TaxTMI 
TaxTMI 
2019 (7) TMI 1659
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....t and foremost issue in assessees appeal(s) / cross objection(s) challenges correctness of validity of all the impugned assessments framed by the Assistant Commissioner of Income tax, Agartala Circle for want of appropriate approval by the Joint Commissioner of Income-tax-as required u/s 153D of the Act. We thus stake up this first and foremost legal issue for adjudication since going to root of the matter. 3. Learned counsel appearing assessee has reiterated the corresponding pleadings in the instant appeal(s) / cross objections that the impugned assessment have been framed without obtaining prior approval of the JCIT as required u/s 153D of the Act. Mr. A.K. Bhardwaj and Mr. Sandip Sengupta; Additional CIT and JCIT, represent the Revenue before us. Both of them strongly argue that the JCIT herein has duly accorded prior approval to the ACIT's draft assessment sought on 28.03.2016. They place on record the ACIT's approval letter dated 28.03.2016 sent to the JCIT concerened who in turn granted his approval reading as under:- "No. JCIT/AGAR/Search & Seizure/2015-16 265 Dated: 28.03.2016 To The ACIT, Circle Agartala %वषय/SUB: Approval u/s ....
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....,991 ....do.... ....do... ...do.... 09-10 7,54,48,735 ....do.... ....do... ...do.... 10-11 12,49,68,760 ....do.... ....do... ...do.... 11-12 21,25,81,959 ....do.... ....do... ...do.... 12-13 33,70,10,742 ....do.... ....do... ...do.... 13-14 27,25,50,393 ....do.... ....do... ...do.... 14-15 20,70,87,907 ....do.... Subhajit Paul AZNPP5539K 08-09 1,53,950 ...do... ....do... ...do.... 00-10 5,25,320 ....do.... ....do... ...do.... 10-11 17,26,930 ....do.... ....do... ...do.... 11-12 19,23,600 ....do.... ....do... ...do.... 12-13 1,15,65,396 ....do.... ....do... ...do.... 13-14 1,74,58,030 ....do.... ....do... ...do.... 14-15 1,44,89,296 ....do.... Abhijit Paul APDPP3896B 08-09 6,06,070 ....do.... ....do... ...do.... 09-10 7,20,050 ....do.... ....do... ...do.... 10-11 23,50,980 ....do.... ....do... ...do.... 11-12 7,97,79,562 ....do.... ....do... ...do.... 12-13 5,20,31,013 ....do.... ....do... ...do.... 13-14 16,89,25,162 ....do.... ....do... ...do.... 14-15 12,98,56,202 ....do.... 4. Mr. Mody's next contention is that the JCIT herein has not applied his mind whilst approvin....
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....ent void or voidable/curable. For a ready reference, provisions laid down u/s. 153D of the Act are being reproduced hereunder: "153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub- section (1) of section 153A 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]." The above provisions u/s. 153D have been laid down under the heading "prior approval necessary for assessment in cases of search or requisition". This heading itself suggests that obtaining prior approval the assessment in cases of search or requisition is necessary. We further note that the provisions u/s. 153D start with a negative wording "no order of assessment or re-assessment" supported by the further wording "shall" makes the intention of the Legislature clear that compliance of Sec. 153D requirement is mandatory. No universal rule can be laid down as to whether mandatory enactment shall be considered directory or Akil Gulamali Somji A.Y. 2001-02 to 2004-05 Page of 14 obligatory with an ....
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....erence may be reverted by other consideration such as object and scope of the enactment and consequence flowing from such construction. The revenue has not been able to rebut the above inference by pointing out other consideration like object and scope of the enactment and the consequence flowing from such construction before us. Clause 9 of Manual of Office Procedure, Volume II (Technical) February 2003 issued by Directorate of Income Tax on behalf of Central Board of Direct Taxes, Department of Revenue, Government of India, reads as under: "9. Approval for assessment: An assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/ADDL.CIT. (For the period from 30-6-1995 to 31-12-1996 the approving authority was the CIT.) The Assessing Officer should submit the draft assessment order for such approval well in time. The submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering letter filed in the relevant miscellaneous records folder. Due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one mont....
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....has no option but to follow the same. He cannot make the final order on the basis of the draft order without forwarding the same to the Inspecting Assistant Commissioner along with the objections and without obtaining the directions of the Inspecting Assistant Commissioner. An assessment made by the Income-tax Officer in violation of the provisions of section 144B of the Act would be an assessment without jurisdiction. In the instant case, the admitted position is that on receipt of the draft Akil Gulamali Somji A.Y. 2001-02 to 2004-05 Page of 14 order of assessment, the assessee did file objections and the Incometax Officer completed the assessment himself on the basis of the draft order without forwarding the draft order and the objections to the Inspecting Assistant Commissioner and obtaining directions from him. Such an order, on the face of it, is beyond the powers of the Income-tax Officer under section 143read with section 144B of the Act and, hence, without jurisdiction. The Tribunal, in our opinion, was, therefore, justified in its conclusion that the assessment was liable to be annulled. It was right in holding that the assessment order passed by the Income-tax Officer th....
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....of I.A.C u/s. 271(1)(c) (iii) for direction for payment of penalty was held as procedurally defective. The provisions laid down u/s. 153D of the Act under consideration in the present case before us, are different as here the prior approval of Joint Commissioner is not required merely for direction for payment of the due amount of tax but overall approval of the assessment framed by the I.T.O. Thus, the cited decision is not applicable in the present case. In the case of CIT Vs. Sara Enterprises (Supra), the issue was as to whether the bar of limitation contained u/s. 275 of the Act would attenuate or curtail the powers of CIT, vested in him u/s. 263 of the said Act. The Hon'ble Madras High Court was pleased to hold that it is not hit by provisions of Sec. 275 of the Act. In Prabu Dayal Amichand Vs. CIT (Supra), the Hon'ble High Court of Madhya Pradesh with reference to Sec. 271(1)(c) of the Act was pleased to hold that a procedural irregularity not involving the question of jurisdiction Akil Gulamali Somji A.Y. 2001-02 to 2004-05 Page of 14 can be cured. It is not helpful to the revenue in the present case because in the present case, the A.O was having no jurisdiction to ....
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....ure, Volume-II (Technical), February 2003 issued by the Directorate of Income Tax on behalf of Central Board of Direct Taxes, Department of Revenue, Government of India dealing with the instant issue of approval to be finalized in a particular manner (supra). He emphasizes that the ACIT as well as the JCIT's action under challenge does not comply the prescribed procedure therein. We find no merit in the instant argument since such a Manual of Office Procedure is for mere internal circulation which not pertaking the character of CBDT's instructions prescribed u/s 119 of the Act. Nor is there any material to suggest that this manual confirms all necessary conditions in the clinching statutory provision u/s 119 of the Act. The as's instant argument is rejected therefore. 6. We now advert to the equally important aspect of correctness of JCIT's approval whose contents stand extracted in preceding paragraphs. We wish to reiterate here that the assessing authority had admittedly sent its letter seeking approval on 28.03.2016 which stood replied by way of alleged approval on the very date with certain remarks at the JCIT's behest (supra). This approval makes it clear that the Assessing O....
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.... manner. The Joint Commissioner must have to go through the seized documents, notices issued by the Assessing Officer, submissions made by the assessee and also the documents submitted by the assessee, then he had to apply his judicious mind to all the relevant records and then only the orders can be approved. In the instant case the last notices u/s 142(1) was issued on 30.03.2015 to which the submissions were made on 31.03.2015 and as mentioned in the assessment order the orders were approved on 27.03.2015. So, it is not known on 27.03.2015, how the Ld. Addl. CIT has applied his mind to the notices issued on 30.03.2015 and the submission made by the appellant on 31.03.2015. As a matter of fact no assessment order was approved by the Ld. Addl. CIT, therefore the assessment order passed by the Ld. Assessing Officer is illegal and liable to be quashed. c. Further it is submitted that, the Hon'ble ITAT of Mumbai in the case of "Smt. Shreelekha Dam ani Vs. Dy. CIT, (2015) 173 TTJ 332 (Mumbai)" it was held that, 'legislative intent is clear inasmuch as prior to the insertion of Sec.l53D, there was no provision for taking approval in cases of assessment and reassessment in cas....
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....the above, it is held that there is no strength in the argument of the Ld. A.R. alleging violation of provisions of sec. 153 D of the Act and hence, the ground of appeal is rejected. " 6. At the time of hearing, ld A.R. of the assessee argued that search was conducted in the premises of the assessee on 13.12.2012. The assessment order under section 153A(b) of the Act was passed on 31.3.2015. The approval was obtained from the Addl. Commissioner of Income Tax, Range-1, Bhubaneswar on 27.3.2015 and filed copy of the same. Notice u/s.142(1) of the Act was issued on 30.3.2015 and referred to pages 15 & 16 of paper book, where copy of the same is placed. On the above stated facts, ld A.R. of the assessee submitted that according to the provisions of section 153D of the Act, no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner of Income Tax in respect of each assessment year referred to in clause (b) of sub-section(1) of 153A except with the prior approval of the Joint Commissioner of Income tax. He submitted that it will be observed from the assessment order dated 31.3.2015 passed u/s.153A(b) in the case of Geetarani Panda....
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.... report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require." In this section also the AO may direct the assessee to get the accounts audited by an Accountant with the previous approval of the Principal Chief Commissioner or Chief Commissioner. This provision has been elaborately considered by the Hon'ble Supreme Court in the case of Sahara India Vs CIT 169 Taxman 328 wherein at para-6, the Hon'ble Supreme Court observed as under: "A bare perusal of the provisions of sub-section (2A) of the Act would show that the opinion of the Assessing Officer that it is necessary to get the accounts of assessee audited by an Accountant has to be formed only by having regard to: (i) the nature and complexity of the accounts of the assessee; and (ii) the interests of the revenue. The word "and" signifies conjunction 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 obje....
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...., even the Hon'ble Supreme Court has clearly laid down that the approval must reflect the application of mind to the facts of the case. 11.6 Similarly, the Hon'ble High Court of Calcutta in the case of Peerless General Finance & Investment Co. Ltd. Vs DCIT 236 ITR 671 has made the following observations which are pertinent to the facts of the case in hand before us. "The factual matrix of the matter clearly shows that a proposal was made on March 10, 1998, and no prior approval therefore was granted by the Chief Commissioner of Income-tax but merely one G. P. Agarwal was nominated. An argument has been advanced to the effect that by making such a nomination, approval will be deemed to have been granted. The answer to the said contention must be rendered in the negative. The Chief Commissioner of Income-tax before granting such approval must have before him the materials on the basis whereof an opinion had been formed. A prior 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 ....
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....i.e., on 31-3-1997 the Commissioner grants approval and that too without giving or recording any reasons whatsoever. The approval order does not disclose the points which were considered by the Commissioner and the reasons for accepting them. In our view, this is totally an unsatisfactory method of granting approval in exercise of judicial power vested in the Commissioner. 11.9. This decision of the Tribunal was considered by Allahabad Bench of the Tribunal in the case of Verma Roadways Vs ACIT 75 ITD 183 wherein also the assessee- appellant has challenged the validity of approval to the assessment order accorded by the CIT Kanpur. The Tribunal at Para-47 has held as under: "Coming to the aspect of the application of mind, while granting approval, we are of the view that requirement of approval presupposes a proper and thorough scrutiny and application of mind. In the 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 func....
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....serve that in the present case there has been no application of mind by the Additional Commissioner before granting the approval". 12. Coming to the facts of the case in hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, the Addl. Commissioner has showed his inability to analyze the issues of draft order on merit clearly stating that no much time is left, inasmuch as the draft order was placed before him on 31.12.2010 and the approval was granted on the very same day. Considering the 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 bee....
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....rge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Jt. CIT had adequate time with him so as to grant approval after duly examining the material prior to approving the assessment order. The circumstances indicate that this exercise was carried out by the Jt. CIT in a mechanical manner without proper application of mind. Accordingly, respectfully following the ratio of the Coordinate Benches of Mumbai and Allahabad as aforementioned and also applying the ratio of the judgment of the Hon'ble apex Court in the case of Sahara India (Firm) vs. CIT (supra), we hold that the Jt. CIT has failed to grant approval in terms of s. 153D of the Act i.e., after application of mind but has rather carried out exercise in utmost haste and in a mechanical manner and, therefore, the approval so granted by him is not an approval which can be sustained. Accordingly, assessments in three COs and nineteen appeals of the assessee(s), on identical facts, are liable to be annulled as suffering from the incurable defect of the approval not being proper. Accordingly, we annul the assessment orders in CO Nos. 8 to 10/Jodh/....
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.... days prior to the grant of approval. 11. In the rejoinder, ld A.R. of the assessee submitted that a reading of the first, second and third paras of the Addl. CIT of his letter dated 27.3.2015 read as under: "Despite a reminder given on 19th March, 2015 to submit the time barring draft assessment orders for approval u/s. 153D on or before 23.03.2015, the draft orders in M/s. Neelachal Carbo Metalicks Pvt. Ltd. Group of cases has been received in this office only on ill 26th March, 2015 in the afternoon. The draft orders having being submitted only 5 days before final orders are getting barred by limitation,, I have no other option but to accord the approval to the same as the approval is statutorily required u/s. 153D, even though there 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 atleast one month earlier so as to allow the....
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....ficer. Humanly all these activities are not possible within one day. Moreover from the system, it can be verified that, the assessment order passed by the Ld. Assessing Officer were not uploaded which again prove that, the assessment orders were not passed within the due date, otherwise what prevented him to upload the assessment orders. So it is clear that the order were never been passed on 31.03.2015, rather it had been passed after the expiry of the due date and back dated. Therefore the assessment orders are barred by limitation and liable to be quashed. b. Further it is submitted that, as per the provisions of the Act, once the assessment orders are passed they should be immediately sent to the dispatch section for dispatch of the orders. In the instant case instead of sending the orders to the dispatch section the Ld. Assessing prefer to call the A/R and handed over the orders on 08.04.2015. Again question arises if the orders were passed on 31.03.2015 why the orders were not sent to dispatch section or handed over to the appellant on the same day or in the immediate next day. But as a matter of fact the orders were never passed within the due date, they are back dated. He....
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....by any other specified mode. Therefore the assessment order is barred by limitation and liable to be quashed. Similar view was also expressed in the following ratios: SHANTI LAL GOD AW AT & ORS Vs. ASSISTANT COMMISSIONER OF INCOME TAX, (2009) 126 TTJ (Jd) 135 COMMISSIONER OF INCOME TAX Vs. PURSHOTTAMDAS T. PATEL, (1994) 120 CTR (Cuj) 332 : (1994) 209 ITR 52 (Guj) JIFFIR AND KAREEM Vs. AGRICULTURAL INCOME TAX OFFICER & ANR., (1999) 240 ITR 587 (Ker) On the above ground it is submitted that, the assessment order passed by the Ld AO is barred by limitation and liable to be quashed." Decision:- Submission made by the Ld. A.R. was considered carefully with reference to material available on record and the observation/findings made are enumerated hereunder:- (i) The submission of the Ld. A.R. was referred to the A.O. u/s.25 Act on 23.09.2016. In reply, the A.O. has given the following reply dt.17.10.2016:- "The Authorized Representative (A.R.) after being appointed by the assess-, act so are not only to plead or argue the case before the A.O. In order to act on behalf, the assessee A.R. a power of attorney (PoA) has been submitted at the out set of the case. That PoA author....
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....n of the tax liability and issue of demand notice, but certainly not the -service of the same on the assessee. [India Ferro Alloy Industry Pvt. Ltd. Vs. CIT (1993) 202 ITR 671, 677 (Cal.), N. Subha Rao 48 ITR 808 (Mys.)]. In the case of Esthuri Aswathiah Vs. CIT (1963) 50 ITR 764 (Mys.), the order under section 143(3) dated 29-02-1961 was served to the assessee on 04-04-1961. The Hon'ble High Court Mysore treated the order as valid. In the case of Ramanand Agrawal Vs. CIT 151 ITR 216 (Gua.), the order u/s 143(3) dated 16-03-1968 was served on 13-04-1968 and the Hon'ble Guahati High Court held the order as valid. Order sheet entry passed by the A.O. states that assessment order was completed on 31.03.2015 and hence, the assessment order served on 08.04.2015 is valid and not time barred as held in the case of Sewduttroy Rambullay & Sons Vrs. CIT (Cal) 204 ITR 580, CIT Vrs. T.O. Abraham & Co.) (Ker) 333 ITR 182. In similar facts and circumstances of the case, the Hon'ble Jurisdictional Tribunal rejected the appeal of the assessee in case of CIT Vrs. Sophia Study Circle in ITA No.286/CTK/2012 for A.Y.2008-09 and the relevant portion of the order is reproduced, verbatim, h....
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....the case discussed above, it is found that there is no inordinate delay in service of the order and therefore, the ground of appeal filed by the appellant is not acceptable and hence, it is rejected." 16. Ld A.R referring to page 16 of the order of the CIT(A) in the case of Geetarani Panda and page 15 of the order of the CIT(A) in the case of Manjusmita Dash submitted that the CIT(A) has called for a remand report u/s.250(4) of the Act dated 23.9.2016 and in reply to the same, the Assessing Officer has submitted his report vide letter dated 17.10.2016, which reads as under: "The Authorized Representative (A.R.) after being appointed by the assessee to act so are not only to plead or argue the case before the A.O. In order to act on behalf of the assessee A.R. a power of attorney (PoA) has been submitted at the outset of the case. That PoA authorizes the A.R. to take copies of the assessment orders. That PoA also authorizes the A.O. to get the assessment order(s) served on the assessee through his/her A.R. Being it a group case all assessment orders after the scrutiny proceedings being completed, have been served on the assessee through her A.R. on 08.04.2015 and the receipt of ....
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....peals, the assessee raised a legal ground which is that the orders of assessment passed by the Assessing Officer are barred by limitation. 5. The facts relating to this issue are that a search and seizure operation was conducted in the case of the assessee on 28.5.2014. In pursuance to the said search, order u/s.153A r.w.s 144 of the Act was passed for the assessment years 2009-2010 to 2014-15 and assessment for the assessment year 2015-16 was made u/s.144 of the Act. The said orders of assessment were served upon the assessee on 9.1.2017 though all the orders were dated 30.12.2016. 6. Before the CIT(A), the assessee contended that the aforesaid orders being dispatched on 7.1.2017 are barred by limitation. The CIT(A) observed that as the orders were dated 30.12.2016 and in absence of any material to show that the Assessing Officer revisited these orders after 30.12.2016 upheld the orders and drawn support from the decision of Hon'ble Calcutta High Court in the case of CIT vs. Binani Industries ltd., (2015) 59 taxmann.com 389 (Cal). 7. Before us, the assessee produced copy of envelope by which the orders of assessment were sent to the assessee by the Assessing Officer and copy....
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....e dispatch register to establish that the orders were complete and effective i.e. it was issued, so as to be beyond the control of the authority concerned within the period of limitation i.e. 29.4.2007. Admittedly, the assessment orders were served on the assessee on 30.4.2007. hence, the assessment orders passed were barred by limitation." In the above decision, Hon'ble High Court follows its one earlier decision and has stated as under: "An identical issue was before this Court in ITA No.832/2008 (D.D. 14.10.2014 in the case of Maharaja Shopping Complex vs DCIT. This court following the judgment of Kerala High Court in the case of Government Wood works vs State of Kerala (1988) 69 STC 62 has held that in the absence of dispatch date made available to the Court from the records, to prove that the order is issued within the prescribed period, order passed by AO is barred by limitation. The said judgment squarely applies to the facts of the present case." 13. To the same effect are the decisions of Hon'ble Kerala High Court, which are in the case of (i) K. Joseph Jacob vs Agricultural Income Tax Officer & another (1991) 190 ITR 464 (Ker) and (ii) Commissioner of Agricultural I....
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.... option but to accord the approval to the same as the approval is statutorily required u/s. 153D, even though there 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-avis 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 Section 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that th....