TaxTMI 
TaxTMI 
2021 (3) TMI 555
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....s not possible for him to go into deep. Therefore, the JCIT without going to the material available on record including the draft assessment order approved only for technical requirement u/s 153D of the Act. Referring to section 153D of the Act , the ld. representative for the assessee vehemently argued that unless the JCIT applies his mind to the material available on record and the draft assessment order as proposed by AO, it cannot be construed as approval as required u/s 153D of the Act. Placing reliance on the order of the Delhi Benches of this Tribunal in Sanjay Dungal & Others vs. M/s. ACIT in ITA No. 1813/Del/2019 & Ors. (copies of which available in the P.B). Submitted that approval of JCIT is not a mere formality or ritual. It is mandatory requirement of the statutory provision. 3. The ld. representative for the assessee further submitted that since the JCIT has not applied his mind to the facts of the matter and granted only a technical approval, the A.O. has no jurisdiction to pass the assessment order. Therefore, the entire assessment order as confirmed by the C.I.T.(A) is invalid, non-est and void, hence, the assessment order as confirmed by C.I.T.(A) cannot stand ....
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....(230 ITR 495), the ld. DR submitted that the power to determine the income vest in the authority exercising the quasi-judicial function. It is in violation of principle of quasi-judicial function that can render the assessment invalid. The Act of Administrative Approval by Additional C.I.T. does not take away the quasi-judicial powers which still vests in A.O. Therefore, even if there is some defect in the technical approval granted by the JCIT, the same may not invalidate the order of assessment. 6. We have carefully gone through the orders of both the authorities below in the light of the arguments advanced on both the sides and the material available on record. The issue of approval u/s 153D goes to the very root of the matter. For the purpose of convenience, the provision of section 153D is reproduced herewith. [SECTION 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 [sub-section (1) of section 153A] or the assessment year referred to in clause (....
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....respondence between the JCIT on the one hand and A.O. on other and also a letter written by JCIT to the Commissioner. OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-I, CR BUILDING, NAPIER TOWN. JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-11, JABALPUR, RANGE-SATNA, KATNS, CHTIINDWARA & SAGAR Tel: 0761-211637, 0701-2211670) F.No. JCIT/R-KATNI/Mittal Group/11-12/ Dated 21.12.2011 To The Assistant Commissioner of Income Tax, Circle, Katni (MP) Sub:- Approval of Draft Assessment order u/s 153A/ 143(3) in the ease of different assessees of Mittal Group, Katni...reg. Please refer to draft orders submitted by you in 14 cases till 19.12.201. After studying these draft ....
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....s figure is worked out in the appraisal report on the basis of some loose papers but you could not produce the particular seized paper on the basis of which these calculations have been made. Clearly this type of addition, where you yourself are not confident/supported by loose paper or proper identifiable document cannot be approved. Further, it is observed that assessee has produced so many evidences to prove the identity/existence and creditworthiness of the companies by providing their PAN, acknowledgement of I.T. return. balance sheet, confirmation, companies master data from site of Ministry of Corporate Affairs and other evidences in some cases other evidences like assessment orders, verification letters from the Income Tax Department and orders u/s. 143(3) in cases of companies of assessee group and investor companies. The assessee has also cited various case laws in his favour which are as under:- (i) CIT vs. Lovely Exports (P) Ltd.(SC)(2008) 216 CTR(SC) 195: (2008) 6 DTR(SC)308 (ii) ACIT vs. Venkateshwar ispat (P) Ltd. (HC of Chhattisgarh (2010, 41 DTR(Chhattisgarh) 350: (2009) 319 ITR 393 (iii)CIT vs. Steller Investment Ltd. (HC of Del....
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.... is found probable, no addition is required. You may also examine and brig on record the basis of addition on account of capital gain working adopting date of acquisition as 01.04.1981. (Iv) Issue related to sale of land having Dolomite mines through route of sale/ purchase of shares of the company. During discussion, this addition was lound to be totally baseless as assessee has already provided copies of accounts payee cheques, bank statements etc. to prove that amount has been received from Jaypee Group. You have not made any enquiries from Jaypee Group except sending a letter. In view of' evidence furnished by assessee, no addition appears to be justified. It is also observed that asses see has already declared capital gain on this transaction in his return u/s 139(1). (v) Excavation and local cartage charges. During discussion. this addition was also found to be totally baseless a assessee has already provided Copies of returns of contractors and other evidence to show that these contractors were working on the site and TDS was made on their payments. Regarding labour payment the evidence of agreement duly signed by Ass....
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....p; (By name Sub Approval of Draft assessment order u/s 153A/143(3) in the case of different Aassessees of Mittal Group Katni Regarding Ref. Your office letter no.JCIT/R-Katni/Mittal Group/11-12 dated 20.12.2011- addressed to CIT-I Jabalpur and copy endorsed to me & dated 21/12/2011 addressed to me and copy to CITI Jabalpur clarification regarding Please refer to the above. It may be clarified that till 20/12/2011 in 21 cases draft orders were submitted to your office. However, from the letter address to me, I am unable to understand it is whether approval under section 153D or directions to reframe the assessments. Please clarify assessee wise and assessment year wise. 2. As regard the addition in the case of Smt. Sarfa Mittal, one of the member of mittal family, it was clearly stated before your ....
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....is I want to say that the issue of Nippon is beyond the jurisdiction. As regards the Ankit & Novas, the draft order is yet to be finallred and the decision is still pending at my end due to the fact that on 20/12/2011 during the course of discussion, it was told to me that the matter is being referred to Dl(Inv) for clarification. Only on receipt of the clarification, the assessment order need to be finalized. It may further be stated that in the case of Ankit Tracom Pvt Ltd., the standing counsel had informed telephonically that passing of assessinent order is stayed. However, it was made clear that assessment order may be prepared and not to be released. 5. Investment in Jewellery and capital gain on sale of these Jewellery Items linked to land purchased by the assessee in the name of Shri Kale- First of all, I may made it clear that the capital gain on sale of jewellery was made on account of purity of gold l.e. the gold jewellery purchased/possessed having purity of 79.96 and when it was sold, the purity was around 90. Some of the Jewellery was claimed to have been acquired by gift from various family members. In spite of repeated opportunities given,....
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....ear, whether the assessment orders submitted to your office was approved or otherwise under sec. 153D or the instructions are under sec. 144A. 9 As per the appraisal report the proposed additions were more than 125 crores and if there is major deviation from such proposal, as per instructions of the Board, deviation report should be famished to the Investigation wing. From your above referred letter, It is not clear, whether any deviation report was furnished to the Investigation wing or not. This may also be made clear to me so that with the short time span, I could complete the search & seizure assessments, 9. It may be made clear that recently my sister in law (Bhabhl) expired on 21 Dec 2011 and due to these time barring cases, I could not even see her during her alling time or otherwise to attend the funeral which was held on 22/12/2011. At the same time, my mother was already a paralytic patient and recently suffered a second paralytic attack, 10. It may further be stated here that the valuation reports In the cases of Shri Vijay Kumar Mitital, MP Minerals and Mittal Roadways were received recently, and the assesee was given an opportunity t....
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.... 1. Share capital in various group companies of Mittal Group It is observed that some companies have subscribed to the share capital of group companies of Mittal Groups. This capital contribution by the Subject to verification by the investigation wing and it was opined by it that this was introduction of undeclared income by the Mittals in their group companies in the name of these companies. In appraisal report, year-Wise introduction of capital in the name of various companies of Mittal family has been worked out, which is the basis of proposed additions in different years in the cases of family members of Mittal group. The A0 is of the view that these transactions are sham transactions as some of the papers related to transfer of shares found in the possession of Mittal family blank and in all probability these shares were held by the family members of Mittal family in the period of 2000-2005 and were purported to have been transferred to these bogus companies and later on in the period of 2005-2010 they were again purchased by the family members of Mittal family. In fact, these were never transferred / subscribed by these bogus companies. The AO is relying on t....
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.... subscription of shares by them through banking channels. However, you honors kind directions are solicited as this issue are common in most of the companies of Mittal Group as well as family members of Mittal Groups. 2. Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon It is observed that FDRs amounting Rs. 66 crores approximately were found in the premises of the assessee during search. Initially, during search these were listed but no impounding of them was made. Later, it is claimed by the assessee that the department has attached these FDRs. The source of investment in these FDR has been treated as unexplained in appraisal report, which is the basis of AOs addition on this point However, it is claimed by the assessee that these FDRs were made out of liquidation of companies' investments with various companies, in which the assessee has subscribed shares sometime back. The version of assessee is that these companies were having investment mostly in shares of some other companies and some minor other investments, which were not profitable investment and those companies were not having sufficient profits. However, as soon as assessee stepped-in, these co....
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.... of these jewelleries taking purchase value as on 01.04.1981, while these jewelries were purchased after taking withdrawal from land transactions related to Shri Kale. No positive evidence regarding this has been brought on record either by the AO. 4. Issue related to sale of a company having Dolomite mines through route of sale / purchase of shares of the company. The one of the company of the assessee was owner of land having Dolomite mines, which was subject matter of sale to Jaypee Group. The assessee chose the route of sale through transfer of shares of the owner company. In this transaction, the amount of capital gain received was partly invested in REC bonds to avail benefits of Section 54EC and remaining amount was offered for taxation. The assessee has shown photo-copies of cheques and MOU reached between assessee and Jaypee Group, which were impounded also during search proceedings. The AO is of the view that this transaction is a shani transaction as it is unbelievable that the share of company would be sold at the value of 56 times of face value. Further, he found that although amount of consideration is shown to be received by cheque but no b....
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....g excavation work. On the face of these documentary evidences regarding these contractors who have received payments from the assessee after TDS and who have also filed their returns in the Income Tax Department, the claim of the assessee appears to be proper and no disallowance of expenses on the basis of statement can be made. Regarding expenses of local carting, the assessee has produced evidence in the form of truck numbers, payment vouchers, registration book of trucks, details of payments etc. The list of payments was found at the premises of the assessee during search. 6. Purchase of lands. The additions have been proposed by the AO, on the presumption that the assessee has paid some extra money over and above the value declared in sale deed without bringing any evidence on record to support his addition. The assessee has explained that during search no any lose paper or any other evidence has been found to reach any such conclusion regarding excess payment over and above the amount in the books accounts, The contention of the assessee appears to be correct. Yours faithfully (Abhishek Shukla) Joint Commissioner of Income Tax, R....
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....ers is 31/12/2011. Hence you are requested to issue clear directions in each and every case assessment year wise. Yours Sincerely, Date: 22/12/2011 (Sanjay Kumar) ACIT-Katni OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX RANGE-1, CR BUILDING, NAPIER TOWN, JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-II, JABALPUR RANGE-SATNA, KATNI, CHHINDWARA AND SAGAR F.No.JCIT/Range/Katni/Mittail/2011-12 Dated: 26.12.2011 To The Asstt. Commissioner of Income Tax, Circle, Katni Sub: Statutory approval of Draft Assessment order u/s 153D in the cases of different assesses of Mittal Group, Katni- Reg. Please refer to your letter No.ACIT/KTE/MITTAL/153D/11-12 dated 26th December, 2011 forwarding therew....
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....irregularity in the assessment proceeding. Moreover, even if the matter is remitted back, the AO cannot do anything better, since time limit provided under the Act has already expired. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below were set-aside and the entire assessment order as confirmed by C.I.T.(A) are quashed. 14. In the result, appeal of the revenue is dismissed and C.O. of the assessee stands allowed. Order pronounced in the open court on 04.03. 2021. (As per my separate, assent order) (Sd/-) Sd/- (Sanjay Arora) (N.R.S.Ganesan) Accountant Member Judicial Member Dated:04 /03/2021 In Re: Mittal Roadways (P.) Ltd. (IT(SS)A No. 143/Jab/2014 & CO 64/Jab/2014) 1. I have perused the Order proposed by my ld. brother, JM, and am principally in agreement therewith in that the impugned assessments fail for want of the necessary approval u/s. 153D. My reasons for the same take a different trajectory and, accordingly, are being stated per a separate, assent order, which is to be read in conjunction with the said order. 2. The appeal raises the issue of....
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....e wonders, could he do so, i.e., in law, being obliged thereby to, and even as required of him by the AO vide his letter dated 22/12/2011, either agree with the draft assessment order or advise necessary changes therein before according his approval. This is as the law contemplates an order of assessment or reassessment only upon his approval and, of course, within the time prescribed therefor. That his directions to the AO in the matter were not in clear terms and, besides, did raise concerns, not addressed, is the substance of AO's letter dated 22/12/2011 to the Jt. CIT. The assessment order as passed - the said non-approval being manifest from the order granting 'approval', can therefore only be regarded as not bearing his approval. 3. It was vehemently argued before us on behalf of the Revenue that the approval cannot be regarded as invalid only for want of the approving authority having, as clearly stated therein, not gone into 'depth', i.e., as much as he would have otherwise, i.e., without the time constraint, preferred to, that being itself a subjective matter, which would vary from person to person. Rather, as the communications exchanged between the two authorities wou....
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....partment, is imperative and cannot be over-emphasized. It appears that inasmuch as no pre-decisional hearing to the assessees, as in ss. 144A/144B, has been provided in section 153D, its primary purpose is to improve the quality of the assessments in search and search-related cases. This perhaps also explains the absolute bar on the issue of an order of assessment/reassessment without prior approval by the Range head in such cases. Where, therefore, the approving authority states of being constrained for time to go into the depth of the matter, it only indicates his non-satisfaction with the draft order. That this nonsatisfaction obtains despite his examination of the various aspects of the assessment/s makes it all the more relevant. The same results from his application of mind and not otherwise. At the same time, he using the same phrase in all the 'approvals', given at the same time, it could - and as it appears, that while he had gone into some depth in some cases, though not satisfied therewith, he might not have in others and, overwhelmed by the volume of work involved in the short span of time available, recused himself - so to speak, by issuing 'technical' approvals. Eithe....
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....ry ingredient toward this. Sufficiency of reason/s, which falls within the realm of the subjective satisfaction of the AO, cannot be gone into. Further, even this the Court does, not to review the manner of the exercise of the power of reassessment per se, but only to see as to whether the requirement of law, providing a condition precedent for the exercise of the said power, has been met or not. In the instant case/s as well, it would be a different matter where the Jt. CIT had issued some direction/s to the AO, subject to and on the basis of which he accords his approval. It will not, in that case, be open for an appellate court to review the same or sit in judgment thereon. No criterion for 'approval', except of course his satisfaction with the draft order, which is in fact implicit - as otherwise the exercise (of approval) itself would be rendered meaningless, has been provided by the statute. The requisite of 'due application of mind' is also toward this satisfaction inasmuch as there could be circumstances, as indeed have been found by the Appellate Courts, as in Tarachand Khatri v. Asst. CIT (in ITA No. 21/Jab/2019, dated 17/01/2020), of there being in fact no satisfaction i....
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....on the decision of the Privy Council in Montreal Street Railway Co. vs. Normandin (1917) A.C. 170 where it was observed as follows: ".....The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes, 5th Edn. p. 596 and following pages. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done." The principle of the Privy Council case was also applied by the Federal Court in Biswanath Khemka vs. King Emperor [1945] F.C.R. 99 and there, as pointed out by this Court, the ....
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....g on section 6 of the General Clauses Act, 1897, the Apex Court held as under: (pgs. 423-425) ' The question is whether the notices which were issued were rendered void by the operation of this proviso. The Commissioner contends that section 6 of the General Clauses Act, particularly cls. (b) and (c), saved the assessments as well as the notices. He relies upon a decision of the Privy Council in John Lemm vs. Mitchell [1912] A.C. 400, Eyre vs. Wynn-Mackenzie [1896] 1 Ch. 135 and Butcher vs. Henderson [1868] LR 3 QBD 335 in support of his proposition. The last two cases have no bearing upon this matter, but strong reliance is placed upon the Privy Council case. In that case, the earlier action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation, had already ended in favour of the defendant and no appeal therefrom was pending, and it was held that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the same act, unless the statute expressly and by definite words gave him that right. The Privy Co....
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....ursuance of an invalid such notice being void and illegal, and the assessments, in consequence, without jurisdiction, which is under question in the instant case. The 'approval' u/s. 153D, as aforenoted, is primarily towards safeguarding the interest of the Revenue in search and search-related cases, giving it a mandatory status. It thus becomes as much integral to the procedure for assessment as is the issue of the notice for reassessment. And, further, in discharge of his quasijudicial functions by the Jt. CIT who, as the Range head, has been for the purpose allowed the requisite powers (see ss. 2(7A), 120(4),124(5), 131, 132, 133). There is, thus, no inconsistency between section 153D, the scope of which has been found as toward improving that quality of the assessments by providing for internal review by the supervisory head (refer para 3), and the powers and duties of the Jt. CIT under the Act. The assessment order/s in the instant case, passed in breach of the qualifying, mandatory condition of its passing, i.e., an approval u/s. 153D, is an invalid order/s, to which no cognizance in law can be given. The plea of the 'approval' thereunder being an 'administrative approval/act....