproduce the grounds from Assessment Year 2006-07 in the case of as under:- “1. That on the facts and circumstances of the case and in law, the assessment completed and the additions made therein under section 153A r.w.s. 143(3) of the Income Tax Act, 1961 ("the Act") are illegal, bad in law, void ab initio, without jurisdiction and barred by limitation.
2. That, on the facts and circumstances of the case and in law, the approval under Section 153D of the Act is mechanical and without any application of mind and thus the impugned assessment order is illegal, bad in law liable to be quashed."
We further find that on 06.05.2024, the Bench had passed the following order:- “The captioned is a bunch of Appeals belonging to one Group and involve certain common issues. At the time of hearing, the learned counsel referred to the Application for Additional Grounds of appeal
filed on 04.02.2022, wherein the following Grounds have been raised for admission:-
1. That on the facts and circumstances of the case and in law, the assessment completed and the additions made therein under section 153A r.w.s. 143(3) of the Income Tax Act, 1961 ("the Act") are illegal, bad in law, void ab initio, without jurisdiction and barred by limitation.
2. That, on the facts and circumstances of the case and in law, the approval under Section 153D of the Act is mechanical and without any application of mind and thus the impugned assessment order is illegal, bad in law liable to be quashed." At the time of hearing, the learned Representative pointed out that the Ground of Appeal
No.2 thereof is relevant for all the captioned appeals It is submitted that the said Ground be admitted for adjudication inasmuch as no fresh investigation is required on facts, as the same are available on record as supported by the record of order sheet proceedings annexed with the instant Application. It is also submitted that similar issue was considered and adjudicated by the Coordinate Bench of the Tribunal in the case of M/s Janak Raj Gupta & Co. in and Others
5. ITAs No.5590/Del/2011 & other 20 appeals and 6. COs filed by the assessees (Nimitaya Properties Ltd., Nimitaya Promoters Pvt. Ltd., Sanjeev Mahajan, Anita Rani & Nimitaya Infrastructure Pvt. Ltd.) And the Department dated 15.12.2023, in favour of the assessee. The learned Representative pointed out that the fact situation is similar inasmuch as the case of M/s Janak Raj Gupta & Co. (supra) is also a part of the extant group of cases. The learned DR has not disputed the aforesaid factual matrix brought out by the learned Representative but has sought time to obtain the necessary instructions from the field in support of the case of the Revenue. Be that as it may, having regard to the submissions put forth, it is evident that the issue raised in the Additional Ground of Appeal No. 2 above involves a point of law and having already been examined on merits in the case of a group concern, we deem it fit and proper to admit the said Additional Grounds for adjudication following the ratio of the judgment of the Hon'ble Supreme Court in the case of NTPC Vs. CIT - 229 ITR 383. Since the learned CIT-DR has sought time to respond on merits, we deem it fit and proper to permit the Department to submit the same on the next date of hearing i.e., 16th July, 2024, a date consented by both the sides. Accordingly, Registry is directed to notify the instant Appeal on 16th July, 2024. Parties informed in Court.”
4. We find that a search operation was conducted u/s 132 of the Act on 06.11.2008 in respect of M/s Nimitaya group of companies and the case of M/s Janak Raj Gupta & Co., and Brijmohan Mahajan, were part of the group under search along with the present appellants accordingly, after centralization of the assessments, the respective assessment orders were passed. Then vide and ors in the case of M/s Janak Raj Gupta & Co., vide order dated 15.12.2023, a coordinate Bench has taken into consideration the manner in which the approval u/s 153D of the Act has been granted by the competent authority. The relevant conclusions in the order dated 15.12.2023 (supra) from paras 12 to 26 when considered, we find that the coordinate Bench has taken into ITAs No.5590/Del/2011 & other 20 appeals and 6 COs filed by the assessees (Nimitaya Properties Ltd., Nimitaya Promoters Pvt. Ltd., Sanjeev Mahajan, Anita Rani & Nimitaya Infrastructure Pvt. Ltd.) And the Department consideration the decision of the Hon’ble Supreme Court in the case of Serajuddin & Co wherein the Hon’ble Supreme Court in SLP(C) Diary No.44989/2023, order dated 28.11.2023 has dismissed the appeal filed by the Revenue against the order dated 15.03.2023 in passed by the Hon’ble High Court of Orissa at Cuttack, wherein the Hon’ble High Court had quashed the assessment order on the ground of mechanical exercise of approval of jurisdiction u/s 153D of the Act.
During the hearing of these appeals after aforesaid order date 6.5.2024, the Revenue was given sufficient opportunity to bring on record the facts as to how the case of the assessee is different from that of M/s Janak Raj Gupta & Co. (supra), a group company.
The ld. counsel has pointed out that in spite of efforts, the assessee could not lay hand on the copies of the approvals granted in the case of the assessee. However, he was able to produce copies of order sheets which make it crystal clear that there is no distinction of facts in the approval granted in the case of the present assessees/appellants and M/s Janak Raj Gupta & Co. (supra) being part of the group searched. The order sheet entries show that on the same date draft approval letter was sent and approval was received and the assessment order was passed. The order sheets do not even mention that draft orders were sent along ITAs No.5590/Del/2011 & other 20 appeals and 6 COs filed by the assessees (Nimitaya Properties Ltd., Nimitaya Promoters Pvt. Ltd., Sanjeev Mahajan, Anita Rani & Nimitaya Infrastructure Pvt. Ltd.) And the Department with the assessment records. Thus we are inclined to hold that the approval given in the case of these appellants is vitiated too.
In the light of the aforesaid, we allow the respective ground in all the appeals and COs. The appeals as well as the Cross Objections of the assessee are allowed and the appeals of the Revenue are dismissed. The impugned assessments are quashed.