TaxTMI 
TaxTMI 
2019 (2) TMI 1529
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.....s. 153C of the Income Tax Act. 1961 ("the Act") in the case of the Appellant for the relevant assessment year. 1.1 While doing so the Ld. CIT (A) failed to appreciate that: (a) The necessary pre-conditions for the initiation as well as completion of an assessment under section 153C of the Act were not fulfilled in the present case; (b) No satisfaction as contemplated under section 153C of the Act was recorded by the AO in the present case so as to frame an assessment under section 153C of the Act; and (c) In any case, the documents on the basis of which the assessment has been framed did not belong to the Appellant and as a consequence the AO had no jurisdiction at all to frame an assessment under section 153C of the Act. 1.2 Without prejudice to the above, the Appellant further submits that the order passed by the AO under section 143(3) r.w.s. 153C of the Act is unsustainable also because the same has been passed without obtaining the necessary, proper and judicious approval as contemplated under section 153D of the Act which fact is also evident from the assessment order and assessment records of the Appellant including the order she....
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....essment order passed by the Assessing Officer is unsustainable as it has been passed without obtaining necessary approval as provided under section 153D of the Act. In view of the same, the Ld. D.R. was directed to obtain copy of approval, if any, granted under section 153D of the Act. In response thereto the Ld. D.R. has submitted the copy of letter dated 12.09.2018 written by the Assessing Officer to the Pr. CIT(C)-3. For the sake of convenience, we extract below the letter written by the Assessing Officer. "To The Pr. CIT (C)-3, Air India Bldg, Nariman Point, Mumbai. (Through Proper Channel) Sir, Sub : Appeal Proceedings before the Hon'ble ITAT 'E' Bench in the case of M/s Sumer Associates PAN: ( AAAFS2830E ), for A.Y 2011-12-Reg. Ref: Letter No. Pr.CIT(C)-3/ITAT 'E' Bench/2018-19 in reference to Letter No.CIT(DR)/ITATO-'E' Bench/2018-19 dated 07.09.2019. Kind attention is invited to the above. In reference to the above referred letter, it is submitted that I have perused the case records of the Assessee for the relevant Assessment Year, however the satisfaction note and the ap....
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....53A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner: Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the Principal Commissioner or Commissioner under sub-section (12) of section 144BA." 7. The above said provisions state that the Assessing Officer who is below the rank of Joint Commissioner shall pass assessment order only after obtaining prior approval of the Joint Commissioner. As per proviso to section 153D, the condition prescribed in that section will not apply if the Assessing Officer has passed the order with the prior approval of Pr. Commissioner or Commissioner under section 144BA(12) of the Act. In the instant case, we are not concerned with the proviso to section 153D as the assessment order has been passed by the Dy. Commissioner of Income Tax, Central Circle -36, Mumbai who is below the rank of Joint Commissioner. Hence, the prior approval of the Joint Commissioner is required to be obtained before passing the asse....
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....Edition as the act of confirming, ratifying, assenting, sanctioning or consenting to some act or thing done by another. Approval implies knowledge and exercise of discretion after knowledge. The Sec. 153 D uses word "shall" which indicate that the provisions are mandatory especially when the Section further prescribes as "that except with the prior approval of the Joint Commissioner no order shall be passed". Therefore in the absence of approval of Joint Commissioner, the order passed by the I.T.O. is not a valid and legal order and therefore has no legal force. He contended that in the eye of law an order passed without such approval is a nullity. 4. The Ld. A.R. submitted further that the provisions of Sec. 153 C of the I.T. Act 1961 are analogous to the provisions of Sec. 158 BD of the Act. The Manual of Office Procedure Volume II published in February 2003 by Directorate of Income Tax (Organization and Management Services ) C.B.D.T. vide Page No.2 has prescribed procedure to be followed in case of Block Assessment. A copy thereof has been furnished. The Ld. A.R. submitted that approval of senior authority provided to avoid arbitrary, high pitched assessments being fram....
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....uring the course of assessment proceedings on various counts. Similarly, even during the appellate proceedings, there has been no appearance of the assessee before the Ld CIT(A) and there was no compliance to statutory notices. The Ld. D.R. placed reliance on the following decisions to support her argument that A.O is well within the jurisdiction to continue with the proceedings from the stage at which the illegality has occurred : 1) Guduthur Bros. Vs. ITO, TC49R, 480 (SC) 2) Gayathri Textiles Vs. CIT, (2000) 243 ITR 674 (Kar) 3) CIT Vs. Sara Enterprises, (1997), 224 ITR 169 (Mad) 4) CIT Vs. Sardarilal Bhashi (1989), 179 ITR 307 (M.P) 5) Prabhudayal Amichand Vs CIT (1989), 180 ITR 84 (M.P) 6) CIT Vs. Damodardas Murarilal (1996), 222 ITR 401 (M.P) 7. In an alternative submission, the Ld. D.R. requested to set aside the file to the A.O or Ld CIT(A), so that defect in not obtaining the approval of the Joint Commissioner of Income Tax can be cured. She submitted further that Tribunal is also not bound by constraints of limitation and therefore, it is prayed that the file may be set aside to the lower authorities for necess....
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....fore the Ld CIT(A), the assessment orders were questioned both on legal issue and on merits. On legal issue, the validity of assessment orders in absence of approval obtained u/s. 153 D of the Act of Joint Commissioner of Income Tax has been questioned. On merits additions made by the A.O were impugned. Since the assessee could not succeed in its appeal, the present appeals have been preferred in questioning the first appellate orders. 12. On perusal of the provisions laid down u/s. 153C of the Act, it is apparent that after issuance of notice u/s. 153C, the A.O having jurisdiction over such other person (against which incriminating material has been found during the course of search conducted on a person) arose or re-assess income of such other person in accordance with the provisions of Sec. 153A. Sec. 153B talks about time limit for completion of assessment u/s. u/s. 153A, whereas S. 153D, talks about necessity of prior approval for framing assessment in case of search or requisition. We thus fully concur with the submission of the Ld. A.R. that provisions laid down u/s. 153D are very much applicable in case of assessment of income of any other person (i.e. the....
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....en provided do not leave an iota of doubt about the very intention of the legislature to make the compliance u/s. 153D a mandatory. There is no dispute that if a provision is mandatory, an act done in breach thereof will be invalid, but, if it is directory, the act will be valid although non-compliance may give rise to some other penalty if provided by the Statute. The general rule that non-compliance of mandatory requirements results in nullification of the Act is subject at least to one exception. If contain requirements or conditions are provided by a statute in the interest of a particular person, the requirements, or conditions although mandatory may be waived him if no public interest are involved and in such case, the act done still be valid even if the requirement or condition has not been performed. Here, before us, is not a case where consent of assessee will waive the condition of obtaining prior approval u/s. 153D of the Joint Commissioner of Income Tax by the A.O for framing assessment u/s. 153C/ 153A of the Act. Condition of prior approval of JCIT u/s. 153D has been put in public interest and not in the interest of a particular person. Thus it cannot be waive....
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....ncellation and amendment of assessment in view of the provisions of Sections 143, 144B, 153 and 251 of the I.T. Act 1961 has been dealt with. The Hon'ble High Court has been pleased to hold as under : "In view of the above discussion, we are of the clear opinion that incases falling under section 144B of the Act, the quasi-judicial function of the Income-tax Officer as an assessing authority comes to an end the moment the assessee files objections to the draft order. The power to determine the income of the assessee thereafter gets vested in the Inspect-ing Assistant Commissioner to whom the Income-tax Officer is required to forward the draft order together with objections. The only thing that remained to be done by the Income-tax Officer is to pass a final order in accordance with the directions given by the Inspecting Assistant Commissioner. The function of the income-tax Officer to make the final assessment under section 144B(5) of the Act is more in the nature of a ministerial function because he can pass the order only in accordance with the directions of the Inspecting Assistant Commissioner. He cannot vary or depart from the directions given by the Inspecting Assist....
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....orders impugned framed in absence of obtaining prior approval of the Joint Commissioner for the A.Ys. under consideration are invalid as null and void and are quashed accordingly. 15. The decisions relied upon by the Ld. D.R are having different facts and issue, hence are not helpful to the revenue. In the case of Guduthur Bros. Vs. ITO (Supra) the levy of penalty without affording a hearing to the assessee was questioned before the appellate authority, who set aside that order. The matter ultimately travelled to the Hon'ble Supreme Court and it was held that the ITO was well within his jurisdiction to continue the proceedings from the stage at which the illegality has occurred and to assess the appellants to a penalty, if any. Before the Hon'ble M.P. High Court in the case of CIT Vs. Sardarilal Hasim (Supra), the issue was regarding applicability of prescribed limitation u/s. 275 in a penalty order passed after the case is remanded by an appellate authority. The Hon'ble Court was pleased to hold that the limitation prescribed u/s. 275 of the Act is not applicable to the penalty order passed after the case is remanded by an appellate Authority. In the case of Gayatri Texti....
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....he Ld. A.R. brought to our notice that the order passed by Pune Bench of the Tribunal in the above said case has been upheld by the Hon'ble Jurisdictional Bombay High Court, vide its order dated 15.01.2013 passed in Income Tax Appeal (L) No.1416 of 2012 and others. The copy of the same is placed in pages 15 & 16 of the paper book. The Ld. A.R. also submitted that the Revenue filed petition for special leave to appeal before Hon'ble Supreme Court of India and the Hon'ble Supreme Court vide its order dated 05.08.2013 in Civil Appeal No.19389/2013 has declined to entertain special leave petition. 9. The Ld A.R also placed reliance on the decision rendered by Hon'ble Gujarat High Court in the case of Pr. CIT vs. Sunrise Finlease (P.) Ltd. (2018) 252 taxman 407, wherein it was held that the assessment order under 153C of the Act can be passed by the Income Tax Officer only after obtaining prior approval under section 153D of the Act from the Joint Commissioner in as much as compliance of section 153D requirement is absolute. For the sake of convenience, we extract below the relevant observations made by Hon'ble Gujarat High Court in this regard. "9. As regards proposed quest....