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2021 (6) TMI 416
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....ned assessment order passed u/s. 153A deserves to be quashed since the statutory and mandatory approval as required u/s. 153D has not been obtained and the approval sought and granted was totally mechanical and ritualistic only." 3. The Ld. Counsel for the assessee stated that this ground is purely legal in nature and no new facts are required for the adjudication of this ground and hence, the same deserves to be admitted keeping in mind the law laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. (NTPC) Vs. CIT (1998) 229 ITR 383(SC). The Ld. Counsel for the assessee took us through the Paper Book filed on 18.05.2021 whereby he has enclosed copy of approval granted u/s. 153D of the Act vide dated 29.06.2017. The Ld. Counsel for the assessee took us through the letter written by the AO to the Addl. CIT vide No. ACIT/C-II/Ldh/2017-18/446, dated 29.06.2017 and pointed out that the AO applied for approval u/s. 153D of the Act to the Addl. CIT only on 29.06.2017. He further took us through page No. 2 of assessee's Paper Book wherein relevant approval was granted u/s. 153D of the Act by the Addl. CIT, Central Circle Range, Ludhiana vide F. No.....
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....tional ground. She first took us through the technicalities that the assessee's application for additional ground is dated 19.03.2021 whereas the assessee has deposited the challan for taking copies from the AO only on 20.03.2021. According to her, this application is totally mechanical and ritualistic and documents obtained from the Department were not available with the assessee at the time of raising this additional ground. Hence, she argued that at this very count the assessee's additional ground should be rejected. 5. When this fact was pointed out to the Ld. Counsel for the assessee, he stated that the assessee obtained the letter written by the AO to the Addl. CIT for approval of assessment order u/s. 153D of the Act and approval accorded by the Addl. CIT u/s. 153D of the Act were actually handed over by the AO only on 19.03.2021, whereas the assessee was asked to deposit a sum of Rs. 100/- which was eventually deposited only on 20.03.2021. When a question was pointed out to the Ld. CIT DR about the authenticity of these documents, she stated that these documents are taken from the Department but her only point is that the assessee first raised this additional gro....
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....cation of mind by the approving authority. 9. On the other hand, the Ld. CIT DR took us through the Departmental Circular F. No. 286/161/2006-IT (Inv. II) dated 22.12.2006 wherein entire process of search and seizure assessment is mentioned and according to her this is strictly followed and there is no deviation from the same. She also stated that the Addl. CIT is supervising authority of the AO in case of search assessment and there is no allegation by the assessee that there is any deviation in the process. She read out the relevant clauses of the above circular issued by the Board. 10. We have gone through all the facts of the case first and also gone through the Paper Book filed by the assessee on 18.05.2021 wherein relevant two documents i.e. letter by the AO to the Addl. CIT which is enclosed in assessee's Paper Book at page No. 1 and which reads as under: Government of India Office of the Asst. Commissioner of Income Tax, Central Circle-II, Opp. B.V.M. School Kitchlu Nagar, Ludhiana. No. ACIT/C-II/Ldh/2017-18/446 Dated: 29.06.2017 To The Additional Commissioner of Income Tax, Central R....
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....n (PAN AHEPJ7203M)-regarding- ********* Kindly refer to the subject cited above. Please refer to your office letter No. 446 dated 29.06.2017, received in this office on 29.06.2017 thereby submitted draft assessment order in the following cases: S.No. Name & address of the assessee PAN Assessment Years 1. M/s Inder International, 594, Nirankari Mohalla No.1, Overlock Road, Ludhiana AABF17996J 2011-12 to 2016-17 (six Years U/s 153A) 2. Sh.Abhay Jain Prop. M/s Shree Lakshmi Steels, 467, Industrial Area-B, Millerganj, Ludjhiana AHEPJ7203M 2012-13 to 2016-17 (Five Years U/s 153C) Necessary statutory approval u/s. 153D is given to pass the above assessment order, as sub. Asse....
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....as submitted. Clearly, therefore, the Additional 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 statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional 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 of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises." 13. We have also gone through the recent case law of Mumbai Tribunal in the case of Arch Pharmalabs Ltd. (supra) wherein the Tribunal held as under: "11.1. It may be pertinent to observe at t....
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....evaluating the nuances of each assessment year involved (iv) the mundane action of Addl. CIT under S. 153D in a cosmetic manner gives infallible impression of approval on dotted line and thus defeats the purpose of supervision of search assessments (iv) initialed draft assessment orders not available in office records. 11.3. As observed, Section 153D bestows a supervisory jurisdiction on the designated authority in respect of search related assessment and thus enjoins a salutary duty of statutory nature. The designated superior authority is thus expected to confirm to the statutory requirement in letter and spirit. It is evident from the communication of AO and consequent approval thereon under S. 153D that no assessment record for any assessment year in question or any seized material had traveled to the authority concerned for his objective consideration of the same qua the draft assessment orders. No reference in this regard is made in the approval note either which may discard such allegation as untrue. No other material or order sheet in assessment proceedings etc. were placed before us either to establish otherwise. Except these two documents namely, a solitary commu....
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....lly scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. 11.5. At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/her process of deriving satisfaction so as to exhibit his/her due application of mind. We may observe that Para 2 of the above approval letter merely says that "Approval is hereby accorded u/s. 153D of the Income-tax Act, 1961 to complete assessments u/....
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.... on designated authority under section 153D of the Act. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the plea raised by the Assessee against maintainability of hollow approval under S. 153D totally devoid of any application of mind. The approval so granted under the shelter of section 153D, does not, in our view, pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments relatable to search in captioned appeals are non est and a nullity and hence quashed." 14. In view of the above decision and the fact that in the present case before us also the Addl. CIT has accorded the approval u/s. 153D of the Act only on 29.06.2017 when the AO placed the assessment order on that very date i.e. 29.06.2017. The relevant approval by the Addl. CIT reads as under: "Necessary statutory approval u/s. 153D is given to pass the above assessment order as such. Assessment record in this case is returned herewith." 15. From the above, it is clear that this is totally non application of mind by the Addl. CIT, who i....