TaxTMI 
TaxTMI 
2021 (4) TMI 476
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.... and the Revenue clarified that the facts and material are same as in the other cases decided by this Tribunal, therefore, both side no objection to follow the earlier order of this Tribunal. 3. We have also carefully gone through the material available on record including the approval said to be granted by Joint Commissioner u/s. 153D of the Act. We find that the issue arises of consideration in this appeal was already decided by this Bench of this Tribunal in IT(SS) No.143/Jab/2014 by order dated 04.03.2021 and other group cases. For the purpose of convenience, we are reproducing the order of this Tribunal dated 04.03.2021, which reads as follows: 2. Shri Dhiraj Ghai, the ld. representative for assessee submitted that the first ground taken by him is with regard to approval by the JCIT as required under section 153D of the Income Tax Act, 1961 ( 'the Act' hereinafter). According to ld. representative for the assessee, no assessment order shall be passed unless it is approved by the JCIT. Referring to Paper Book, the ld. representative for the assessee submitted that the JCIT in categorically terms says that due to shortage of time as he was holding charges of six rang....
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....rrespondence between the JCIT and the A.O. Referring to the copy of the letter addressed to the A.O. by the JCIT, the ld. DR submitted that there were discussions between the A.O. and the JCIT, therefore, it cannot be said that there was no application of mind. The A.O. also has responded to the letter of the JCIT dated 21.12.2011 by this letter dated 22.12.2011. The assessee was also invited for the discussion along with the A.O. in the chambers of the JCIT. The JCIT has also written a letter to the Commissioner on 20.12.2011 in order to take the Commissioner into confidence. The A.O also by his letter dated 26.12.2011 reminded the JCIT to give approval at the earliest opportunities, since, the assessment is getting time barred. 5. The ld. DR placed her reliance on the judgment of the Supreme Court in C.I.T. vs. Jai Prakash Singh (219 ITR 737) and submitted that charging sections fix the liability to tax and any violation of machinery provision will not render the assessment order void. Once the superior authority agreed to the finding of the lower authorities then it is not necessary to record reasons for so agreeing. Referring to the judgment of the Bombay High Court in....
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....urt relate to service of notice on the legal heirs of deceased assessee. It is not a case of approval as required by statutory provision. Therefore, the Judgment of the Apex Court is not applicable to the facts of this case. 9. We have also gone through the judgment of the Bombay High Court in Mrs. Ratanbai N.K. Dubash (supra). In this case, the AO passed the order without obtaining direction from Inspecting assisting Commissioner. Hence, the assessment was annulled. This judgment of the Bombay High Court in fact supported the case of the assessee. Moreover, this Bench of the Tribunal in Tarachand Khatri (supra) has found that on identical circumstances, there was no approval u/s. 153D of the Act. One of us Accountant Member is party to the order. 10. Now, let us examine whether the JCIT granted approval for passing the assessment order. Under the scheme of the Act, u/s. 153D, the Commissioner has no role to play. It is not known, why the JCIT intended to take the Commissioner into confidence by addressing a letter to him. The Commissioner has all the powers u/s. 263 of the Act, in case, he/she is satisfied that the assessment order is erroneous or prejudicial to ....
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.... Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon (iii) Investment in Jewellery and capital gain on sale of these jewellery items linked to land purchased by the assessee in the name of on Shri Kale (iv) Issue related to sale of land having Dolomite mines through route of sale purchase of shares of the company. (v) Excavation and local cartage charges. In this meeting, all the points of addition and replies of the essence were discussed in length and you were directed to proceed as per line of action laid down in the discussion. For your convenience and clarity of action to be taken the main point are discussed here below:- i. Share capital in various group companies of Mittal Group: Without reproducing the contents of the note, it is to observe that you have not given any basis for including some part of share capital in the hands of family members of assessee. The specimen case was of Smt. Sarla Mittal for A.Y. 2004-05 in which the proposed addition of Rs. 1,3,00,000/- could not be explained by you. You were specifically asked by hon'ble CIT to explain how this working has been done and what is the basis of arriving at thi....
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....ollowing Hon'ble apex court judgment and other High court judgment. In case you wish to differ on this matter, you may put up your view point before undersigned. (ii) Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon. In this matter also, detailed discussion was made and Hon'ble CIT, has clearly indicated that you should examine whether any investments in purchase of share of these companies/liquidation of investments of these companies has been made by the assessee in cash. Wherever any such investment is found. it should be properly examined and may be considered for additions as undisclosed investment of these companies (iii) Investment in Jewellery and capital gain on sale of these jewellery items linked to land purchased by the assessee in the name of on Shri Kale On this issue, during discussion, il was found that assessee has already surrendered the amount of cash investment in the said land. Later on. the assessee paid to Shri Kale by cheque and got witthdrawn the same amount in cash as per copy of bank account furnished. It is also found that this cash was available with the assessee and he may have utilized it f....
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....d, which are duly recorded by the assessee. d. Cash deposits in savings banks accounts, which are duly recorded by the assessee. e. Interest on loans taken against FDRs, which are duly recorded by the assessee. Further your may also verify correct value to be adopted for sale of property in in the case of Shri Pawan Kuamr Mittal (HUF). On the other issues, which may come across in other draft orders, instructions will be issued separately. Copy of note addressed to Hon'ble C.I.T. is enclosed. (Abhishek Shukla) Joint Commissioner of Income Tax Range-Katni Shri C.R. Mittal & Sons (HUF). IT(SS) A No. 100 Jab 2014 10 Copy to: The Commissioner of Income Tax-1, Jabalpur with reference to discussion made. With your honor in this connection. Joint Commissioner of Income Tax, Range-Katni. Office of the Assistant Commissioner of income tax Circle Katni, Katni(MP) F.No ACIT TE/M /1530 approval/ Camp- Jabalpur, dated the 22 Dece: 2011 To, The Joint Commissioner of income tax, Range Katni Jabalpur, Sir, (By name Sub Approval of Draft assessment order u/s 153A/143(3) in the....
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....ons are to be made or otherwise. It may be mentioned here that on this issue, during the personal discussion, your honour had advised me to refer the decision of the ITAT Indore in the case of Agrawal Coal Corporation wherein the case laws suggested by the assessee and also in the present letter you had quoted have been elaborately discussed and held that merely filing of PAN, copy of return, profit and loss account is not sufficient. In view of your advise, and Following the decision of ITAT Indore bench, such additions were made. 4. Another point raised is Fixed deposit Receipts in the cases of Ankit/Novas/Nippon. It may be clarified that the case of Nippon is neither assessed at Katni nor where it is being assessed has given by Mittal. As regards this 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....
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....is wrong, please clarify. 6. Issue related to sale of land having Dolomite mines though routes of sale/purchase of shares of the company. In my knowledge, no such issue had came to any of the draft assessment orders submitted to you. It appears that all the above issues are raised by your honour as per the version of Mr. Lalit Mittal and Shri RN Mittal, CA. 7. Similar is the position regarding Excavation and cartage charges- the matter relates to unaccounted purchases and non debiting of expenses based on various seized documents, statements of various employees at the time of search and post search enquirles. The addition was made on account of unaccounted transactions. 8. From the perusal of the letter dated 21/12/2011, it is not clear, 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 n....
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....t is to submit that ACIT, Circle Katni, Shri Sanjay Kumar has submitted draft assessment orders in the cases of some assessees belonging to the Mittal Group, in which search was conducted by the department and block assessments orders u/s 153A / 153(3) are to be passed by 31.12.2011. It is further submit that these draft orders for companies and some other assessee of this group are yet to be submitted for perusal of this office. Due to paucity of time available and large number of assessments pending in this Range and other Ranges, it was thought fit to discuss the issues involved in each draft assessment order with the assessee and the AO and simultaneously refer to appraisal report so that a proper and balanced view or the issues may be taken in shortest possible time. The major issues crystallized are presented below for your kind consideration and necessary directions. 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 ....
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....re capital subscription has been verified by the then AO viz ACIT, Katni. The assessee has also brought on record some letters of verification issued by the Assessing Officers of Investor companies, which were received by the assessee in past. From the website of ROC, the assessee has drawn latest status of some of these investors companies to show that these companies are live companies and in some cases they are listed companies also. The Assessee also claims that some of the letters issued by the AO for confirmation have been duly responded by the said companies. In some other cases, the report from local income tax department at Kolkata and New Delhi have been received. In my view, the presumption of these investors companies being bogus companies is not established. On the other hand, the assessee has proved beyond doubt the existence of these companies and the fact of 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 ob....
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.... the payment was made in cash. Later, the assessee got the land in his name by paying sale consideration by cheque to Shri Kale and getting back withdrawal of the same amount from his bank account in cash. Assessee states that the some of the jewelleries found from the members of family, or sold by them, are purchased from the amount of this cash withdrawal available with the assessee. However, assessee has not been able to directly link this amount with the purchase of jewellery as no purchase bills are available with the assessee. It is claimed by the assessee that these jewelleries were already in the WT return of these lady members. As per finding of the appraisal report, the AO has proposed investment in these jewelries to be made from undeclared income of the assessee. The assessee has further raised objection to long-term capital gain calculation on the sale 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 Do....
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.... of M P State Mining Corporation. This corporation is co-owner of the company, which is managing the excavation work at site. It is stated by the assessee that excavation work is independently managed and supervised by the assessee at site. It is further explained that this mine was managed directly by this corporation and from December, 2006, it has been let out to the assessee on commission basis with understanding that existing employees and labours of corporation working at this mine will be retained by the assessee. It is claimed by the assessee by producing an affidavit of Shri Burman that he is not well educated and could not understand the contents of the statement stated to be signed by him during his examination in the Investigation Wing, Apart from this affidavit, the assessee is supported by copies of returns filed by these contractors supplying labours and doing 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 ....
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....n has been made. If so, please provide me the copy of minutes recorded of this consultation with the Investigation Wing. 3. You are aware that as an assessing officer in this case, I have examined each and every document along with the submission and gone through all the aspects of the cases and the findings are based on concrete evidence gathered by me during the course of assessment proceedings and as gathered by investigating wing during search and seizure proceedings. 4. The copy of directions addressed by you to me is without any DAK number and the photocopy of some original letter, which has not been received by me till now. It is requested your honor to provide me original copy of the same. 5. Since the directions are not clear I am withholding the passing of assessment orders till the specific directions are received. I would also like to mention that the time barring date in said assessment orders 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 ....
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.... his mind even though there was a discussion between the A.O. and JCIT, the JCIT could not make his mind. Hence, this kind of casual approval/technical approval without going to the matter and without applying his mind to the material available on record is not an approval at all. Therefore, A.O. has no jurisdiction to pass the assessment order. In other words, the assessment order passed by A.O. as confirmed by C.I.T.(A) is void, nullity, non-est, hence, cannot be stand in the eye of law. 13. An irregularity in the assessment order may be rectified by remitting back the matter to the assessment. In the case on hand it is not an irregularity in the assessment order, it is a jurisdictional error. The A.O. has no jurisdiction to pass the assessment order unless the JCIT granted approval. This Tribunal is of the considered opinion that this is not a rectifiable error since it is a jurisdictional error and not an 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 autho....
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....f each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner. (emphasis, supplied) The operative part of the approval letter afore-referred reads as under: 'Due to shortage of time, as holding charge of six ranges, it is not possible for me to go into the deep, therefore, the draft assessment orders in the following cases submitted by you are hereby approved u/s. 153D as per technical requirement. Case records as received are returned herewith.' (emphasis, supplied) The facts and circumstances leading to the said 'approval' have been discussed in detail, reproducing the communications exchanged between the Jt. CIT, the approving/competent authority, and the Assistant Commissioner, Katni ('Asst. CIT' for short), the Assessing Officer (AO), in the order by my ld. brother. The same cannot, by any score, be regarded as a valid approval. It is not a case of non-application of mind, a question of fact, as the ld. counsel for the assessee, Shri Ghai, would contend ....
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....ertion has been elaborated in Board Circular 3/2008, dated 12.3.2008. It states of the law providing thus for an approval of an assessment in cases where search has been conducted or requisition made. Not much guidance also flows from the Notes on Clauses explaining the statutory change; the sections 153A to 153C having been inserted on the statute-book by Finance Act, 2003, w.e.f. 01/4/2003. A review of the provisions of section 144A and, since omitted, section 144B, reveal them, and even as explained by the Hon'ble Courts, to be designed to provide a pre-assessment review and a forum to an assessee to know the merits of the proposed assessment order before the actual assessment is made and he saddled with a pecuniary liability resulting from it. The object appears to be to avoid multiplicity of proceedings and to reduce the area of dispute between the assessees and the Department and also to provide for a check and balance against arbitrary assessments causing unnecessary harassment, which could otherwise be avoided [Bhagwat Prasad v. CIT [1998] 232 ITR 480 (All)]. The Board Circulars issued qua the said sections have also explained the same to be an attempt to improve the qualit....
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...., as apparent, to meet, in the given facts and circumstances of the case, the technical requirement of 'approval'! It is also not open for this Tribunal to travel beyond the express statement by the competent authority in the 'approval letter', and to, upon a review of the correspondence exchanged (including the material referred to therein) between the Revenue authorities, form an opinion as to whether the approving authority ought to have been, or been not, satisfied. It is his, and his satisfaction alone that is relevant, and doing so would be to intrude upon and usurp his supervisory power and duty with regard to assessment, framing of which is the prerogative of the Revenue. It is equally impermissible to question the bona fides of the approval as given or the truthfulness of what is stated in the 'approval' letter or indeed in the AO's letter dated 22/12/2011 (supra) seeking clarifications. 4. The question of due application of mind, which is often raised by and on behalf of the assessees in such-like situations, as indeed was in the instant case, it may be clarified here, arises for review only from the limited stand-point of whether the condition/s of the section o....
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....es next for consideration is the legal consequence of such an approval, i.e., which cannot be regarded as one in the eyes of law. Without doubt, there has been thus, in fact, non-compliance of section 153D of the Act. The provision, cast in negative terms, coupled with the use of word 'shall', clarifies a mandatory intent, law on which is well-settled (see: Montreal Street Railway Co. v. Normadin [1917] A.C. 170, relied upon and applied in, to cite some, Hazari Mal Kathulia v. ITO [1961] 41 ITR 12 (SC) and Bhakta Vedanta Swami Charitable Trust vs. CIT (in WP(C) 12347/2005, dated 09/5/2006 (Orissa)). 5.1 An issue that came up in this regard during hearing was of the 'approval' being an 'administrative approval', lack of which may therefore not be fatal to the assessment. It may be necessary to clarify this aspect as want of administrative action, even as clarified in State of UP v. ManbodhanLal Srivastava [1958] SCR 533 and K.S. Srinivasan v. UoI [1958] SCR 1295, 1321, noted with approval in Hazari Mal Kathulia (supra), may not affect the validity of the acts done. In the facts of the latter case, the Commissioner had failed to consult the Central Board of Revenue, which he....
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....tory and its neglect, as of no consequence to the result. In view of what has been said in these cases, the failure to consult the Central Board of Revenue does not destroy the effectiveness of the order passed by the CIT, however wrong it might be from the administrative point of view. The power which the CIT had, was entrusted to him, and there was only a duty to consult the Central Board of Revenue. The failure to conform to the duty did not rob the CIT of the power which he exercised, and the exercise of the power cannot, therefore, be questioned by the assessee on the ground of failure to consult the Central Board of Revenue, provision regarding which must be regarded as laying down administrative control and as being directory.' 5.2 The issue, nevertheless, is not res integra; the decision in CIT vs. Maharaja Pratap Singh Bahadur of Gidhaur [1961] 41 ITR 421 (SC), among others, being on the point. In the facts of that case, reassessment notices u/s. 34 (corresponding to section 148(1) of the Act) were issued by the AO without observing the procedure prescribed therefor. The notices were issued on August 8, 1948 without recording the reasons for doing so and putting t....
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....or affect any right, obligation or liability acquired, accrued or incurred under any enactment so repealed. It further provides that any legal proceedings may be continued or enforced as if the repealing Act had not been passed. Now, if the amending Act had repealed the original section 34, and merely enacted a new section in its place, the repeal might not have affected the operation of the original section by virtue of section 6. But the amending Act goes further than this. It repeals the original section 34, not from the day on which the Act received the assent of the Governor-General but from a stated day, viz., March 30, 1948, and substitutes in its place another section containing the proviso abovementioned. The amending Act provides that the amending section shall be deemed to have come into force on March 30, 1948, and thus by this retrospectivity, indicates a different intention which excludes the application of section 6. It is to be noticed that the notices were all issued on August 8, 1948, when on the statute book must be deemed to be existing an enactment enjoining a duty upon the Income Tax Officer to obtain prior approval of the Commissioner, and unless that approva....
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....er only follow the directions by the latter, which he cannot vary or depart from. His acceptance of the revised return by the assessee thereafter, even though furnished within the time period stipulated by law therefor, was accordingly disapproved by the Hon'ble Court, explaining that the provision of sec. 139(5) for furnishing a revised return is to be understood and construed in a reasonable manner. Sure, time permitting, it is open for the AO to, as in Maharaja Pratap Singh Bahadur (supra), seek fresh approval (u/s. 153D), and issue an assessment order - marking the culmination of the process of framing the assessment. This is, again, for the same reason; an order passed without a valid approval being of no consequence in law. Reference in this regard may also be made to CIT v. Ratanbai N.K. Dubhash [1998] 230 ITR 495 (Bom). There is however no gainsaying that the time constraint, as stated in the 'approval' itself, is the reason for its grant in the manner it has, so that this aspect becomes, even as in Maharaja Pratap Singh Bahadur (supra), academic. In fact, this fact itself, i.e., the grant of approval so as to circumvent the time limitation for assessment, is itsel....
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.... Accountant Member 4. For the purpose of convenience, we are reproducing the so called approval said to be granted by Joint Commissioner of Income Tax in this case which is available at Page No. 184 of the P.B : "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 i....