TaxTMI 
TaxTMI 
2019 (12) TMI 814
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....153A the 'AO' ought to have accepted the income returned in absence of any material corresponding to the additions made having been found during the course of search. 2. BECAUSE, on due consideration of facts and in the overall circumstances of the case the Ld 'CIT(A)' had fallen in error both on facts and in law in sustaining disallowance of Rs. 31,51,200/- alleging the payment to be bogus revenue expenditure without any evidence or basis in support of his assumption. 2.1 BECAUSE, while doing so the Ld 'CIT(A)' omitted to consider that the Commission was duly paid by account payee cheques, subjected to Tax Deduction at Source, Parties are identifiable, and payment were duly made in respect of services utilized by the 'appellant' and addition has been made without discrediting the evidences brought on records. 2.2 BECAUSE, the whole basis of disallowance been that the amount of Commission re-routed to the 'appellant' by way of introduction of Unsecured Loan is based on incorrect presumption of facts and is based on no evidence. 2.3 BECAUSE, while confirming the disallowance the Ld 'CIT(A)' has wrongly observed that no evidence was brought....
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....TR (Bom.) 218 (APB 145-146) holding the question of validity of approval goes to the root of the matter and could have been raised at any time. Similar view was taken by the Agra Bench in the case of Shri Saurabh Agarwal Vs DCIT, Central Circle, Agra (2019) (9) TMI 866- Agra Bench. Parties were heard, and in view of the legal position as discussed above, the Ground being raised is purely a legal ground and goes to the root of the matter therefore, the same is admitted. 4.2. The Ld. Counsel of the assessee Shri Anurag Sinha, Advocate submitted that the so-called approval as granted by the Learned Additional Commissioner of Income Tax, Central Range, Kanpur under section 153D of the Act, which has led the foundation for passing impugned Assessment order dated 31.03.2015 under section 153A of the Act is no Approval in the eye of law as the purported Approval been granted without due application of mind and such a mechanically granted Approval vitiates the Assessment order rendering it to be held illegal and void ab-initio. He invited attention to section 153D of the I.T Act, 1961, which mandates that no order of Assessment shall be passed except with the prior approval of the Joint....
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....ersigned which was mandatory on your part in view of the guidelines of the Hon'ble Board. A copy of the final order issued in the above cases should be sent to this office for records." Sd. Encl: Case Records R.K Chaturvedi Addl. Commissioner of Income Tax 26/03/2014 (Central Range), Kanpur 4.3. Ld. Counsel of the assessee placed reliance to the following case laws: (a) AAP Paper Marketing Ltd. Vs ACIT (2017) (4) TMI 1371 (b) Smt. Shreelekha Damani Vs DCIT (2015) 173 TTJ (Mumbai) 332 (c) CIT Vs. Smt. Shreelekha Damani (2019) 307 CTR (Bom.) 218 (d) Geeta Rani Panda Vs ACIT (2018) 194 TTJ (Ctk) 915 (Cuttack) (e) Shri Saurabh Agarwal Vs DCIT (2019) (9) TMI 866-Agra Bench (f) Shri. Ghanshyam Vs ITO (2018) 194 TTJ UO (Agra) 25 (g) State Ba....
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....ative Approval by Additional CIT does not take away the quasi-judicial powers which still vests in AO and therefore Administrative act cannot invalidate the assessment". Reliance was also placed to CIT Vs Jai Prakash Singh 219 ITR 737 (S.C) for the proposition that charging sections fix the liability to tax and any violation of machinery section will not render the assessment order void. Reliance was also placed to the Hon'ble Delhi High Court in the case of Dr. Pranoy Roy Vs DCIT in W.P (C) 4742/2018 & CM Appl.18248-18249/2018 to demonstrate as to what constitutes Judicial order is and what is Administrative order. Attention was drawn to Bangalore Bench of the ITAT in the case of M/s Toyota Kirloskar Motors (P) Ltd. Vs ACIT in ITA No. 828/Bang/2010 for the proposition that power of granting or not granting previous approval cannot be equated with appellate power. The DR's thus, submitted that the subject matter of the challenge in the present appeal is assessment order for which the jurisdictional fact is the existence of Approval, therefore, the Approval itself cannot be the subject matter of adjudication. It was submitted by the DR's that once the superior authority is agreei....
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....t was held by the Hon'ble Supreme Court that only quasijudicial proceedings can be challenged before the ITAT, not administrative proceedings. However as rightly pointed out by the Ld. A.R that in the case of Shri. Ghanshyam (supra) wherein Agra Bench had the occasion to deal with similar objection that sanction accorded by the Ld. CIT, in that case under section 151 of the Act before issuing Notice under section 148 of the Act to the assessee is Administrative in character and not quasi-judicial. The Agra Bench rejected the submission of the revenue, by preferring to place reliance upon subsequent Judgement of Hon'ble Supreme Court in the case of 'Chhugamal Rajpal Vs S.P Chaliha', 79 ITR 603(S.C) and therefore, in that case held Approval granted to be based on total non-application of mind. In this view of the matter since the issue raised in this appeal specifically stood dealt with by the Agra Bench in Ghanshyam (supra) in its right perspective, therefore, the contention raised by the revenue deserves to be rejected. Revenue has placed reliance upon K.M Bansal (supra) wherein the Hon'ble Jurisdictional High Court after being duly apprised of view held in the cases of S. Narayana....
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....uided by the above statements in law particularly by the Jurisdictional High Court in K.M Bansal (supra) and as finally concluded by the Hon'ble Apex Court in the case of Sahara India Firm (supra) objection of the Ld. DR's that act of granting Approval under section 153D of the Act by the Additional CIT is an Administrative act therefore, its validity is immune from challenge before the Tribunal, cannot be sustained and is hereby rejected. 10. The Ld. D.R's have also contended that in the cases of Saurabh Agarwal (supra) this Bench in Para- 4.11 has referred and relied upon 'Verma Roadways Vs ACIT', 75 ITD 183 mentioning it be from Jurisdictional High Court order whereas it was delivered by the Allahabad Bench of ITAT and which in further appeal stood reversed by the Allahabad High Court. We have gone through the order passed in the case of Saurabh Agarwal (supra) and given careful thought to the Hon'ble Allahabad High Court Judgment in 'CIT Vs Verma Roadways', (Supra) delivered on 11.01.2018. We found that though vide Ground No.8 the Department had raised a specific ground challenging the order passed by the ITAT on the issue of grant of Approval by the CIT, in that case. Howev....
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....elevant 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 requisition is made under section 132A. 50.3 Applicability-These amendments will take effect from the 1st day of June, 2007." 13. The legislature in its highest wisdom made it compulsory that the assessments of search cases should compulsorily be made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority have to approve the Assessment order. Object of entrusting the duty of Approval of assessment in search cases is that the Additional CIT, with his experience and maturity of understanding should scrutinize the seized documents and any other material forming the foundation of Assessment. It is a....
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....that all the issues have been taken care off while framing the assessment by the AO, and that all the observations made in the appraisal report relating to examination/investigation as also the issues identified in the course of examination of seized material have been carefully considered by the AO, the Additional CIT, granted Approval. Admittedly, the Additional CIT, without any consideration on merit in respect of issues on which addition was made granted the Approval on the undertaking of the AO, in view of stated paucity of time with him for granting Approval. This approach of the Additional CIT, Central has rendered the Approval to be an eyewash and idle formality and such a mechanically granted Approval is no approval in the eyes of law. 16. The Lucknow Bench of the ITAT in the case of 'Aap Paper Marketing Limited Vs ACIT', (2017) (4) TMI 1371-ITAT Lucknow, (APB, Pg. 122-129) coincidentally where the ITAT had the occasion to consider the validity of approval granted by the same Additional CIT, Central Circle, Kanpur while quashing the assessments in Para-14 held as under: "In the present case Addl. CIT has granted impugned approval halfheartedly without app....
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.... factual matrix of the approval letter, we have no hesitation to hold that the approval granted by the Addl. Commissioner is devoid of any application of mind, is mechanical and without considering the materials on record. In our considered opinion, the power vested in the Joint Commissioner/Addl Commissioner to grant or not to grant approval is 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." 19. The above order so passed by the ITAT was subjected to judicial scrutiny in appeal before the Hon'ble Bombay High Court and the Hon'ble High Court approved the order passed by the Mumbai Bench of the ITAT which is found ....
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....here is no time left for undersigned to ensure that all the points raised in the appraisal report, the appellate proceedings, audit inspection etc. are duly taken into account, and the enquiries and investigations that are required to be made are actually made before finalization of the assessment orders. It would have been much better and in the interest of Revenue if you had submitted the draft orders at least one month earlier so as to allow the undersigned sometime to go through and analyse the same vis-a-vis the appraisal report and seized records. It also goes without saying that you never cared even to discuss these cases with the undersigned for guidance and line of investigation to be taken. However, despite all this, I have gone through the material available on records and some of the observations, in respect of the following cases are given in subsequent paras." 24. In our considered view, the provisions contained in s. 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the statute by the Parliament....
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....nces required to be appreciated as the approval is self-evident, i.e., that it was granted by the Additional Commissioner of Income Tax without application of mind and without looking into the record. 22. We may record that the decisions relied upon by the ld. DR are factually distinguishable as none of the order has examined this aspect of the matter which is subject matter of present litigation i.e non-application of mind by the superior authorities at the time of granting the Approval. The sum and substance of the decisions relied upon by the Ld. DR's was that the assessee was not entitled to any hearing or representation at the time of grant of approval. As mentioned hereinabove the scope and ambit in the present litigation is not that of grant of hearing or representation at the time of Approval but whether the Approval can be granted by the superior authority without application of mind even without examining the draft assessment order and that on the basis of undertaking of the AO to the effect that the AO has looked into seized material, investigation report, etc. can be held sustainable in the eyes of law. We had already answered that such an approval is bad in law and ....