ITAT Delhi Quashes Antriksh Group Assessments Over Mechanical Search Assessment Approval

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently reiterated that approval required before search assessments are finalised must reflect independent application of mind and cannot be accorded mechanically through a common approval covering multiple assessees and assessment years.

Holding that the approval granted in the present case suffered from non-application of mind, the Tribunal quashed assessments framed against various entities and individuals belonging to the Antriksh group.

A bench of Judicial Member Madhumita Roy and Accountant Member Amitabh Shukla delivered the ruling. The Tribunal relied on a line of decisions holding that the approval requirement is intended to act as a safeguard against arbitrary exercise of power and cannot be reduced to a mere formality.

The dispute arose from a search conducted on the Antriksh group on February 5, 2014. Following the search, assessment proceedings were initiated against various group entities and individuals, including Antriksh Engineers Construction Corporation, Antriksh Engineers Private Limited, Rajbir Singh Goyat and Rakesh Kumar Yadav. Before the assessment orders were passed, approval was obtained from the Joint Commissioner of Income Tax.

The taxpayer companies challenged the validity of the approval. They contended that a single approval had been granted for 59 cases covering multiple assessees and assessment years. According to them, the approval did not disclose movement of files.

They further argued that it did not show separate consideration of individual assessment years or contain any reasons demonstrating application of mind. Reliance was placed on decisions of the Delhi, Allahabad, Bombay and Orissa High Courts, as well as the Third Member ruling in Dheeraj Chaudhary. The tribunal noted that the Revenue was unable to controvert these factual aspects.

Examining the approval granted in the present case, the Tribunal found that it did not indicate movement of files. It also found that no separate approval had been granted for each assessment year and that no reasons had been recorded for granting approval.

The Tribunal held, "As the approval does not speak of movement of any file, neither given each year separately nor assigned any reason for such approval, the same is found to be a mechanical approval and, therefore, liable to be quashed as the same suffers from non-application of mind by the order approving authority."

Having found the approval invalid, the Tribunal held that the assessments themselves could not survive.

The tribunal observed, "Once the approval is quashed, the assessment orders are also, therefore, vitiated and void ab initio and, therefore, quashed."

The tribunal also considered other grounds raised in some of the appeals. It held that completed assessments could not be disturbed in the absence of incriminating material found during the search.

In certain cases, it further held that proceedings involving material belonging to another person could not be sustained where the mandatory procedure prescribed under Section 153C had not been followed. The tribunal also quashed assessments framed under Sections 143(3) read with 144, where it found that proceedings ought to have been initiated under Section 153C.

The appeals were accordingly allowed, and the impugned assessments were quashed.