TaxTMI 
TaxTMI 
2015 (8) TMI 1250
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.... the Hon'ble Commissioner of Income tax (Appeals )-40 erred in upholding the disallowance of brokerage paid for arranging new premises of Rs. 2,20,500/- on the ground that the expenditure was for non business purpose. 3. Fair Market Value of the leasehold land as on 01.04.1981 Rs. 1,85,13,960/( Para 11.3 of the assessment order): On the facts and in the circumstances of the case and in law, the Hon'ble Commissioner of Income tax (Appeals)-40 erred in adopting the fair market value as on 01.04.1981 at Rs. 700/-per square feet instead of Rs. 1000/- per square feet considered by your appellant in respect of property at 11, Damani House, Cuffe Parade, Mumbai - 400005. 4. On the facts and in the circumstances of the case and in law, the Hon,ble CIT (Appeals)-40 erred in not adjudicating the ground that the order passed U/s 143(3) read with Section 153 A with the prior approval of the Addl. CIT as required U/s 153D is bad in law, as it was against the principles of natural justice in so far as the opportunity of being heard personally in the matter was not given by the Addl. CIT despite requests by your appellant." 3. By an application dated 4.7.2013....
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....in the frame work of the provisions of Sec. 153D of the Act. The Ld. Sr. Counsel continued to argue that the approval granted by the Addl CIT is devoid of application of mind and by any stretch of imagination the order made u/s. 143(3) r.w. Sec. 153A of the Act cannot be said to be made after receiving the approval as per the provisions of Sec. 153D of the Act. The entire arguments/submissions of Ld. Shri Mistry revolved around this approval letter dated 31.12.2010. 9. Per contra, defending the assessment order, the Ld. Departmental Representative stated that the AO has made the assessment order after getting the approval from the Range Addl. CIT and therefore the mandate of Sec. 153D of the Act has been fulfilled and there is no error in law and the assessment is to be upheld. It is the say of the Ld. DR that the issues raised vide additional ground require interpretation and therefore the Tribunal should not take any interpretation which would defeat the provisions of the law. 10. We have given a thoughtful consideration to the rival contentions. We have also gone through the approval of the Addl CIT, Central Range- 7, Mumbai carefully. The said approval read as under: ....
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....n conducted under section 132 or requisition is made under section 132A. does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 50.3 Applicability- These amendments will take effect from the 1st day of June, 2007." 11.3. The Legislative intent is clear inasmuch as prior to the insertion of Sec.153D, there was no provision for....
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....ion and not disjunction. In other words, the twin conditions of "nature and complexity of the accounts" and "the interests of the revenue" are the prerequisites for exercise of power under section 142(2A) of the Act. Undoubtedly, the object behind enacting the said provision is to assist the Assessing Officer in framing a correct and proper assessment based on the accounts maintained by the assessee and when he finds the accounts of the assessee to be complex, in order to protect the interests of the revenue, recourse to the said provision can be had. The word "complexity" used in section 142(2A) is not defined or explained in the Act. As observed in Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634 1 (All.), it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the....
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....approval can be granted only when the materials for appointment of the extraordinary procedure is required to be taken by the Assessing Officer. The Assessing Officer, therefore, was required to place all materials before the Commissioner of Income-tax or the Chief Commissioner of Income- tax, as the case may be, to show that he intends to take recourse to the said provision having regard to the nature and complexity of the accounts of the assessee and the interests of the Revenue. No such materials had been placed before the Chief Commissioner of Income-tax. It further appears that even no previous approval was sought for but merely a proposal was placed for perusal of the Chief Commissioner of Income-tax and for appointment of a special auditor. The Chief Commissioner of Income-tax, therefore, did not apply his mind at all as regards the prerequisite for grant of previous approval and mechanically appointed Sri G. P. Agarwal, as a special auditor. The said order depicts a total non-application of mind on the part of the Assessing Officer as also the Chief Commissioner of Income-tax." 11.7. Another section relevant to the facts in issue is Sec. 158BG which read as unde....
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.... case of Kirtilal Kalidas & Co. (supra), the I.T.A.T Madras Bench 'A' has observed that the function to be performed by the Commissioner in granting previous approval requires an enquiry and judicial approach on the entire facts, materials and evidence. It has been further observed that in law where any act or function requires application of mind and judicial dikscretion or approach by any authority, it partakes and assumes the character and status of a judicial or at least quasi-judicial act, particularly because their Act, function, is likely to affect the rights of affected persons." 11.10. Similarly, u/s. 151 of the Act it is provided that no notice shall be issued u/s. 148 unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied that it is a fit case for the issue of such notice. The sanction under this section was considered by the Tribunal, Mumbai Bench in the case of Shri Amarlal Bajaj in ITA No. 611/M/2004 wherein at para-8, the Tribunal has considered the decision of the Hon'ble High Court of Delhi Bench in the case of United Electrical Co. 258 ITR 317 which read as under: "Hon'ble Delhi High Court i....
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.... coupled with a duty. The Addl Commissioner/Joint Commissioner is required to apply his mind to the proposals put up to him for approval in the light of the material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. Commissioner before granting the approval. Therefore, we have no hesitation to hold that the assessment order made u/s. 143(3) of the Act r.w. Sec. 153A of the Act is bad in law and deserves to be annulled. The additional ground of appeal is allowed. 13. The ld. Departmental Representative has strongly relied upon the decision of the Tribunal Mumbai Bench in the case of Rafique Abdul Hamid Kokani Vs DCIT 113 Taxman 37, Hon'ble High Court of Karnataka in the case of Rishabchand Bhansali Vs DCIT 136 Taxman 579 and Hon'ble High Court of Madras in the case of Sakthivel Bankers Vs Asstt. Commissioner 124 Taxman 227. 13.1. We have carefully perused the decisions placed on record by the Ld. Dr. We find that all the decisions relied upon by the Ld. DR are misplaced inasmuch as all these decisions relate to the issue whether t....