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Facts
The assessee and the Revenue filed appeals against the orders of the Ld. Commissioner of Income-tax (Appeals). The assessee raised additional grounds concerning the assessment being framed under Section 143(3) instead of Section 153C/143(3) and the assessment order being void due to lack of DIN. The Revenue's appeals were consolidated with the assessee's.
Held
The Tribunal found that the approval granted for the assessment lacked application of mind, as the approving authority relied on electronic evidence that was not found in the assessment order. The assessments were vitiated due to this procedural lapse and incorrect application of sections.
Key Issues
Whether the assessment order is valid when the approval granted for it shows a lack of application of mind and reliance on non-existent evidence? Whether the assessment should have been framed under Section 153C/143(3) instead of Section 143(3) alone?
Sections Cited
143(3), 153C, 153D, 281B
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Income Tax Appellate Tribunal, DELHI BENCHES : G : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
ORDER PER ANUBHAV SHARMA, JM: These are appeals preferred by the Assessee as well as the Revenue against the orders of the Ld. Commissioner of Income-tax (Appeals) (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 143(3) (assessee’s appeal) and 143(3) r.w.s. 153C (Revenue’s appeal) of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:- ITA No. & Ld. Appeal No. & Date of AO who passed the Assessment CIT(A)/FAA order of the Ld. FAA assessment order & Year who passed Date of order the appellate order 1287/Del/2024 CIT(A)-29, CIT(A), Delhi-29, DCIT, CC-25, New 2018-19 New Delhi 10416/2017-18, dated Delhi, dated 08.02.2024 27.02.2021 2168/Del/2024, CIT(A)-29, CIT(A), Delhi-29, DCIT, CC-25, New 2014-15 New Delhi 10397/2013-14, dated Delhi, dated 07.02.2024 27.02.2021 2169/Del/2024, -DO- CIT(A), Delhi-29, DCIT, CC-25, New 2015-16 10566/2013-14, dated Delhi, dated 07.02.2024 27.02.2021 2170/Del/2024, -DO- CIT(A), Delhi-29, DCIT, CC-25, New 2016-17 order dated Delhi, dated 07.02.2024 27.02.2021 2171/Del/2024, -DO- CIT(A), Delhi-29, DCIT, CC-25, New 2017-18 order dated Delhi, dated 07.02.2024 27.02.2021
On hearing both the sides, we find that in AY 2018-19, the assessee has raised the additional grounds of appeal as follows:- “Additional Ground No.1: The ld. Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the assessment so framed by AO u/s 143(3) of the Act, whereas the assessment for the impugned year should have been framed u/s 153C/143(3) of the Act. Additional Ground No.1.1: The ld. Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the assessment so framed by AO u/s 143(3) of the Act, whereas the assessment for the impugned year 2
should have been framed u/s 153C/143(3) of the Act and further admittedly, no notice came to be issued u/s 153C of the Act by the AO for the instant year. Additional Ground No.2: That on the facts and in the circumstances of the case the impugned assessment order so passed u/s 143(3) of the Act is null and void, and is also in complete violation of CBDT Circular No.19/2019, since no DIN is mentioned in the entire body of assessment order.”
Further, in the appeals filed by the Revenue, the assessee has raised the same ground by way of an application moved under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. The ld. AR has relied a catena of decisions including the decision of the Hon’ble Delhi High Court in the case PCIT vs. Shiv Kumar Nayyar, [TS-343-HC-2024-Delhi and of the Hon’ble Supreme Court in the case ACIT vs. Serajuddin & Co. (2023) 150 taxmann.com 146, to submit that approval granted in the case of the assessee is without any application of mind.
We have taken into consideration the approval, copy of which is made available at page 11 of the paper book and for convenience, we reproduce the scanned copy of the same below:-
The ld. DR has defended the approval primarily submitting that the approval is merely an administrative act and there is no format to exhibit application of mind and, specifically with regard to AY 2018-19, it was submitted that may be out of mistake in the approval under section 153C has been mentioned.
After taking into consideration the material on record, it comes up that while recording the satisfaction note u/s 153C of the Act dated 26.09.2019, copy of which is available at pages 1-10 of the paper book, the AO mentions that notices are issued u/s 153A r.w.s. 153C of the Act for AY 2012-13 to 2017-18. However, in case of the assessee for AY 2018-19, also the approval was sought by the letter dated 26.02.2021 for concluding the assessment u/s 153C of the Act and the same was granted. At the same time, it transpires from the copy of assessment order in regard to AY 2018-19 that the assessment is shown to be completed u/s 143(3) of the Act and at the same time the AO mentions in para 20 that the assessment is completed as per prior approval u/s 153D of the Act as granted by the Addl. Commissioner of Income-tax, Central Range-7, New Delhi, vide letter dated 26.02.2021. The aforesaid discussion leaves no doubt in the minds of this Bench that certainly, there was routine exercise of powers and, therefore, the competent authority did not even enter into the question as to if at all for AY 2018-19, the provisions of section 153C of the Act or 143(3) of the Act were applicable. The manner in which the approval has been granted shows that the approving authority has mentioned of electronic evidences for digital evidences being considered by the AO and were considered admitted. However, when we go through the assessment order, we find that as such, no electronic evidences were found relied in the assessment order. This indicates that the competent authority has not examined the assessment records or gone through the incriminating materials and merely endorsed the draft assessment orders as put across which is not the mandate of law for which reliance is rightly placed by the ld. Sr. Counsel on the decision of the Hon’ble Delhi High Court in the case of Shiv Kumar Nayyar (supra).
In the light of the aforesaid, the additional grounds raised are sustained. The impugned assessments being vitiated are quashed. The appeal of the assessee is allowed and those of the Revenue are dismissed.