TaxTMI 
TaxTMI 
2021 (1) TMI 909
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.... of Cases in which identical issues have arisen. 4. Learned Counsel for the Assessee mainly argued in ITA.No.1813/Del./2019 in respect of Shri Sanjay Duggal as a lead case and references also made to all the remaining appeals as well. 5. Ld. CIT(A) recorded the facts of the case in detail under the Head "Background of the Case" in the impugned order which refers to the factual position in respect of all the above Assessees. The background of the facts are as under : 5.1. A search and seizure operation was conducted on 29.12.2015 against Shri Rajnish Talwar [who was Ex- General Manager (Sales) ] of M/s. Jagatjit Industries Ltd., [M/s. JIL]. Shri Sanjay Duggal [who was Ex.DGM (Sales) of JIL], their family Members and MAPSKO Group. The basic issue of search and seizure was deposit of huge money in the bank accounts of M/s. Alfa India which is proprietary concern of Shri Arun Duggal brother of Shri Sanjay Duggal and transfer of huge amounts from bank accounts of M/s. Alfa India to various bank accounts maintained by Shri Rajnish Talwar and his family Members and Shri Sanjay Duggal and his family Members. 5.2. These accounts were maintained in various branches of....
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....Ratna Talarr Rohini South Indian Bank 6. 303.53.9693 Kritika Talwar Rohini South Indian Bank 7. 303.53.10682 Chesta Talwar Rohini South IndianBank 8. 555.53.204 Sanjay Duggal Faridabad South Indian Bank 9. 555.53.205 Arun Duggal Faridabad South Indian Bank 10. 555.53.206 Neeru Duggal Faridabad South Indian Bank 11. 555.53.207 Nany Duggal Faridabad South Indian Bank 12. 555.53.208 Poonam Duggal Faridabad South Indian Bank 13. 555.53.209 Neha Duggal Faridabad South Indian Bank 5.5. In view of the large value transactions in these accounts, the South Indian Bank branch authorities had requested the account holders to submit copies of their respective PAN Cards. But every time the customers either pretended that they have no PAN card or refused to provide the PAN details. It was found by the bank authorities that the above mentioned individuals were having PAN cards. Subsequent to the request of the bank officials for the information regarding source of the funds in the account, the proprietor of the current account, i.e., M/s. Alfa India closed t....
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....e initial enquiry, that the receipts of M/s Alfa India was not recognized in the books of account of JIL. 5.9. In the post search and survey enquiries period, three more bank accounts of M/s Alfa India, maintained with South Indian Bank were identified and similar pattern was observed that cheques deposit from liquor distributors and ultimately transferred to the bank accounts of members of Duggal & Talwar families, from where cash was withdrawn. The details of the three new bank accounts of M/s Alfa India, discovered during the post survey period which were maintained with South India Bank, Gurgaon, Faridabad and Rohini, New Delhi i.e., A/c. Nos.xxx0213, xxxx0004 and xxx2186 respectively. In the post search and survey period, enquiry was conducted from various parties such as M/s Jagatjit Industries Limited, Shri Sanjay Duggal, Shri Rajnish Talwar, different liquor distributors of Haryana etc., 5.10. The enquiry was conducted to identify/determine the accuracy of the events/processes, in relation to cheque deposits into the bank accounts of M/s. Alfa India and withdrawal of cash/utilization of cash. The purpose of the enquiry was to highlight the role of differen....
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....at it was not possible because perusal of books of account of M/s. Jagatjit Industries Limited, M/s. Sohan Lal Singha AOP and M/s. Om Prakash Singla AOP shows that all sale and purchase transaction were recorded therein i.e. between M/s Sohan Lai Singla AOP & M/s Jagatjit Industries Limited and between M/s Om Prakash Singla AOP & M/s Jagatjit Industries Limited. v. Sh. Sanjay Duggal stated that sales were under-reported or under-invoiced in the books of account of M/s Jagatjit Industries Limited and the payments made to M/s Alfa India was to against such (out of books) portion of these sales transactions. vi. The AO has also noted, from the perusal of books of account of M/s Jagatjit Industries Limited, that the sales were not under-reported or under-invoiced. The collection for the sales made by the M/s. Jagatjit Industries Limited was ensured by means of collection of cheque and giving of rebate and discount to the liquor distributors. It is also noted by the AO that receipt in the bank account of M/s Alfa India has not been recognized as collection receipt in the books of account of M/s Jagatjit Industries Limited." 5.13. In the impugned order, the sta....
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....he course of search at his residence on 29th and 30th of December 2015, where he said that the end use of cash withdrawn from the account of family members of Duggal and Talwar family, was for funding the payoff to key persons of liquor trade for sales promotion of M/s Jagatjit Industries Limited. The AO has noted that, no detail of beneficiary to whom pay-off/gift were made was provided by Sh. Rajnish Talwar/ Sanjay Duggal. The A.O. has further noted that Shri Talwar's claim cannot be cross verified due to non-furnishing of details by him in this regard. As per the AO, no evidence of gift purchased for distribution to key person/ sales team of distributors of M/s Jagatjit Industries Limited, was provided by Shri Rajnish Talwar. The AO also observed that it seemed odd, that gifts were procured by Head Office of M/s Jagatjit Industries Limited, as claimed by him (Sh. Talwar). The AO has also noted that no details i.e. identity and other details were provided with respect to sales team responsible for administration of gifts in the manner, claimed by Shri Rajnish Talwar, at M/s Jagatjit Industries Limited. The AO also observed that otherwise also, gifts purchased in cash, needs to be....
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.... Sh. Rajnish Talwar. Enquiries conducted from third party/ M/s Jagatjit Industries Limited has revealed that negotiation/finalization of rebate and discount and its communication was the work of sales team, more precisely Sh. Rajnish Talwar and Sh. Sanjay Duggal. However, Sh Sanjay Duggal and Sh. Rajnish Talwar have been evasive with regard to their role regarding rebate and discount finalization and communication and apparently, have not stated the truth about their involvement in rebate and discount structure and administration, followed at JIL. ii) The result has been excessive credit in one set of accounts which has been used to square off the debit balance of parties, from which payments have been collected in the bank accounts of M/s Alfa India, against sales made to these parties by M/s Jagatjit Industries Limited. The enquiries have revealed that collection/deposit into the bank account of M/s Alfa India was done at the instructions of Sh. Sanjay Duggal & Sh. Rajnish Talwar and was based upon, fraud instructions. Representatives on behalf of liquor concerns, who have made payment into the bank account of M/s Alfa India, have contradicted the version of Sh. Sanjay D....
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....l of persons who were part of sales administration, engaged in gift distribution, was provided by Sh. Rajnish Talwar. The purchase of gift is also not verifiable, due to nonfurnishing of detail/evidence by SJi. Rajnish Talwar, the claims related to utilization of cash (through the channel of M/s Alfa India are unverified/ un-verifiable. v) There is also harmonization in the rebate and discount value in the books of account of dealers and books of account of M/s Jagatjit Industries Limited, with respect to rebate and discount provided by M/s Jagatjit Industries Limited, after closure of M/s Alfa India bank account in the South Indian Bank, C.R. Park Branch, New Delhi. It is to be noted that Duggal and Talwar family closed their bank accounts, because of alarm raised by bank, on account of huge fund movement involving M/s Alfa India account and non-furnishing of PAN by Duggal and Talwar family. vi) With regard to role of dealers/distributors of M/s Jagatjit Industries Limited, making payment into the bank account of M/s Alfa India, their role appears to be suspicious, as to why they made payment into the bank accounts of M/s Alfa India, particularly in the lig....
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....bate and discount is made and it is signed by the State Sales head and Director Sales of M/s Jagatjit Industries Limited and the amount is credited into the account of respective buyers. The copies of quarterly statements (as stated earlier) have been impounded during the course of survey and are inventoried as Annexure A-2 in the case of JIL. The quarterly statements are designated as "Sales Promotion Schemes" (SPS) sheets and quantity of rebate and discount for each of the customers of Jagatjit Industries Limited is calculated on the basis of quantity of stock (no. of case) lifted multiplied by discount per brand. The covering letter of the SPS sheets is signed by Sh. Rajnish Talwar (State Sales Head, Haryana) and Sh. Vinod Kumar Banga (C.O.O., Director Sales) upto financial year 2013-14. The actual sheets reflecting the computation bears the signature of accountant of Kundli Depot and Sh. Sanjay Duggal, in addition to signature of Sh. Rajnish Talwar and Sh. Vinod Kumar Banga. x) It may not be out of place to mention here that, that Sh. Sanjay Duggal was DGM Sales, M/s Jagatjit Industries Limited between Year 2010-12 and RSM Sales between Year 2008-2010. Sh. Rajnish Talw....
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....tained through the mechanism of M/s Alfa India was delivered to Mr. Vinod Kumar Banga. xiv) No evidence/detail of gift purchase or its distribution was provided by Sh. Rajnish Talwar, despite giving of opportunity to him. xv) No detail of beneficiary of gift, used during sales promotion, was provided, despite giving of opportunity. xvi) No detail of persons belonging to sales team, who have administered gift distribution (as claimed by Sh. Rajnish Talwar), was provided by Sh. Rajnish Talwar, so that facts could be verified by this office. xvii) It is highly improbable that HO/Head Office of M/s Jagatjit Industries Limited was buying the gifts instead of field offices/sales team. xviii) Sh. Sanjay Duggal is not aware about the utilization of cash (withdrawn through the mechanism of M/s Alfa India), a part of which has been utilized for gift administration, as claimed by Sh. Rajnish Talwar. It is to be noted that Sh. Sanjay Duggal was working just under Sh. Rajnish Talwar. xix) Third parties like Sh. Sohan Lai Singla and Sh. Ramesh Khurana have cited the role of Sh. Sanjay Duggal and Sh. Rajnish Talwar, contradicting the rol....
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....outed from liquor wholesalers through M/s. Alfa India to the bank accounts of his family members. Shri Rajnish Tailwar also admitted that M/s. Alfa India was a dummy concern and the whole purpose of floating the same was for routing the funds to give a genuine looking cover to the expenses of liquor wholesalers. The relevant portion of his statement is reproduced in the impugned order. 5.21. During the course of search and seizure, Shri Sanjay Duggal also stated that M/s. Alfa India was a dummy concern and was used for routing the funds received from various liquor dealers specially Shri Sohan Lal Singla [AOP], Shri Om Prakash Singla [AOP] and others as per directions of JIL. Shri Sanjay Duggal specifically admitted that M/s. Alfa India did not provide any goods or services in lieu of receipt of these funds. The relevant portion of the statement is reproduced in the appellate order. This statement of Shri Sanjay Duggal was confronted to Shri Rajnish Talwar who agreed with the version of Shri Sanjay Duggal that management of JIL was directing some parts of payments due to JIL to M/s Alfa India, Shri Rajnish Talwar, Shri Sanjay Duggal and the family Members of these two fami....
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....al 2,63,23,399/- 5.24. The A.O. given opportunities of being heard to the Assessees and assessment orders have been passed under section 153A of the I.T. Act, 1961. The A.O. in the case of Shri Sanjay Duggal and his family members made several additions which are in the nature of - (i) Unexplained bank deposits and interest thereon which have been enhanced later on also by the Ld. CIT(A) in A.Y. 2010-2011 (ii) Other Years - (i) Unexplained bank deposits and interest thereon (ii) Unexplained HRA (iii) Disallowance under section 10(38) of the I.T. Act. (iv) Addition on account of advance against sale of house. (v) Addition on account of unsecured loans + interest. (vi) Addition on account of long term capital gains + Commission paid on the same. 5.25. In the case of Shri Rajnish Talwar and Group in A.Y. 2010-2011 following additions are made. (i) Addition on account of foreign travel expenses. (ii) Unexplained bank deposits received from M/s. Alfa India under section 68 of the I.T. Act. (iii) Addition under section 10(31A) HRA. ....
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....Del/2019 2012-13 Arun Duggal, 3E-42-NIT, Faridabad, Haryana. PAN No. AGUPD5708Q 7,50,220/- 17,80,85,900/- 12 1822/Del/2019 2013-14 Arun Duggal, 3E-42-NIT, Faridabad, Haryana. PAN No. AGUPD5708Q 21,79,060/- 1,20,65,540/- 13 1618/Del/2019 2010-11 Ratnashri Buildtech Pvt. Ltd., C/o Kapil Goel, Adv., F26/124, Sector 7, Rohini, Delhi. PAN No. AADCR8863Q Nil 56,10,000/- 14 1619/Del/2019 2011-12 Ratnashri Buildtech Pvt. Ltd., C/o Kapil Goel, Adv., F26/124, Sector 7, Rohini, Delhi. PAN No. AADCR8863Q Nil 96,90,000/- 15 1620/Del/2019 2012-13 Ratnashri Buildtech Pvt. Ltd., C/o Kapil Goel, Adv., F26/124, Sector 7, Rohini, Delhi. PAN No. AADCR8863Q 36,87,160/- 1,28,67,160/- 16 1621/Del/2019 2014-15 Ratnashri Buildtech Pvt. Ltd., C/o Kapil Goel, Adv., F26/124, Sector 7, Rohini, Delhi. PAN No. AADCR8863Q 50,62,260/- 56,99,390/- 17 1622/Del/2019 2010-11 Ratna Talwar, C/o Kapil Goel, Adv., F-26/124, Sector-7, Rohini, Delhi PAN No. ACGPT9955M 4,79,450/- 4,34,07,330/- 18 1623/Del/2....
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.... 2010-11 Neeru Duggal, 3E-42NIT, Faridabad, Haryana. PAN No. AHNPD0991P 5,37,090/- 89,91,240/- 36 1802/Del/2019 2011-12 Neeru Duggal, 3E-42NIT, Faridabad, Haryana. PAN No. AHNPD0991P 2,48,990/- 61,36,200/- 37 1803/Del/2019 2012-13 Neeru Duggal, 3E-42NIT, Faridabad, Haryana. PAN No. AHNPD0991P 7,16,500/- 73,59,880/- 38 1804/Del/2019 2013-14 Neeru Duggal, 3E-42NIT, Faridabad, Haryana. PAN No. AHNPD0991P 15,86,960/- 24,29,290/- 39 1991/Del/2019 2015-16 Neeru Duggal, 3E-42NIT, Faridabad, Haryana. PAN No. AHNPD0991P 7,01,040/- 44,86,380/- 40 1611/Del/2019 2010-11 Rajnish Talwar, C/o Kapil Goel, Adv., F-26/124, Sector-7, Rohini, Delhi. PAN No. AAZPT8964F 3,16,600/- 3,56,59,579/- 41 1612/Del/2019 2011-12 Rajnish Talwar, C/o Kapil Goel, Adv., F-26/124, Sector-7, Rohini, Delhi. PAN No. AAZPT8964F 4,84,600/- 5,50,95,760/- 42 1613/Del/2019 2012-13 Rajnish Talwar, C/o Kapil Goel, Adv., F-26/124, Sector-7, Rohini, Delhi. PAN No. AAZPT8964F 1,13,44,520/- 4,73,71,590/- 43 1614/Del/2019 2013-14....
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.... in the bank accounts of the Assessees are solely and exclusively belong to M/s. JIL. The sum and substance of the replies of the Assessees have been that they are not real owners of these bank accounts and the transactions reflected in these bank accounts did not belong to them. The Ld. CIT(A), however, did not accept the contention of Assessees and not only confirmed all the additions, but, also enhanced the additions on account of addition made under section 68 and enhancement of addition under section 2(22)(e) of the I.T. Act, 1961. The appeals of the Assessees have been dismissed. 6. The Assessees have preferred the above appeals before the Tribunal in which common issues have arisen. 6.1. It may be noted that all the Assessees in their appeals have also raised the Grounds of Appeal in Memorandum of Appeals, challenging the approval under section 153D of the I.T. Act, 1961, to be bad in Law and void abinitio and as such same is not valid as per Law which is also without application of mind. Therefore, no assessments could have been framed by the A.O. under section 153A of the I.T. Act, 1961. It is pointed-out that in the three appeals of M/s. Ratna Sri Buildtech Pv....
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....Ltd., 378 ITR 693 (Del.) and Silver Line 383 ITR 455 (Del.), Judgment of Hon'ble Punjab & Haryana High Court in the case of M/s. VMT Spinning Co. Ltd., 389 ITR 326 (P & H). He has, therefore, prayed that additional ground which has already taken in the Memorandum of Appeal may be admitted for disposal of the appeals. 7. On the other hand, Ld. D.R. strongly objected to the additional ground of appeal raised by the assessees and submitted that additional ground should not be admitted. Oral discussion had gone through between the A.O. and the JCIT who are having their Office in the same building and JCIT has applied his mind before granting approval. JCIT was having all the records with him. Even if their cases are taken later on, is no ground to show JCIT was not having access to the record. Proceedings are monitored by the JCIT. The Ld. D.R. has referred to the statements of Shri Sanjay Duggal and Shri Rajnish Talwar to show that income have been rightly assessed in their hands and in the hands of their family Members. 8. We have considered the rival submissions and perused the material on record. It is not in dispute that all the assessees except in three cases mentioned abov....
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.... liability, the matter could be remanded to the Tribunal for adjudicating upon the additional ground on its merits. [Matter remanded.]" 8.1. The Hon'ble Delhi High Court in the case of Pr. CIT vs., Nilkanth Concast (P.) Ltd., [2016] 387 ITR 568 (Del.) following the same decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., (supra) held as under : "The powers of the Tribunal are wide enough to consider a point which may not have been urged before the Commissioner (Appeals) as long as the question requires to be examined in the interest of justice. Held accordingly, that the Tribunal had not exceeded its jurisdiction in examining the question whether the Assessing Officer was justified ill extending the time for the auditor nominated under section 142(2C) of the Income-tax Act, 1961, to submit the audit report." 8.2. In the aforesaid matter, we have given sufficient opportunity of being heard to all the parties to argue on additional ground of appeal and its admission. Since all material is available on record which is not disputed by the Revenue Department also and since the decision upon new ground raised by the assessees woul....
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....53D is juxtaposed with Section 151 and Section 274, most important differences which is peculiar to Section 153D is the word "Each" is not used in Section 151 and Section 274 and the word "Each" is specially and consciously referred to in Section 153D so that assessee-wise and year-wise express and specific application of mind on the part of the Approving Authority is there which is in accordance with the overall Scheme of Section 153A to Section 153D of the I.T.Act,1961 which is year centric Scheme of the assessment which is not there in the earlier Scheme of block assessments. He has relied upon the Judgment of the Allahabad High Court in the case of Shri Mohd. Ayub vs., ITO [2012] [2] 346 ITR 30 (Alld) in which non-issue of separate notice under section 148 of the I.T. Act, 1961 was held to be invalid because each assessment year is to be taken as an independent unit of assessment. Learned Counsel for the Assessee, therefore, submitted that if the above settled position is tested to provisions of Section 153D as involved in the present appeals, it would be glaring that even in a case where requirement of separate notice under section 148 of the I.T. Act, 1961, was given absolute....
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.... has not considered significant material on record because the assessments in the group cases i.e., of JIL etc., were completed under section 153A prior to the assessments in the case of assessee and the same have not been looked into by the authorities below and nowhere same have been objectively co-related with the assessments of the assessees. There is a failure even to consider appraisal report at assessment stage. The principle of real income is also not considered and merely on hypothetical income the assessments have been framed. Therefore, non-consideration of the material with the Revenue Department in the case of JIL have not been objectively considered while framing the draft assessment order. There is also no co-relation with the available unaccounted/ hidden assets/investments in possession in the hands of the assessees as detected from the extensive search vis-à-vis special transactions of credits in the bank accounts shows mechanical assessment being mechanically approved by the Approving Authority. There is no meaningful and independent enquiry conducted at the assessment stage. The relevant provisions of Law have not been considered for making the additions ....
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....there in the present case. The approval under section 153D is thus invalid, bad in Law and void abinitio. Learned Counsel for the Assessee in support of the above contention that approval under section 153D have been granted in a most mechanical manner without going through the seized material and other material on record and without application of mind, therefore, such approval is invalid and void abinitio and as such entire assessment orders are illegal and bad in Law and liable to be quashed, relied upon the following decisions : 1. Order of ITAT, Delhi Bench, Delhi in the case of M3M India Holdings vs., DCIT [2019] 71 ITR (Trib.) 451 (Del.) 2. Order of ITAT, Cuttack Bench, Cuttack in the case of Dilip Constructions Pvt. Ltd., Bhubaneswar vs., ACIT, Circle-1, Bhubaneshwar in I.T.(SS) Nos.66 to 71/CTK/2018 etc., Dated 29.11.2019. 3. Order of ITAT, Agra Bench, Agra in the case of Rajesh Ladhani, Faizabad vs., DCIT, Central Circle, Agra in ITA.Nos.106, 107 and 108/Agra/2019, Dated 06.11.2019. 4. Order of ITAT, Agra Bench, Agra in the case of Shri Saurabh Agarwal, Mathura vs., DCIT, Central Circle, Agra in ITA.Nos.263 to 267/Agr/2017 etc., Dated 18.09.2019. ....
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.... search and panchanamas by the Addl/JCIT, Central Range, by the Investigation Wing. Thereafter, there are regular discussions between the A.O. and his Addl./JCIT, Central Range, as to which assessees are covered by Section 153A and which by Section 153C. In these cases, the A.O. has duly taken approval from JCIT for passing the assessment orders under section 153D well within time before limitation. On examination of the Office records it is clear that draft Orders in these cases were sent by the A.O. to the JCIT, Central Range-1, New Delhi who have duly accorded his approval under section 153D. Therefore, it is logically inferred that the assessment orders under section 153A of the Act were passed by the A.O. with prior approval under section 153D from JCIT, Central Range-1, New Delhi. Thus, the assessees contention is not at all valid and sustainable as per relevant provisions of the I.T. Act. The A.O. examined the issue of transfer of money from the Account of AOPs [liquor wholesaler] who have purchased liquor from M/s. JIL into the account of M/s. Alfa India from where the money was transferred to the accounts of Shri Sanjay Duggal and Shri Rajnish Talwar and their family Membe....
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....a case of assessee, A.O. shall have to give separate notice of each assessment year and assessee shall have to be directed to file return of income for each year and separate orders shall have to be passed for each assessment year. In Section 153A of the I.T. Act, the A.O. shall have to see whether there are abated or non-abated assessments which was not provided in earlier provisions for block assessments. The Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla [2016] 380 ITR 573 (Del.) considered the issue of abated and non-abated assessments and with regard to completed assessments held that the same can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment. It is also held in the same Judgment that in so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall have to be made separately for each assessment year on the basis of the findings of the se....
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....oning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 11.3. The Hon'ble Supreme Court of South Carolina in State vs., Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that "Approval implies knowledge and, the exercise or discretion after knowledge." 11.4. The Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs., Land Acquisition Officer [2003] 5 SCC 83 wherein it has been held that : "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authori....
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....icious mind. We are of the view that the obligation of the approval of the Approving Authority is of two folds ; on one hand, he has to apply his mind to secure in build for the Department against any omission or negligence by the A.O. in taxing right income in the hands of right person and in right assessment year and on the other hand, JCIT is also responsible and duty bound to do justice with the tax payer [Assessee] by granting protection against arbitrary or unjust or unsustainable exercise and decision by the A.O. creating baseless tax liability on the assessee and thus, the JCIT has to discharge his duty as per Law. Thus, granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act. 11.7. In the following Orders of various Benches of the Tribunal, it is held that while granting approval under section 153D, the JCIT shall have to peruse all the incriminating material and other seized material on record and proper p....
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....te no reply have been conveyed to the assessee. He has, therefore, submitted that in this case no approval have been conveyed to the assessing officer before passing the assessment order. He has submitted that in section 153D the word used is 'Shall' which indicates that this provision is mandatory which is to be complied before passing the assessment order. In the present case, no such approval have been found on record. On inspection of the record, it was found the approval was received by the assessing officer for the first time by Fax on 5th February 2014 [PB 48]. There is no other documentary evidence available on record. It is, therefore, clear that approval/sanction of the Addl. CIT was received after passing of the assessment order. Therefore, assessment order is illegal and bad in Law. The assessing officer was not in possession of the valid sanction/approval of Competent Authority before passing the assessment order. Learned Counsel for the Assessee submitted that the Tribunal can in fact call for production of the assessment record for itself to determine whether the satisfaction was received, before passing the assessment order by the Assessing Officer ? Reliance was pl....
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....ting prescribed procedure. It was, therefore, submitted that the said statutory function of granting sanction was exercised casually and not in a proper manner by due application of mind. Therefore, assessment order is null and void and liable to be quashed. 12. On the other hand, Learned Departmental Representative relied upon the orders of the authorities below and referred to PB-47 approval granted by Addl. CIT on 31st January 2014. She has submitted that the Addl. CIT, Chandigarh after going through the assessment record, correctly granted approval to the draft assessment order. She has submitted that Addl. CIT does not say that he has not gone through the material on record and also did not apply his mind before grant of approval in the matter. Ld. D.R, therefore, submitted that this ground of appeal of assessee may be dismissed. 13. We have considered the rival submissions. It is not in dispute that search and seizure action was taken in the case of the assessee on 30th January 2011. Therefore, assessing officer rightly proceeded against the assessee firm under section 153A of the Income Tax Act, 1961. The assessing officer also rightly passed the assessment....
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....sessee filed RTI application to the Revenue Department, copy of reply is filed at page 469 of the PB, in which it was explained that letter of the Assessing Officer, Faridabad dated 30th January 2014 was forwarded to the Addl. CIT, Chandigarh on 30th January 2014. No reply was given to assessee as to when the letter of the assessing officer was received by Addl. CIT, Chandigarh. It was also intimated that no such record is available in the office of Assessing Officer regarding mode by which assessment record along with the letter of the assessing officer dated 30th January 2014 were forwarded to the Addl. CIT, Chandigarh. No details/explanation were furnished as to on which date the assessment record was received by the Addl. CIT, Chandigarh. The assessee, on inspection of the record, intimated the assessing officer that no original approval under section 153D is available on record. Learned Counsel for the Assessee referred to PB 48, which is Fax message received on 5th February 2014, communicating the approval of Addl. CIT to the assessing officer. This Fax message is not legible. The Hon'ble Bombay High Court in the case of Pr. CIT vs. Smt. Shreelekha Damani (supra), held as und....
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....d that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid. 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks. 'To, The DCIT(OSD)-l Mumbai Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg. Ref : No. DCIT (OSD)-l/CR-7/Appr/2010-ll dt. 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analyze the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961." 7. In plain terms, the Additional CIT recorded that the d....
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....reply to RTI application, the assessing officer has reported that no record of mode of dispatch of assessment record to the Addl. CIT is available with the Assessing Officer. Similarly, no record is available as to how the draft order and assessment record have been received by Addl. CIT at Chandigarh. The Addl. CIT, Chandigarh did not mention in his approval dated 31st January 2014 (supra), if he has gone through the assessment record or that assessment record was produced before him. Since no details are available on record about the mode, through which, assessment record was transmitted by the assessing officer at Faridabad to Addl. CIT in Chandigarh and vice-versa by Addl. CIT, Chandigarh to Assessing Officer at Faridabad on the very next day would lead to suspicion, in explanation of A.O. if any, valid draft order was transmitted to the Addl. CIT within the time or if the Addl. CIT has communicated the approval under section 153D to the Assessing Officer at Faridabad on 31st January 2014. These facts would clearly show that the action of the Addl. CIT, Chandigarh granting approval in this case was, thus, a mere mechanical exercise, accepting the draft order as it is, without a....
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.... and order of approval u/s.153D of the Act dt.23.11.2017, which provides validity to the impugned Assessment order, the main question which arises for our consideration is whether the said Approval granted by the ld. Joint CIT u/s.153D of the Act vide his order dated 23.11.2017 can be held to be granted after due application of mind and can be held to be valid in the eye of law as per intention of the legislature and mandate of the provision of section 153D of the Act ? 22. Since we are adjudicating the controversy regarding validity of procedure and approval granted by the JCIT vide letter dated 23.11.2017, therefore, we find it necessary and appropriate to reproduce the relevant provisions of section 153D of the Act, which reads as under: "'153D. Prior approval necessary for assessment in cases of search or requisition.--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 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. Provid....
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....the approval goes to the root of the matter and could have been raised at any time and the Tribunal was justified in holding that there was no application of mind on the part of the authority granting approval and, therefore, approval was invalid. The relevant paras 4 & 5 of this judgment read as follows: " 4. This was not a case where no approval was granted at all. However, the Tribunal was of the opinion that the approval granted by the Additional Commissioner of Income Tax was without application of mind and, therefore, not a valid approval in the eye of law. The Tribunal reproduced the observations made by the Additional CIT while granting approval and came to the conclusion that the same suffered from lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record. 5. The learned Counsel for the Revenue submitted tha....
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....ranting approval. The Addl. CIT, Chandigarh has merely gone through the draft assessment order as per PB-47. Therefore, the contention of Learned Counsel for the Assessee is justified that the approval was granted in a most mechanical manner without application of mind and such approval was intimated to assessing officer only on 5th February 2014, after passing of the assessment order on 31st January 2014. The above decisions are clearly applicable to the facts and circumstances of the case. In view of the above discussion, we are of the view that no valid approval/sanction have been granted by the Addl. CIT, Chandigarh before passing the assessment order in the matter. The requirement of Section 153D of I.T. Act, 1961, are not satisfied in this case. We accordingly hold that entire assessment order is vitiated and is null and void. We, accordingly, set aside the orders of the authorities below and quash the assessment order in the matter. Resultantly all additions stand deleted. In the result, Ground No.1.3 of the appeal of Assessee is allowed. " 27. Furthermore, ITAT Cuttack Bench in the case of Geetarai Panda (supra) in paras 24 to 26 held that when the approving author....
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....le-1, Bhubaneswar Sub: Approval of the Assessment orders u/s 153D of the LT. Act, 1961 in respect to the cases of M/s Dillip Construction P Ltd- Reg Ref: Your letter no. ACIT/CC-l/BBSR/Report/2017-18/7 dated 17.11.2017 seeking approval of draft assessment orders u/s 153D Approval is hereby accorded as per the provisions of section 153D of the I.T. Act tor passing the assessment orders in respect to the following cases. Sl.No. Name of the assessee PAN A.Y. Total Assessed Income (Rs.) Section under which order passed 1. M/s. Dilip Construction P Ltd., AABCD1417E 2010-11 18,25,68,000/- u/s.153A/143(3) 2. 2011-12 14,96,41,388/- u/s.153A/143(3) 3. 2012-13 8,21,92,330/- u/s.153A/143(3) 4. 2013-14 10,07,78,950/- u/s.153A/143(3) 5. 2014-15 9,53,00,070/- u/s.153A/143(3) 6. 2015-16 16,51,32,390/- u/s.153A/143(3) 7. 2016-17 14,72,53,800/- u/s.143(3) Sd/- Joint Commissioner of Income Tax (Central), Bhubaneswar End: Record for the AY 2010-11 to 2016-17 (In Seven Folders) The approval granted in the case of Shilpa Seema Constru....
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....red to mention that he has perused the relevant assessment records and draft assessment orders for which he has granted approval u/s.153D of the Act as per the mandatory requirements of the said provisions of the Act. 31. Before we proceed, we find it appropriate to consider the contention of ld CIT DR wherein, he submitted that as per letter dated 19.12.2018, the JCIT, the approving authority had given approval for passing order u/s.153A r.w.s 143(3) in both the cases after satisfying himself with the draft assessment orders. This letter has been written to the JCIT (Central) by approving authority i.e. JCIT (BPU) pertaining to the office communication regarding additional ground of appeal, which are being adjudicated but in view of approval order dated 23.11.2017, thus we are inclined to accept the contention of ld A.R. that this submission of approving authority is mere an attempt to fill the gaps and procedural lacunas occurred in the procedure adopted by JCIT while granting approval under section 153D of the Act and, therefore, the contention of ld A.R. in this regard hold the field. 32. Similarly letter dated 4.1.2019 issued by JCIT (Central), Bhubaneswar to....
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....e authority enabling the AO to pass assessment or reassessment orders in the search cases, then, it is the duty of the approving authority to exercise such power by applying his judicious, vigilant and cautious efforts. We are of the view that the obligation on the approval granting authority is of two folds, one the one hand, he has to apply his mind to secure in-build for the department against any omission or negligence by the AO in taxing right income in the hands of right person in the right assessment year and on the other hand he is also responsible and duty bound to do justice with the taxpayer/assessee by granting protection against arbitrary or unjust or unsustainable exercise and decision by the AO crating baseless tax liability on the assessee and thus he has to discharge his duties as superior authority. Thus, granting approval u/s.153D of the Act is not merely an official formality but it is a supervisory act which requires proper application of administrative and judicial skill by the authority on the application of mind and this exercise should be discernible from the order of approval u/s.153D of the Act. 36. In our humble understanding the provisions of s....
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....d enquiry along with explanation, documentary evidence and other relevant material or information submitted by the assessee during search and assessment proceedings, the superior authority has to grant the approval u/s.153D of the Act for passing assessment/reassessment orders in the search cases. 38. Further, in our considered view, the approval u/s.153D of the Act cannot be treated as an official formality but the provision has been inserted by the legislature with some specific and useful purpose. It is apparent that the purpose behind enactment of the said provision in the Statute by the legislature are of two folds viz (i) before approval, the Sr. Authority will ensure that the assessee should be protected against undue or irrelevant addition & disallowances in the assessment and (ii) the approving granting authority will also ensure that proper enquiry or investigations are carried out by the Assessing Officer on all the relevant materials including material in hands of the department at the time of initiating search proceedings, material or documents found and seized during search operation and materials found and unearthed during post search investigations and enqu....
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....ders. The scope and issue agitated by the assessee by way of legal ground in the present case is not that of grant of hearing or representation to the assessee at the time of granting approval but the main grievance and legal objection of the assessee is that the approving authority has granted approval without application of mind and without looking into the seized materials and investigation report and draft assessment/ reassessment orders and this fact should be clearly discernible from the approval order and no other extraneous material/document can be seen in this regard. 40. In view of above, we are inclined to hold that if an approval has been granted by the approving authority in a mechanical manner without application of mind then the very purpose of obtaining of approval u/s.153D and mandate of enactment by the legislature will be defeated. In the present case, the approving authority, the ld JCIT got five days time but from the order of approval, we are unable to see any exercise by the approving authority and even in the approval orders (supra), he has not mentioned that the relevant appeal folders/files along with assessments/reassessment orders have been peru....
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....d vs., DCIT, Central Circle, Agra (supra) in which in paras 11 to 25 it was held as under : 11. Having held as above, the issue which now requires to be adjudicated is whether the Approval so granted in this case can be treated as valid in view of the mandate of the provisions of Sec. 153-D of the Act vis-a-vis the legislative intent of inserting the said section in the statute. Section 153-D read as under : "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 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. Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case maybe, is required to be passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12) of Section 144BA." 12. The legislative intent can be gathered from the CBDT Circular No. 3 of 2008, dated 12.3.2008 which read as under: "50. Assessment of search cases Orders of asses....
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....ection 153D of the Act should necessary reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. 14. In the above background of law and in the light of Order dated 27.03.2015 passed under section 153D of the Act, which gives legality to the impugned Assessment order, question which arises for our consideration is whether the said Approval granted by the Additional CIT, Central, Kanpur vide his order dated 27.03.2015 can be held to be granted after due application of mind and can be held to be valid in the eye of law? 15. To decide the above issue, order dated 27.03.2015 passed by the Additional CIT was again carefully perused. The contents of the Approval, as reproduced in Para 4, speak for itself loud and clear. The following inferences are inevitable from the bare reading of the said order. Draft Assessment orders were placed before the Additional CIT, Central, Kanpur on 27.03.2015 at 3.50 PM for the first time and soon on the same day it was granted. As clearly mentioned in the Approval under challenge, that prior to this date the case was never discussed with the authority grant....
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....n of mind by the ACIT before granting the approval. Consequently, we hold that the assessment orders made u/s 143(3) of the Act r.w.s 153A of the Act in the case of M/s Siddhbhumi Alloys Ltd. for Assessment Year 2006- 07 is bad in law and deserve to be annulled, thus, we ordered accordingly. Finally additional ground of appeal raised by the assessee by way of Rule 27 of the IT AT Rules in ITA No. 321/Lkw/2016 for the Assessment Year 2006-07 is allowed." 17. From the approval order dated 27.03.2015 of the Addl. CIT, we find that the Ld. AR has rightly pointed out that in the facts of case of AAP Paper Marketing Limited (supra) there may be some justification for the qualified approval in view of the fact that the limitation in that case was getting expired on the day when the draft assessment orders were put up before the Additional CIT, Central Circle, Kanpur for his approval. However, to the disadvantage of the revenue in the case on hands there can be no little justification for qualified approval as the proposal for approval was put up before the Additional CIT on 27.03.2015 at 3.50 PM and at the same time it was granted, without any application of mind on the pretext t....
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....kha Damani", (2019) 307 CTR (Bom.) 218 (APB-138- 139) wherein in Para-7 the Hon'ble High Court held as under : 7. In plain terms, the Addl. CIT recorded that the draft order for approval under s. 153D of the Act was submitted only on 31st Dec. 2010. Hence, there was not enough time left to analyze the issue of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Addl. CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is , therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statue does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Addl. CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher authority had granted the approval without consideration ....
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....ty will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by senior authority will also ensure that proper enquiry or investigations are carried out by the assessing authority. Thus, the above provision provides for mental application of a senior officer of the Department, which in turn, provides safeguard to both i.e., Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed by the Pune Benches of the Tribunal in the case of Akil Gulamali Somji vs. 1TO in ITA Nos. 455 to 458 (Pune) of 2010, order dt. 30th March, 2012, wherein it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. The Hon 'ble Bombay High Court in the case of CIT vs. Akil Gulamali Somji in IT Appeal (L) No. 1416 of 2012, order dt. 15th Jan., 2013 concurred with the view of the Tribunal that not following of the provisions of s. 153D of the Act will render the related order of assessment void. 25. In the instant case, we find that the supervisory authority ha....
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....approval from the competent authority. In this regard we are of the opinion that the Revenue is not entitled to second inning, for correction of its own mistake. Assessee cannot be made to run again for many more years for contesting the litigation. Hon'ble Supreme Court also in the case of Parashuram Pottery Works Co. Ltd. v. ITO 106 ITR 1 observed that "It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in jnind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity, (emphasis supplied) In view of these peculiarity of the facts we....
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....ed by the Authority below the rank of the Joint Commissioner, the provisions of the Act do not mandate that a fresh round of opportunity of hearing should Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another be given to the Assessee by such Authority, namely, Joint Commissioner also even for approving Draft Assessment Order." 4.1. Similarly, Gujrat High Court in the matter of Pr. CIT v. Sunrise Finlease P. Ltd. [2018] 89 taxmann.com 1 (Gujarat)Vin paragraph No. 9 -11 had held as under : 9. As regards proposed questions [B] and [C] viz., whether lack of approval under section 153D would invalidate the assessment order and was not a curable defect, it may be noted that section 153D of the Act mandates that 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 subsection (1) of section 153A or the assessment year referred to in clause (b) of subsection (1) of section 153B, except with the prior approval of the Joint Commissioner. In the present case, the assessment order has been passed by....
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....ent would stand vitiated in view of non-compliance of the provisions of section 153D of the Act. On this count also, therefore, the appeal, does not merit acceptance. 4.2. Similarly in the matter of Akil Gulamali Somji 20 taxmann.com 380 (Pune) Tribunal had held as under: "11. We have considered the above submissions and have gone through the decisions relied upon by the parties in view of orders of the authorities below and material available on record. The relevant facts are that during the course of search and seizure action on 29.7.2003 at the business and residential premises of Mr. Shriram Soni, certain documents belonging to the assessee were found and seized. Notice u/s. 153C was issued to the assessee and assessment u/s. 153C r.w.s. 144 have been framed for all the 4 A.Ys. under consideration. Before 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 prese....
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.... Municipal Board AIR 1965 SC 895 if object of the enactment will be benefited by holding the same directory, it will be construed as mandatory, whereas if by holding it mandatory, serious general inconvenience will be created to nascent persons without very much further object of enactment, the same will be construed as directory. But all these does not mean that language used is to be ignored, only that the prima facie inference of the intention of the legislature arising from the words used may be displaced by considering the nature of the enactment, its designed consequences flowing from alternative constructions. The wordings and language used in Sec. 153D of the Act and the heading "prior approval necessary for assessment in cases of search or requisition" under which, Sec. 153D has been 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-compl....
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....e fact that such approval has been obtained should also be mentioned in the body of the assessment order itself. " Chapter XIVB also deals with assessment of search cases. Sections 153A, 153B & 153 C have been introduced to Chapter XIV "procedure for assessment" w.e.f. 1.6.2003 by the Finance Act 2003 whereas Sec. 153 D has been inserted to the Chapter w.e.f 1.6.2007 by the Finance Act 2007. These provisions thus also deal with the assessment in case of search or requisition and when the assessment orders in the present case were passed the provisions laid down u/s. 153D were very much in operation. In the present case, assessments in question have been framed on 27.12.2007. 13. In the case of Mrs. Rataabai N.K. Dubhash (Supra), the difference between cancellation 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 a....
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....se of SPL's Siddharth Ltd. (Supra), before the Hon'ble Delhi High Court, the facts were that notice issued by the A.O u/s. 147 r.w.s 148 of the Act for re-opening the assessment for the A.Y. 2002-03 was set aside by the Tribunal on the ground that the requisite approval of Addl. Commissioner of Income Tax, wh ch is mandatorily required, was not taken. Since 4 years had elapsed from the end of the relevant A.Y, the A.O u/s. 151(1) of the Act was required to take approval of the competent authority. The Hon'ble Delhi High Court after discussing the issue in detail and the case laws cited before it has been pleased to approve the decision of Tribunal. In view of these decisions and the position of law provided u/s . 153D of the Act, we hold that the assessment 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. (Supra) the levy of penalty without affording a hearing to the assessee was ques....
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....the ITO. Here in the present case, as we have already discussed, and also cited the recent decision of Hon'ble jurisdictional Bombay High Court in the case of Mrs. Ratanbai N.K. Dubhah ( Supra) and of Hon'ble Delhi High Court in the case of SPL's Siddhartha Ltd. (Supra) that requirement u/s. 153 D for obtaining approval of JCIT is not procedural only but a mandatory requirement, hence the cited decision by the Ld. D.R is not applicable in the case of present assessee. Under above circumstances, the issue raised regarding the validity of assessment orders in question without obtaining prior approval u/s. 153D of the Act is decided in favour of the assessee. The assessment orders in question are thus quashed as null and void. Personal hearing to the Assessee before according the approval under section 153D 4.3 From perusal of the above decisions, it is categorically clear The assessee is not entitled to have personal hearing from JCIT before granting approval u/s. 153D, as the assessee had already been heard during the assessment/reassessment proceedings by the Assessing Officer and Therefore, we are in agreement with the submissions of....
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....ssment for the Block period shall be passed by the Assessing Officer without the previous approval of the Joint Commissioner in respect of a search initiated under section 132. The assessee contends that before granting previous approval under section 158BG for an order of assessment made under section 158BC, the Joint Commissioner should have given a hearing to the assessee. It is submitted that the power to grant previous approval under section 158BG is an amalgam of appellate and revisional power and therefore, the right to a hearing should be read into section 158BG. It is also contended that the Tribunal failed to consider this ground though specifically urged before it. 4.1 Chapter XIV-B contains a special procedure for assessment of search cases. Section 158BC prescribes the procedure for block assessment. Clause (c) of section 158BC enables the Assessing Officer, on determination of the undisclosed income of the block period, to pass an order of assessment and determine the tax payable by him on the basis of such assessment. Clause (b) requires he Assessing Officer to proceed in the manner laid down in section 158BB and the provisions of sec ion 142 subsections (2)....
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....isfaction. It is well-settled that any administrative actions based either on policy or on subjective assessment, if does not prejudicially affect any vested right or interest, need not be preceded by a hearing, unless the statute specifically provides for the same. Therefore, in the absence of any provision for opportunity of hearing in section 158BG, there is no need for the Joint Commissioner to give a hearing to the assessee before granting "previous approval" under section 158BG. The first question is, therefore, answered against the assessee. 4.6. The language used in section 153D and section158BG, are similar in nature and both prohibits passing of the assessment order or reassessment/block assessment without the prior approval of the officers mentioned in the said sections. The language used in these sections are in the mandatory form which prohibits passing of the order by the assessing officer without prior approval. Meaning thereby if an order is passed without any approval from the authorities mentioned in the respective sections then the order shall be bad in law and would be liable to be declared void being passed in contradiction to these provisions. Moreove....
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....Whether an administrative order which entail civil consequences/penal consequences/civil liabilities can be challenged before the tribunal if assessment order is premised on such administrative prior approval 4.8. In the above noted paragraph it is categorically mentioned that if the approval is lacking under section 153D granted by the superior authorities, then the assessment order is liable to be quashed being passed in violation of section 153D. However, if the approval is granted by the superior authority without looking into the material, without application of mind and merely relying upon the understanding of the assessing officer, then in that eventuality the said approval ceases to be approval in the eyes of law. In our view the approval as envisaged under section 153D of the Act is not empty formality and there is a rational and reason for mandating the approval before passing the assessment order under the Act. If it was merely a formality and the superior authority is not required to apply its mind then there was no reason to incorporate even for approval of the superior authority and it would not have been worded in the mandatory manner. Because the language u....
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....y 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 discretion 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." 4.12. Similarly, in the matter of Sahara India (Firm) vs. CIT, 169 taxman 329 and in paragraph 6 and 21-24 it was held 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(2....
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....the facts of the case. 21. In the light of the aforenoted legal position, we are in respectful agreement with the decision of this Court in Rajesh Kumar's case (supra) that an order under section 142(2A) does entail civil consequences. At this juncture, it would be relevant to take note of the insertion of proviso to section 142(2D) with effect from 1-6-2007. The proviso provides that the expenses of the auditor appointed in terms of the said provision shall, henceforth, be paid by the Central Government. In view of the said amendment, it can be argued that the main plank of the judgment in Rajesh Kumar's case (supra) to the effect that direction under section 142(2A) entails civil consequences because the assessee has to pay substantial fee to the special auditor is knocked off. True it is that the payment of auditor's fee is a major civil consequence, but it cannot be said to be the sole civil or evil consequence flowing from directions under section 142(2A). We are convinced that special audit has an altogether different connotation and implications from the audit under section 44AB. Unlike the compulsory audit under section 44AB, it is not limited to mere p....
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.... [1978] (1) SCC 248 and S.L. Kapoor v. Jagmohan AIR 1981 SC 136. As already noted above, the expression "civil consequences" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. Anything which affects a citizen in his civil life comes under its "wide umbrella. Accordingly, we reject the argument and hold that since an order under section 142(2A) does entail civil consequences, the rule audi alteram partem is required to be observed. 23. We are also unable to persuade ourselves to agree with the proposition canvassed by learned counsel for the revenue that since a post-decisional hearing in terms of sub-section (3) of section 142 is contemplated, the requirement of natural justice is fully met. Apart from the fact that ordinarily a post-decisional hearing is no substitute for pre-decisional hearing, even from the language of the said provision it is plain that the opportunity of being heard is only in respect of the material gathered on the basis of the audit report submitted under sub-section (2A) and not on the validity of the original order directing the special audit. It is well-settled....
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....umbai Bench in the case of Shri Amarlal Bajaj v. Asstt. CIT[2013] 37 taxmann.com 7/60 SOT 83 (URO) wherein at para-8, the Tribunal has considered the decision of the Honble Hígh Court of Delhi Bench in the case of United Electrical Co. (P.) Ltd. v. CIT[2002] 125 Taxman 775/258 ITR 317 (Delhi) which read as under: 'Hon'ble Delhi High Court in the case of United Electrical Co. Pvt. Ltd. v. CIT258 ITR 317 has held that "the proviso to subsection (1) of section151of the Act provides that after the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in builts safeguards to prevent arbitrary exercise of power by an Assessing Officer to fiddle with the completed assessment". The Hon'ble High Court further observed that "what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner h....
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....Karnataka in the case of Rishabchand Bhansali v. Dy. CIT[2004] 136 Taxman 579/267 ITR 577 and Hon'ble High Court of Madras in the case of Sakthivel Bankers v. Asstt. CIT [2002] 124 Taxman 227/255 ITR 144. 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 the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue." 4.14. In view of the above we are of the considered opinion if the approval is granted by the superior authorities for extraneous reasons, without application of mind or without looking into the record, then the approval loses its character of an approval in the eyes of law. Accordingly we have no hesitation in declaring that the approval granted by the higher authorities on 27 March 2014 is no approval in the eyes of law and accordingly the assessment made....
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....s relied upon by the learned departmental representative 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 without looking into seized material, investigation report, the draft assessment order etc can be sustainable in the eyes of law. We had already answered that such an approval is bad in law and cannot be sustained. 4.17 The last submission made by the learned departmental representative was that the matter may be sent back to the assessing officer to pass a fresh assessment order after seeking the approval from the competent authority. In this regard we are of the opinion that the revenue is not entitled to 2nd inning, in the matter as the non grant of approval/grant of approval in a mechanical manner takes out the direction of the assessing officer to pass the assessment order and the same cannot be rectified or improved by the revenue in the 2nd round of litigation. Undoubtedl....
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....ddressed by the DCIT, Central Circle, Dehradun to the Addl.CIT, Central Range, shows that such draft assessment orders were submitted for approval on 30th March, 2015. The relevant scanned copy of the same reads as under:- " F.No.: DCIT/CC/DDN/DFA/2014-15/ Office of the Dy. Commissioner of Income Tax, Central Circle, Dehradun Dated : 30.03.2015 To The Addl. Commissioner of Income Tax, Central Range, Meerut Sir, Subject: Submission of Draft Assessment Orders in DBIT Group of cases, Dehradun - Approval thereof - regarding Kindly refer to the subject cited above. 2. In this context, it is submitted that in compliance to your directions the Draft Assessment Orders in the following cases u/s 153A of the I T Act 1961 are being submitted for your kind perusal and necessary approval. Sl.No. Name of the assessee PAN Asstt. Years 1. Sh. Sanjay Bansal ACZPB9725A 2007-08 To 2013-2014 2. Uttarakhand Uthan samiti AAAAU1376N 2007-08 To 2013-2014 3. Wali Gram Udhyog sansthan AAAAW1501B 2007-08 To 2013-2014 ; 4. Shri Krishna Educational Trust AAATS 3624 C ....
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....Shri Krishna Educational Trust AAATS 3624 C 2007-08 To 2013-2014 u/s 153C Sl.No. Name of the assessee PAN Asstt. Years 01 Rama Gautam ADQPA8706L 2007-08 To 2013-2014 02 Mamta Dandriyal AYDPD5055F 2007-08 To 2013-2014 03 Gulzar Ahmed AFGPA7405Q 2007-08 To 2013-2014 04 Sohan lal kala AKMPK8071H 2007-08 To 2013-2014 05 Rishi Raj ANOPS3775M 2007-08 To 2013-2014 3. You are directed to pass necessary orders, as discussed/as amended in the drafts, in the above cases for all the relevant years. This office letter approving the draft orders shall invariably be quoted in the final order. A copy of final order passed in these cases shall be sent to this office for record. Further, proceedings are to be filed in the case of assessee when it was incorporated/was not in existence. 4. Record submitted in the cases of the above assesses are being returned. Sd/- (Anupam Kant Garg) Ends: as above. Addl. Commissioner of Income Tax Central Range, Meerut." 16. From the above, it is seen that the AO passed the draft assessment order on 30.03.2015 and submitted the same for approv....
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.... 17.1 We find identical issue had come up before the Delhi Bench of the Tribunal in the case of Rishabh Buildwell Pvt Ltd. (supra). The Tribunal, after considering the various decisions, quashed the assessment orders by observing as under :- " 11. We have heard the arguments of both the parties and gone through the record and documents filed before us. For ready reference the entire part of the letter of approval dated 30.12.2016 is reproduced as under: "Subject: Prior approval u/s 153 D in the cases of Cloud- 9 & Sethi Group- regarding. Please refer to your office letter F. No. DCIT/ CC/ GZB/ S&S/153D 2016- 17/2904, 2908 & 2911 dated 28-12- 2016 & 30-12-2016 on the above mentioned subject. 2. In the following cases of Cloud-9 & Sethi Group, prior approval u/s 153D of the IT Act, 1961 accorded for passing assessment orders in respect of the assesses for the assessment years as mentioned below: S. Name of the assessee PAN A.Yrs. No. 1 M/s Risabh Buildcon Pvt. Ltd. AACCR7502F 2009-10 to 2015-16 2 M/s R.G.V. Fininvest Pvt. Ltd. AAACR4383G 2009-10 to 2015-16 3 M/s Aggarwal Capfin Fin. Services P.Ltd. AA....
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....the above points, a copy of the final orders passed be sent to the JCIT. 13. The Income Tax Act envisages prior approval of the JCIT before passing the assessment order. The provisions read as under: "no order of assessment or reassessment shall be passed by the assessing officer below the rant of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of Section 153A or assessment year referred to in clause (b) of sub-section (1) of Section 153B except with the prior approval of Joint Commissioner." 14. When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. The Act envisages that the JCIT's approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or rework the order once the approval has been accorded. The approval to be given is statutory in nature and legally binding. In the instant case, the approving authority has clearly mentioned that the approval given is a technical approval. Moreov....
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....rom lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record. 5. The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid. 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks :- "To, The DCIT(OSD)-1 Mumbai Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 20....
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....ind, the Jodhpur Bench of the Tribunal in the case of Indra Bansal & Ors (supra) has observed as under :- "6.4. Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 22 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally require....
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....ntical to the facts of the appeal for A.Y. 2008-09, therefore, following similar reasonings the assessment orders for other years are also held to be null and void being not in accordance with law. Accordingly, these appeals filed by the assessee are also allowed." 11.13. The Order of ITAT, Delhi G-Bench, Delhi in the case of Rishabh Buildwell P. Ltd., New Delhi vs., DCIT, Central Circle, Ghaziabad (supra) in paras 8 to 16 has held as under : "8. We have heard the arguments and find that the issue is a purely legal issue pertaining to approval of assessment u/s 153D of the Act and hence being admitted. We rely on the judgment of the Hon'ble Supreme Court in the case of NTPC v. CIT (1998) 229 ITR 383 SC wherein it has explained that the power of the Tribunal in dealing with the appeals under Section 254 of the Act is " expressed in the widest possible terms". It was further observed as under: "5. .....The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it....
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....-12-2016 on the above mentioned subject. 2. In the following cases of Cloud-9 & Sethi Group, prior approval u/s 153D of the IT Act, 1961 accorded for passing assessment orders in respect of the assesses for the assessment years as mentioned below: S.No. Name of the assessee PAN A.Yrs. 1 M/s Risabh Buildcon Pvt. Ltd. AACCR7502F 2009-10 to 2015-16 2 M/s R.G.V. Fininvest Pvt. Ltd. AAACR4383G 2009-10 to 2015-16 3 M/s Aggarwal Capfin Financial Services P.Ltd. AABCA0925E 2009-10 to 2015-16 4 M/s Arihant Info Solutions P. Ltd. AADCA5015H 2009-10 to 2015-16 5 M/s Sethi Estate P. Ltd. AABCS7643B 2009-10 to 2015-16 6 Sh. Chander Mohan Sethi AASPS1246A 2009-10 to 2015-16 7 Sh. Gulshan Sethi AASPS1248Q 2009-10 to 2015-16 8 M/s East View Developers P. Ltd. AABCE5324R 2009-10 to 2015-16 9 Sh. Desh Bhushan Jain AAFPJ6467R 2009 10 to 2015-16 10 M/s Max City Developers Pvt. Ltd. AAECM5401A 2009-10 to 2015-16 11 Sh. Sanjeev Jain ACFPJ3817P 2009-10 to 2015-16 12 M/s Sethi Buildwell Pvt. Ltd. AAICS9/42C 2009-10 to 2015-16 13 Sh....
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....sions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. The Act envisages that the JCIT's approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or rework the order once the approval has been accorded. The approval to be given is statutory in nature and legally binding. In the instant case, the approving authority has clearly mentioned that the approval given is a technical approval. Moreover, he has directed the DCIT to ensure the seized materials and the findings of the appraisal report to be incorporated in the final assessment order. This clearly goes to proves that the approval given by the JCIT is not a final approval as required u/s 153D of the Act but a conditional approval subjected to modifications by the DCIT after receiving of the approval which makes it an invalid, qualified, uncertain approval. This is not the mandate of the Act. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. The approv....
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.... an error in holding that the same is invalid. 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks :- "To, The DCIT(OSD)-1 Mumbai Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg. Ref : No. DCIT (OSD)-1/CR- 7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analyze the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961." 7. In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st December, 2010. Hence, there was not....
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....to the same assessment year and its basis. The assessee has explained above that these cases are coming up because of the assessments framed in the case of M/s. JIL and others prior to the search in the case of assessee. Therefore, all material was within the knowledge of the Income Tax Authorities prior to the search in the cases of the assessees. Therefore, for granting approval under section 153D of the I.T. Act, the Approving Authority shall have to verify and consider each assessment year and shall have to apply independent mind to the material on record to see whether in each assessment year there are un-abated or abated assessments and their effect, if any. But, in the present case, the Approving Authority i.e., JCIT has granted common approval for all the assessment years in respect of the single assessee. Thus, there is no application of mind on the part of JCIT while granting approval for all the common years instead of granting approval under section 153D for each assessment years separately. 13. In the present cases various approvals were granted by the JCIT, Central Range-1, New Delhi, and forwarding letter of the A.O. are placed on record in all the cases. In all t....
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..... The A.O. has failed to consider the concept of real income for the purpose of determining the correct tax liability and correct determination of income of the assessees. We rely upon the Judgment of the Hon'ble Supreme Court in the case of Godhra Electricity Co. Ltd., 225 ITR 746 (SC). This fact is also not verified and considered by the JCIT while granting approval under section 153D of the I.T. Act. It may be noted here that entire sale proceeds when cannot be added in the hands of M/s JIL as income which is also not done in the case of M/s. JIL, rightly so, how the same sale proceeds could be added as income in the hands of assessees under section 68 of the I.T. Act is not understandable. Thus, the Approving Authority without application of mind and in a most mechanical and technical manner granted approval under section 153D even without reference to any reason in the Order under section 153D of the I.T. Act. We, even, otherwise failed to understand that in search cases how an approval can be granted to an assessment year which is required to be based only on incriminating material without verification of those material and its reference in the appraisal report. The JCIT even....
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....ot clarified whether assessment record is also seen by the JCIT. It may also be noted that even in some of the Talwar group of cases approval is granted prior to 30.12.2017 but in main cases of Shri Sanjay Duggal and Rajnish Talwar the approval is granted on 30.12.2017. Therefore, without granting approval in the main cases how the JCIT satisfied himself with the assessment orders in group cases which is also not explained. Therefore, the approval granted by the JCIT in all the cases are merely technical approval just to complete the formality and without application of mind as neither there was an examination of the seized documents and the relevance of various observations made by the Investigation Wing in appraisal report. Thus, we hold the approval under section 153D have been granted without application of mind and is invalid, bad in Law and is liable to be quashed. Since we have held that approval under section 153D is invalid and bad in law, therefore, A.O. cannot pass the assessment orders under section 153A of the I.T Act against all the assessees. Therefore, all assessment orders are vitiated for want of valid approval under section 153D of the I.T. Act and as such no add....
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....ding before the Tribunal for all these years. Learned Counsel for the Assessee, therefore, submitted that since assessee M/s. JIL is already in Departmental Appeal before the Tribunal, therefore, no direction be issued against the assessee as it may be prejudicial to the interests of the assessee. He has submitted that when the issue of rebate is already pending before the Tribunal and no seized material was found during the course of search, therefore, even such addition could not be made against the assessee. Thus, in these circumstances when assessee M/s. JIL is already in Departmental Appeal before the Tribunal, therefore, no direction under section 150 of the I.T. Act be issued against the assessee because the A.O. shall have to satisfy the requirements of Section 147 of the I.T. Act on assumption of jurisdiction in their case. He has relied upon several decisions in support of the contention that even if direction is issued under section 150 of the I.T. Act, the A.O. shall have to satisfy the requirement of Section 147 of the I.T. Act which cannot be done in the present case because the case of M/s. JIL is also connected with the search and as such no direction could be issue....