By TIOL News Service

CHANDIGARH, MAY 04, 2018: THE ISSUE IS - Whether the AO loses its jurisdiction u/s 153A merely because he assumes the jurisdiction u/s 153D. NO is the verdict.

Facts of the case

The assessee company, engaged in forging tractor parts & auto parts, was subjected to search proceedings during the relevant AY, whereupon certain incriminating documents were seized. The asessee was served notice u/s 153A in response to which it filed returns declaring its income. The AO passed assessment order which made an addition to the assessee's declared income. Such ordeer was passed after seeking approval u/s 153D from the Addl. CIT & which was granted through a letter. Later, the CIT exercised power of revision and passed an order setting aside the assessment order & directed de novo assessment. Pursuant to such directions, the AO passed a fresh assessment order wherein the quantum of the addition made was increased substantially. The assessee contested such order before the CIT(A), who allowed the appeal on grounds that grounds that no fresh approval was taken by the AO u/s 153D. When the Department appealed to the Tribunal, its appeal was allowed and the matter was restored to the CIT for adjudication on merits regardless of approval u/s 153D. Hence the assessee's appeal.

On hearing the matter, the High Court held that,

++ amongst the questions of law raised by the assessee, the main issue is as to w hether under Section 153D of the Act there is a requirement of fresh approval for complying with the remand directions under Section 263, in a case where the assessment under Section 153A of the Act was originally framed after compliance of Section 153D of the Act? Such questions is answered against the assessee. Considering the provisions of Section 153D, no order of assessment u/s 153A and 153B can be passed by the A.O. without prior approval of the Joint Commissioner;

++ the assessment order dated 24.12.2010 was passed u/s 153A r/w Section 143(3) of the Act after obtaining approval u/s 153D of the Act. The approval was vide letter dated 24.12.2010. Thereafter the said order was taken up in revision. The order was set aside and the matter was remitted to the A.O. to pass a fresh assessment order. The approval under Section 153D was not set aside. There was no question thereupon of the A.O. seeking fresh approval under Section 153D. The order dated 18.03.2014 passed by the A.O. was in compliance with the remand directions. It was not a case of the A.O. assuming jurisdiction under Section 153A of the Act. That stage was over when order dated 24.12.2010 was passed. The A.O. was complying with the directions of the revisional authority. Section 153D of the Act is only applicable for passing an assessment order or re-assessment order. There is no requirement under Section 153D for prior approval for complying the remand directions. The approval dated 24.12.2010 in fact was to the effect that assessment of assessee can be passed under Section 153A. Remand direction was that the assessment under Section 153A should be framed again. There was no occasion of fresh assumption of jurisdiction to frame assessment. Rather it was in continuation of earlier proceeding which was duly approved. Even otherwise there is no question of seeking an approval from the Joint Commissioner or the Additional Commissioner Officer lower in rank than Commissioner for complying with the directions given by the Commissioner;

++ the CIT (Appeals) allowed the appeals of the assessee on the basis that compliance of Section 153D of the Act was mandatory. It is not the issue whether the provision is procedural or the requirement of approval is mandatory. The fact is that Section 153D of the Act had been duly complied with by the A.O. The contention raised that even an order of remand cannot be passed without complying with Section 153D of the Act is beyond the scope of the section. The Tribunal rightly held that Section 153D of the Act is for assuming jurisdiction to pass an assessment order under Section 153A of the Act and the A.O. would not lose the jurisdiction to frame assessment while complying with remand order.

(See 2018-TIOL-827-HC-P&H-IT)