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Facts
The assessee's case arose from a search and seizure operation. The assessee questioned the assessment order passed under Section 143(3) read with Section 153B(1)(b) on the grounds that the approval under Section 153D was not granted with due application of mind.
Held
The Tribunal found that the approval letter for the assessment did not reflect any application of mind by the approving authority. Relying on Supreme Court and Delhi High Court judgments, the Tribunal held that the approval was mechanical and invalid.
Key Issues
Whether the approval granted by the approving authority under Section 153D of the Income Tax Act, 1961, was validly obtained with due application of mind.
Sections Cited
143(3), 153B(1)(b), 153D, 132, 153A(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES: C : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI ANUBHAV SHARMA
Assessment Year: 2018-19 Shri Jagbir Singh Dhull, Vs DCIT, Sita Shyam Colony, Central Circle, Jind, Haryana – 126 112 Karnal. PAN: AARPD0818Q (Appellant) (Respondent) Assessee by : Shri Ved Jain, Advocate & Ms Uma Upadhyay, CA Revenue by : Shri Kailash Dan Ratnoo, CIT-DR Date of Hearing : 28.04.2025 Date of Pronouncement : 09.05.2025 ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 05.07.2023 of the Commissioner of Income-tax (Appeals)-3, Gurgaon (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeal No.10479/2019- 20 arising out of the appeal before it against the order dated 28.12.2019 passed u/s 143(3) r.w.s. 153B(1)(b) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle, Karnal (hereinafter referred to as the Ld. AO).
On hearing both the sides, we find that amongst other grounds on merits, the assessee has raised an additional ground of appeal questioning the impugned
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.
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. 2 JCIT/RC/Chd/CC-KNL/OSD/184/2019-20/187/529 to 534; and JCIT/RC/Chd/CC- KNL/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:-
6. 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.