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2025 Supreme(Online)(ITAT) 8075
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
SHRI S RIFAUR RAHMAN, ACM, SHRI ANUBHAV SHARMA, JM
Zeal Impex & Traders Private Limited – Appellant
Versus
DCIT, CC-25 – Respondent
ITA No. 667/Del/2024 | ITA No. 979/Del/2024
For the Appellants/Petitioners: Sh. Salil Agarwal, Sr.Adv., Sh. Madhur Agarwal, Adv., Sh. Shailesh Gupta, CA
For the Respondents: Sh. Amit Jain, CIT, DR
Approval under Section 153D must reflect substantive review; mechanical approvals violate legal standards.
Headnote:(A) Income Tax Act, 1961 - Section 153C, 153D - Approval mechanism - Approval granted without application of mind renders the assessment order void. The appeal arises from a search operation yielding digital evidence suggesting underreporting of income, leading to additional tax assessments. The appellant contests the procedural legitimacy of the approval process under Section 153D, arguing mechanical application. The court identifies precedents establishing the necessity for substantive review in granting approvals. (Paras 1-8)
(B) Digital Evidence - Reliance on unexamined electronic data without verification of compliance with evidentiary standards vitiates assessments. Lack of independent evaluation of evidence collected through digital means raises concerns about meeting legal scrutiny. The assessing authority must ensure that electronic evidence is credible and adheres to established guidelines. (Paras 6-8)
| Table of Content |
|---|
| 1. case involves appeal against the commissioner’s order. (Para 1 , 2) |
| 2. approval granted under section 153d is contested. (Para 3 , 4 , 5) |
| 3. court analyzes the adequacy of approval process. (Para 6 , 7) |
| 4. findings indicate approval was mechanical. (Para 8) |
ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 29.12.2023 of the Commissioner of Income-tax (Appeals)-28, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeals No: 29/10405/2013-14 arising out of the appeal before it against the order dated 09.03.2021 passed u/s 153C/143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Central Circle- 25, New Delhi (hereinafter referred to as the Ld. AO) for AY: 2014-15.
2. The assessee company had filed return on 24.09.2014 and subsequent to a search in the case of Surendra Kumar Arya, JBM group of companies and key officers of the group on 05.10.2017 allegedly certain documents and digital data indicating under invoicing and suppression of scrap sales by JBM group companies to various scrap dealers were found and seized. The assessee’s case was accordingly taken up for assessment and under Section 153C by issuing a notice against which assessee had filed return reporting income as earlier reported. The AO examined the issue of unrecorded investment and concluded that assessee had made a cash payment for purchase of land at Bithalpur for which addition was made of Rs.10.94 crores and stand sustained by the Ld. CIT(A) to the extent of Rs.25,70,000/- for which the assessee is in appeal before us and so is the department.
3. On hearing both the sides we find that it is ground no. 2 which Ld. Counsel at first argued and whereby the approval granted under Section 153D of the Act has alleged to be granted in mechanical and arbitrary manner without application of mind.
4. Though the Ld. DR defended the approval what we find coming up admittedly is that in regard to multiple years for AY 2012-13 onwards till AY 2018-19 this approval letter dated 04.03.2021 mentions that approval was granted to the draft assessment orders ‘as amended’. Further, the approval mentions as under:
“You have certified about perusal and verification of data seized in electronic format through working copies having certified cash values as that of original hard drives/CDs/pen drives/mobile data & any other electronic data.
5. It comes up that this objection of the order having dealt by Ld. CIT(A) in para
5.3.3 and completeness we reproduced the same as under:
“5.3.3 The appellant has submitted that the impugned order passed u/s 153C /143(3) of the Income Tax Act is without jurisdiction as the order in this case was passed without valid approval under section 153D of the I.T. Act, 1961. In this regard we would like to draw your kind attention that approval for A Y 2012-13 to A Y 2018-19 was given by Additional Commissioner of Income Tax, Central Range - 7, New Delhi vide letter no Addl. CIT / CR-7/2020-21/884 dated 04/03/2021. As such separate approval for each year for A Y 2012-13 to A Y 2018-19 has not been given by Additional Commissioner of Income Tax in accordance with section 153D of the Income Tax Act.
I have carefully considered the submission of the appellant and facts of the case. It is noted that the impugned assessment order involved issues as discussed above. The approval u/s 153D was accorded after due examination of the relevant records and verification by the Range Head. Therefore, the allegation of the appellant that the approval was granted in a mechanical manner is without any substance.
Further, the approval granted by the Additional Commissioner of Income Tax, Central Rage-2, New Delhi is in the nature of administrative power. The Range Head while examining the matter u/s 153D does not examine or adjudicate upon the rights or obligations of the assessee, but only considers whether the Assessing Officer has fulfilled the
